The big international game developers are stepping up their operations in Romania — the top emerging Europe location for game development after Poland — where they sit alongside local indie firms that have already scored some solid successes.
In Romania, the industry’s turnover has been steadily growing. It exceeded $200mn for the first time in 2019, up by a healthy 14.7% from the previous year, according to Romanian Game Developers Association (RGDA) data. The figures for 2020, while not out yet, are likely to be even stronger as gaming was one of the industries that flourished during the pandemic, providing a way for people suddenly cut off from their friends and normal pursuits to entertain themselves and connect with others.
“A lot of people who stayed at home and needed entertainment turned to games, so that means a lot of games were bought … a lot of records have been set for the number of people playing online, game downloads and so on,” Andreea Medvedovici Per, executive director of the RGDA, tells bne IntelliNews.
A report from the Interactive Software Federation of Europe (IFSE) shows that time spent playing games increased by 1.5 hours a week during the initial lockdowns in spring 2020, though dropped back to pre-pandemic levels as lockdowns eased. 30% of players surveyed said video games helped them feel happier, less anxious and less isolated.
A Deloitte report comes to a similar conclusion, showing that the lockdowns increased the number of hours spent in front of screens, and inspired people to try new digital activities including gaming. “With school and office closures, work furloughs and canceled travel plans, more people are playing video games — and more are upgrading their gaming relationships from casual to committed,” said the report. Even before the pandemic, the sector was growing strongly with revenues of the global gaming industry exceeding $152.1bn in 2019, up by 9.6% on the year. Globally there are more than 2.5bn gamers, with steady growing average revenue per user (ARPU).
This is borne out by the big international companies that have operations in Romania. Cristian Pana, managing director for Ubisoft Romania and Serbia, reports an increase in player engagement, but adds: “it is too early for us to say how this will impact the future of our industry”.
"We have seen an increased usage of games and associated services globally, which ultimately means that there has been an increased level of social engagement from our players,” Andrei Lazarescu, senior producer, EA Romania, tells bne IntelliNews. Lazarescu also stresses the social impact of video games during the pandemic, for example in raising awareness. When the coronavirus was spreading around the world in March 2020, the World Health Organisation (WHO) and video game companies launched #PlayApartTogether to encourage physical distancing.
Growth in strange times
The biggest local player, Bucharest-based game development agency Amber Studio, is one company that has grown strongly since the start of the pandemic. Since bne IntelliNews’ feature on the Romanian game development industry in 2018, Amber’s headcount has almost tripled to just over 700 people and it now has six offices in four countries: Bucharest and Botosani in Romania, New York and San Francisco in the US, Guadalajara in Mexico and Montreal in Canada. Amber’s annual revenue has risen steadily from $7.5mn in 2018 to $13.6mn in 2019 and $20.8mn in 2020.
Amber’s head of operations Tudor Postolache tells bne IntelliNews that 2020 was a “very special year” for the company. “When so many industries and businesses were severely hit, we continued our growth and put the throttle on international expansion. I’m happy to say the gaming industry has been very resilient, actually thriving over the last year, and I’m convinced this tendency will carry on both for the industry and for us,” he says. “Over the last year we have seen more appetite from studios and publishers to invest more.”
Botosani, a small city in northern Romania close to the borders with Moldova and Ukraine, is not on many investors’ maps. It’s better known for manufacturing than for the high tech industries that have taken root in Bucharest, Cluj, Iasi and bigger university towns. Amber is the only gaming company there. Explaining the move, Postolache says: “We wanted to try it out and see how we were received by the talent pool. The success has been absolutely fantastic. We were hoping to get around 30 to 40 people by the end of 2020; we finished up the year very close to 70 and now we are working to fit out a new office space because we want to add another 100 people.” The team started out doing quality assurance (QA), but Amber is looking to add artists and programmers in future.
Around the same time as Amber was setting up in Botosani, it also started exploring options in Mexico. It announced the opening of its fifth studio, in Mexico’s second city Guadalajara, in February 2020, and now has 120 people there, with plans to grow to around 200 by the end of the year. Amber’s latest international move came in mid-2020 when it set up a translation and localisation team in Montreal, a city with a “solid and mature gaming industry” and strong support from the government of Quebec, according to Postolache. Amber has since been hiring core workers for a creative studio in Montreal too, which it plans to turn into a fully fledged studio in the coming months.
On top of this, the company has two offices in the US and is continually exploring additional locations. While it hasn’t yet made the move into Asia that Postolache discussed back in 2018, this is still something the company wants to pursue.
To date the company’s growth has been organic, but it is “talking very seriously” about growth options, says Postolache. “We are self funded at the moment, but we have been discussing internally about securing financing to grow at a faster pace. We have not taken a decision on this yet but looking at all the options: private investment, debt financing, IPOs. Really all the options are there.”
Moving into Romania
While Amber has been expanding internationally, several other companies moved into Romania during the pandemic year. They include Berlin-based mobile games company Kolibri Games, France’s Wolcen Studio and Israeli Playtika that opened a $6mn research and development centre in Bucharest.
