“When we started the Digital Serbia Initiative we realized that one of the sectors that has a huge potential for the future of our economy is gaming. I went on and launched the Serbian Gaming Association (SGA). Two years later we have over 80 members. Two recent exits and the many new rising players are evidence enough that I was not mistaken,” says Nikola Čavić, President and founder, SGA. Last year’s global report Startup Genome also outlined gaming, alongside blockchain, as one of the two major tech spheres in Serbia.
Serbia is home to an estimated 80+ studios and companies operating in the gaming industry. And even though there’s practically no access to funding for the sector, several players have made a big footprint. Nordeus is a Belgrade-based self-funded mobile games company whose popular game Top Eleven has over 220 million registered users and ranks among the world’s industry leaders. The gaming scene’s growth is also visible through relevant acquisitions: 3Lateral, a leading developer of digital animation and creative content, was acquired by Epic Games in 2019, while the Novi Sad-based gaming studio Eipix was acquired by Playrix, one of the largest mobile game developers in the world.
“With this Serbia is now on the global game development map and I expect to see more acquisitions, but also more and more local companies being started that will be leveraging the knowledge and the know-how accumulated by the ecosystem,” Cavic is confident.
The magic sauce: Do a lot with nothing
“The vast majority of the companies here, especially studios and startups in the gaming sphere are bootstrapped. I think the ability to do a lot with nothing is what makes Serbia an interesting game development destination,” says Cavic. Similar to the whole SEE region, in the Balkan country there are no VCs interested and versed in the industry, there are also little to no angel investments in the sphere. In 2018, when the last gaming report in the country was released, the majority of the raised capital is sourced from friends and family, with 60% of the interviewed companies seeking capital investment in 2019 to enable faster growth and development.
The founder of SGA sees the large number of software engineers and artists as another prerequisite for the specialization of the ecosystem in this direction. One of the biggest international successes is also a gaming company – Nordeus, which logically has its spillover effects. Also, when Epic Games bought 3Lateral, they decided to open up a campus in Novi Sad where 300 people will be working. Global giant Ubisoft also opened a studio in Belgrade three years ago and already has well over a hundred employees. Eipix also employs some 400 people in Novi Sad.
“In addition to the big global brands, I already see the second wave of local gaming companies coming and they will be the pillars of the future ecosystem,” Cavic adds. The scene is expected to further mature and change as the government introduced tax incentives in 2019, where tech startups, including gaming ones, can pay almost no corporate income tax thanks to the generous programs and incentives. As a result of these incentives, there is a surge of interest among domestic and international investors in Serbian gaming studios, reads a recent statement by the SGA.
Insights into the Serbian gaming industry
Cavic estimates the size of the local game development market somewhere around €100M. With 43% of the companies generating all of their revenues abroad, the top five markets for games developed in Serbia are the US, Germany, the UK, France, and China, and the majority of the studios that participated in the latest report of SGA make up to €20K in net annual earnings. There are also outliers with net profit exceeding €5M.
The rising stars
Alongside the widely known names in the industry, as Cavic outlined, there’s a new wave of players coming. “The ecosystem is maturing, and we now have not only the studios but also more and more service and technology providers,” he says. Based on his observations there are four names, which the world will get to hear more often in the next years:
Two Desperados is a Belgrade based video games development studio. Its games Woka Woka and Viola’s Quest are no. 1 marble shooter game with over 30 million players.
Demagog Studio creates content for video games, animated videos, and music. Its flagship project is the award-winning, Apple-featured game Golf Club: Wasteland. The Wasteland IP is growing with new games and an animated series in development.
Sozap is an interactive entertainment company with a focus on free to play games for smartphone and tablet devices. Sozap his headquartered just outside Stockholm, Sweden, with an office in Niš, Serbia.
Tummy Games is a small mobile gaming company from Serbia located in the city of Novi Sad and founded in 2016. The first game the team released is called Tummy Slide. The company is specialized in hyper-casual games. At the beginning of 2020, its games hit 10M downloads.
In around a month SGA will be releasing its annual report on the gaming industry that will showcase the newest trends and hot names. Indeed, with the 2020 pandemic boosting the global sector, Serbia’s gaming observers are also optimistic. One of the managers at the SGA, Kristina Janković, told local publications that in the last few months the figures relating to the sale of games, the number of downloads, and the sale of consoles have grown in the various markets between 30% to 80%.
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