4 Feb 2020
Surge in Virtual Sales to Sultan-Worshipping Russian Consumers
Increase in Russian m-commerce purchases double that of global average, with Game of Sultans the biggest earner.
The Russian economy passed a number of important milestones last year. For one thing, spending via mobile apps passed the psychologically significant US$1 billion barrier for the first time. Bearing in mind that just 10 years ago the trade in pirated and hacked software was the publicly accepted norm rather than an occasional aberration, this is seen as a particularly remarkable turnaround. To put this into due perspective, while the global value of the mobile app market (including gaming, e-shopping, subscriptions and paid-for content) climbed by some 20% in 2019, the equivalent figure for Russia was 40%.
In terms of the highest individual revenue earners, first place went to Game of Sultans, an online strategy game, followed by VKontakte (the St Petersburg-based social network seen as Russia's Facebook), TikTok (the Beijing-headquartered video-sharing service) and a number of food-delivery applications. Overall, over the past three years, the amount spent on such virtual items by Russian consumers has grown by a massive 155%, a sure indication that the notion that online content and services always come at a cost has now been firmly established across the country.
Despite this clear uptick, absolute financial data has proven hard to come by. In the case of Game of Sultans – an empire-building role-playing simulation developed by Mechanist Games, a Fujian-based independent software producer – although it has been widely acknowledged as 2019's big earner, there has been little official financial disclosure to date. It's a similar story with VKontakte and Boom, a music player that also performed well last year, both of which were developed by the Mail.ru Group, Russia's second-largest online publisher. In third place – and equally opaque – was Ivi.ru, the country's leading streaming service, which has made huge headway in Russia as the domestic pioneer of on-demand content.
In total, WhatsApp remained the most frequently downloaded application in Russia, with Telegram – its somewhat notorious, domestically developed counterpart – coming in a close second. Taking third and fourth place, respectively, were two other domestic offerings – Nalogi FL, the official Russian tax-assessment app, and a suite of programmes from the Post of Russia. Overall, about 50% of the online dwell time of the typical Russian is taken up by social media / messenger activity, with TikTok accounting for the most breathtaking increase in usage – up 860%. Meanwhile, the use of food / beverage delivery apps as well as online restaurant booking services were up by a combined total of 250%.
It is also notable that Russian online preferences closely mirror global trends, albeit with domestic counterparts outperforming their international equivalents. This sees Yandex preferred to Google, VKontakte to Facebook, Ivi to Netflix, Ozon to Amazon and Badu to Tinder. Nor is this solely a language issue, with many middle-aged and young Russians sufficiently fluent in English to negotiate their way around such applications. As few prohibitions also apply, it would seem the ascendancy of the home-grown app is simply a matter of them being intuitively easier and more user-friendly for Russian consumers.
From an external commercial point of view, the rise and rise of mobile apps within Russia – and the willingness of users to embrace them as potential payment channels – represents a clear opportunity for accessing the country's consumers on a transactional basis. It's a growing opportunity and one that Hong Kong manufacturers / distributors with an interest in the Russian market would be well advised to factor into their promotional / sales strategies.
Leonid Orlov, Moscow Consultant