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Being local is the key to success

Miikka Luotio, Regional Director of Europe, Xsolla

Miikka Luotio is the Regional Director of Europe at Xsolla. Xsolla is a global videogame commerce company that offers a set of tools and services to help game developers fund, launch, sell and monetize their games. Apart from Xsolla’s products, Miikka talks to us about the success of the mobile games industry and what it means to be where your customers are.

Welcome to Berlin! You just founded your new branch here, spreading your business across five continents. What made you choose the German capital?

We chose Berlin as one of our key hubs because it is in the center of Europe, not far away from our Eastern, Western and Northern markets. What makes Berlin all the more attractive is its up-and-coming, vibrant games industry and great cooperation partners like medianet Berlin-Brandenburg e.V. and Berlin Partner. These associations are helping us get visibility and support to help the games industry in the videogame consumer market. Germany is on top of Europe, and because of that, there’s a big game industry here. Young talents are attracted to Berlin as a city, so for us, Berlin was the natural place.

Please describe what your products are all about and what they are used for.

Xsolla has been a merchant of record for video game companies for over 17 years. We managethe commerce from the digital video game and in-game purchases on behalf of video game publishers. With our global reach, we process transactions in 700+ different payment methodsand work for 1000+ companies, from small indie studios to big corporations, worldwide, giving us unparalleled coverage. You could argue that we handle all the tedious work that has nothing to do with the creative process like global compliance, refunds, chargebacks, international sales taxes, customer support, and anti-fraud. These mundane things that customers and companies have to think about are still important in the best cases. Our tools are white-label templates that are easy to implement, giving our partners complete control so that they can focus on a close
consumer relationship.

Apart from the monetization of games, you offer two funding platforms. How do they work? How do you “remove the barriers between game creators and financiers”, as you advertise it on your website?

First, we have the Xsolla Funding club, a matchmaking tool for devs to find investors. It is an online platform where devs submit their game or concept and get the attention of certified investors. It facilitates access on an international scale. It is an excellent way in our remote-working world to get your game out without traveling the globe. Second, we have the Game Investment Platform, a supplement to Xsolla Funding Club. It's a platform for certified investors who are looking for co-investment opportunities. The difference from other crowdfunding platforms is the amount of money our members are willing to invest, up to millions of euros. Crowdfunding video games can be challenging due to the number of backers you need to succeed. Our platform fills a missing link with the international connection to the certified investors we can offer.

In Germany, revenues from in-game purchases increased by 44% from 2019 to 2020 and amount to 3,2 billion Euro. In mobile games, in-game purchases account for 99% of the total revenue, followed by 56% in PC games and 16% in console games. What are the reasons for this constant increase? What makes in-game articles so attractive to gamers?

Free2Play is not a new thing. The advent of mobile gaming opened up a viable and more lucrative part of the game industry. When it comes to mobile gaming, that is where the money is. And mobile games are so successful with that strategy that even big publishers go after that on other platforms. We are seeing a lot of games choosing to go Free2Play instead of going premium, even if they could, just because they see that games are becoming a service. When games become a service, and when Free2Play goes hand in hand with subscription models, they cater to the market's digitalization trend. The games can change seasonally, and people want to take part in them and evolve with them, extending a game's lifespan and revenue stream.

You work for big publishers as well as for small indie studios and provide services in 20+ languages. What are the biggest challenges when working all over the world for all kinds of studios?

The biggest problem is being there locally. Xsolla is headquartered in L.A., and have expanded in China, Korea, Canada, Japan, Brazil and even Kuala Lumpur - we are looking at further expanding with a couple more offices in the next year.. Our most important asset is creating regional offices to respond to local trends and be there for the local publishers. In the post-pandemic world, people want to meet in person, have support in their time zone, and talk to people who understand local market trends and regional best practices as every market is different. Taking Europe as an example, you can see other markets emerge: the Northern part is powerful in mobile games and Free2Play. At the same time, Germany is a cradle of strategy and simulation games, and the U.K. is a mix of everything, very close to the American market. But it's also a question of who the local publishers are, what cool new games are being developed, to respond and support quickly. Being local is the key to success, and we realized that this is the path we have to take.

In terms of finding talent, Berlin already has a lot of people working in the field, and you can find great talent here. And even though Berlin is our European headquarters, we still need to decentralize and hire remotely, as a traditional single office doesn't cater to our needs to be local everywhere.

When you started out in the games industry, you were a Producer working on titles of the Angry Birds franchise as well as Bejeweled iOS. So, in your opinion, what makes a good mobile game? And what criteria must be met that players are willing to pay, despite the ample or even free competition?

It’s fun! How do you make something that is addictive? It ultimately always has to be fun! It’s easy to overcompensate because you have such ample financial opportunity whenever you make a mobile game. It’s easy to get greedy and side-tracked by what the community wants. It’s a balancing act. How do you balance the community feedback with heavy monetization strategies? They always need to amplify the fun.

Another thing is that you must not copy what worked well for others but have to make your own decisions. You need to innovate and take risks, but at the same time, use established best practices. You need someone with a creative vision who can say no and still knows what the community wants. That’s why it’s so important to have great game designers in your team and a visionary leader.