- Digital battleground sets record for gamers on a single server
- World of Tanks is a leading title in $16.5 billion industry
As Vladimir Putin rolled tanks across Red Square last May to commemorate Russia’s victory over Nazi Germany, thousands of gamers across town had just finished celebrating the triumph with an epic battle of their own.
Over at a packed Olympic Stadium, a venue normally hosting the likes of Madonna, Beyonce and Metallica, bands of virtual warriors manned banks of computers along the venue floor to hunt each other with Allied and Axis war machines. Bright orange bursts of cannon fire lit up 10-meter screens as flickering black-and-white war footage of Red Army advances in World War II played to the delight of the crowd.
The “Portraits of Victory” tournament was sponsored by the World of Tanks video game and marked the culmination of a lifelong fascination with both history and technology for the game’s creator, Victor Kislyi. Two decades ago, Kislyi began melding the two passions in his family’s Minsk apartment with his brother, eventually building the company they created, Wargaming Pcl, into a growing army of 150 million global users.
The effort has valued the business at $1.5 billion and given the 39-year-old a net worth of $1 billion, according to the Bloomberg Billionaires Index. Kislyi declined to comment on the valuation, saying only that he has a “very modest” lifestyle and has never tried to put a number on his fortune.
“World of Tanks has created its own subculture and that’s the most important thing,” said Oleg Shpilchevsky, head of the games business unit at Moscow-based Mail.Ru Group, the maker of Armored Warfare: Project Armata, a competing product named after Russia’s most advanced real-world tank.
Wargaming is one of the industry’s most successful creators of free-to-play online games, which produce revenue through premium accounts offering players more credits that enable them to move faster through increasingly difficult levels of play. Kislyi controls 64 percent of the Cyprus-based business in his name and through a 25.5 percent stake held by his father, according to Wargaming’s 2013 semi-annual financial report. The business has 4,000 employees on four continents and revenue of $590 million in 2015, according to data compiled by Bloomberg and estimates by analysts.
Kislyi said it all started in his father’s science lab in the late 1980s, just as the Soviet Union was starting to unravel. That’s where he played his first video game, on what he called “an old, pot-bellied computer.” He was instantly hooked.
With the spirit of capitalism taking hold among Russia’s post-communist youth, Kislyi began preparing for college and considered majoring in business. His father persuaded him physics was a better path for intellectual development, but by then his passion was video games. His favorite: Civilization, a strategy game that debuted in 1991.
“I almost flunked one of my study sessions because of that,” Kislyi said in a July 2014 interview with business daily Vedomosti.
World of Tanks features 400 models of actual 20th-century vehicles ranging from the German Panther and Soviet T-34 to the American Sherman and British Cromwell. The game became an instant hit when it was released for personal computers in 2010 in Russia, where the Great Patriotic War, as World War II is known, continues to elicit intense national pride.
Three years later, Kislyi’s creation entered the Guinness Book of World Records for having the most players on one server at one time: 190,541. It now has more than 110 million registered users, more than a third in the former Soviet Union and Europe, and can be played on multiple platforms, including Microsoft Corp.’s Xbox One and Sony Corp.’s PS4, as well as mobile devices.
World of Tanks is the biggest online multiplayer game where players operate warcraft instead of characters, according to SuperData Research, a New York-based company that tracks the industry. The biggest of all, League of Legends, for example, is a role-playing fantasy fighter game that allows players to choose individual warriors with special powers that unite in teams and go to war with rivals.
"The combination of creative brilliance and business acumen is what drives Wargaming’s success,” SuperData Research Chief Executive Officer Joost van Dreunen said.
Kislyi moved the game onto phones and tablets with the 2014 release of World of Tanks Blitz, which has been downloaded 40 million times. He’s released two follow-on PC titles, World of Warships and World of Warplanes, which already have 6 million and 10 million registered users, respectively. He’s also expanded into China, the biggest multiplayer game market by far, where a subsidiary, KongZhong Corp., runs Wargamings operations.
For the moment, the growth prospects for the business remain strong. Global revenue from free games advanced 6 percent last year to $16.5 billion, accounting for almost a third of the entire digital games market, and may reach $18 billion in 2017, according to SuperData.
In China, League of Legends earned billionaire Pony Ma’s Tencent Holdings Ltd. an estimated $1.6 billion in revenue last year, helped by the company’s promotion of the fastest-growing trend in the gaming world -- so-called E-Sports, or organized leagues comprised of professional players who vie for real money. Newzoo, an Amsterdam-based research company, predicts the number of E-Sports enthusiasts will reach 145 million next year, up from 58 million in 2012.
Two of the world’s savviest tech investors -- Jeff Bezos and Alisher Usmanov -- are also getting in on the action. Amazon.com paid $970 million in 2014 to acquire Twitch.tv, a platform for streaming gameplay. Usmanov, once Russia’s richest person, followed suit last year with a $100 million investment in Virtus.pro, the country’s largest E-Sports company.
“It’s the fastest-growing market, generating huge interest around the world,” said Ivan Streshinsky, a board member of Usmanov’s USM Holdings in an October 2015 statement on the Virtus.pro website.
Kislyi is not squandering the momentum. At home, he stokes the flames of patriotism by helping to fund re-enactments of battles fought along the Stalin Line of fortifications that ringed the Soviet frontier, using real tanks and fake explosives. Abroad, he holds dual citizenship with Cyprus and has become a recognizable figure in the Cypriot banking world, joining investors Wilbur Ross, Daniel Loeb and Viktor Vekselberg, Russia’s second-richest person, in recapitalizing the island’s two leading banks after the country’s 2012 financial crisis nearly drove them to ruin.
Known for its low corporate tax rates, a legal system based on British law and favorable secrecy laws, Cyprus is a base Kislyi can use to broaden his reach. He controls a 17 percent stake in Cyprus’s second-biggest lender, Hellenic Bank Pcl, through Wargaming and can be found hobnobbing with the island’s finance authorities and business leaders, including an appearance with the finance minister at a November 2014 screening of the Brad Pitt World War II tank epic, "Fury."
Wargaming is investing in European startups to develop its own live-streaming service and pushing into the U.S., where it bought Chicago-based Day 1 Studios for $20 million in 2013 to adapt World of Tanks to Xbox and PS4. Kislyi has also invested $26 million to develop Wargaming’s E-Sports league, which held online tournaments in cities including Moscow, Las Vegas and Warsaw last year that attracted 850,000 players and paid $3.3 million in prize money, the company’s largest-ever payout.
“We must become a conveyor belt for the production of quality games,” Kislyi said by phone from Cyprus. “We are the company that explores big markets. If there are a billion microwave ovens with joysticks and it is possible to play games on them, we will develop the software for them.”