Kolibri opened its new studio in Bucharest in August 2020, headed by Stefan Sovu, founder of Profane Studios. It currently employs six people but there are plans to add more in the near future. Commenting on the role of the Bucharest office, Sovu tells bne IntelliNews: “We are chasing the next big idle hit. The challenge is how we are going to get there.
“I plan for our studio to become fully independent soon. Our short-term plan is to focus on making fast and agile iterations on our current project, the goal being to release a successful idle mobile game soon,” he adds.
Entering a new market during a global health crisis wasn’t easy. “We started building our studio after the pandemic hit, so we made the bold decision to assemble the team and start working fully remotely. It’s proven a complex challenge to build a team from scratch during these times. But at the same time, we like challenges and solving this problem has been very rewarding.”
Kolibri has been owned since February 2020 by Ubisoft, the France-based company that effectively launched the Romanian game development industry when it set up in Bucharest back in 1992. There are now more than 2,000 people in the two Ubisoft studios in Romania. Having recently taken over at the helm of Ubisoft Romania, Pana says: “My ultimate goal is to ensure that we take on meaningful projects, attracting the best talents for moving the future of entertainment forward.”
He talks of “plans to expand both in numbers and expertise, while also taking on new and exciting projects”; towards the end of 2021, Ubisoft Romania plans to move to a new purpose-built office that will provide room to grow in the years to come.
Cristian Pana, managing director for Ubisoft Romania and Serbia
“Over the years, we’ve proved to be one of the best co-dev partners to our other offices around the world,” Pana adds. Some of the games the Romanian teams have worked on include Assassin’s Creed, Tom Clancy’s Ghost Recon, Tom Clancy’s Rainbow 6 Siege, Watch Dogs and the Just Dance franchises. Ubisoft Romania has started a collaboration with Ubisoft Massive on Tom Clancy’s The Division franchise, and according to Pana has “other amazing unannounced projects” in the pipeline.
Another international giant in Romania is EA. EA Romania is now one of the company’s largest studios in the world, as well as one of the only two studios worldwide where EA Sports FIFA & NHL video game franchises are developed. EA Romania is also one of the company’s largest quality verification and security centres, with over 1,700 employees and collaborators. There are plans to grow further in Romania, and EA is launching a new recruitment campaign.
Indies grow up
There are now over 103 studios employing more than 6,000 people in Romania — the actual figure is most likely higher says Per. Many are small, while the top 10 Romanian gaming companies accounted for 87.8% of the total local industry revenue in 2018.
Catalin Butnariu, president of the RGDA and head of corporate development at Amber, believes the emergence of a vibrant local indie development scene is “the most encouraging evolution” in Romania.
“As the industry is evolving, the number of independent developers is growing significantly from one year to the next,” he says. While the local operations of big international developers like Ubisoft, EA and Gameloft dominate, along with local emerging champion Amber, “if you look in a little more detail, you can see the number of independent developers is growing. There are developers that are setting up studios, working on games that have some degree of success. I think this trend will continue, and growth in the game sector in Romania will come from the independent sector.”
One of the most successful local developers is Killhouse Games, which launched Door Kickers 2: Task Force North in early access on Steam late last year.
“We've had Door Kickers 2 in Early Access since November, and it’s our best launch so far. Keep in mind it’s still a niche game and many people don't buy Early Access titles on principle, but we've outsold Door Kickers 1 and Door Kickers Action Squad's first year on Steam — so that’s pretty good,” says Dan Dimitrescu, co-founder and game designer at KillHouse Games.
Sand Sailor Studio, creator of the critically acclaimed Black the Fall, is also now working on its third game. It followed up its debut game Black the Fall, inspired by stories from Ceausescu’s Romania, with a very different offering, multi-player party game BOSSGARD.
Per points out that for an independent studio to be on its third game is in itself a success. “A lot of studios are dismantling and their founders start working for other established studios because can’t afford to build new games any more. The fact they are still here is testament to the fact they have potential,” she says.
Another local success story is Metagame, the creator of Tap Busters, a mobile role player game (RPG), where bounty hunters battle evil monsters. The popularity of Tap Busters allowed the Metagame team to go on to secure a new deal with their publisher to create a second game, Zombieland, based on intellectual property (IP) from the movie licensed in partnership with Sony. Zombieland is the most successful mobile game created in Romania so far.
A new way of working
A lot has changed in the way game developers work since the start of the pandemic. Given it’s a creative industry with a high degree of digitisation, it had a natural advantage when it came to sending people to work from home when the first lockdown was suddenly imposed in spring 2020, though for tasks such as testing this was more complicated.
Ubisoft’s Pana says that working “in a fast-moving, high tech industry in which digitalisation is key … it was easier for us to adapt.” Per agrees that aside from the challenge of setting up systems to ensure content wasn’t leaked, shifting online wasn’t a problem per se. Given that for many in the industry game development is a labour of love, employees overworking became more of a concern than slacking off.
Launching in Bucharest during the pandemic, Kolibri’s Sovu said it was a “very tough time” for many people, and having taken the decision to go ahead and assemble the team and start working fully remotely, “It’s proven a complex challenge to build a team from scratch during these times”.
When a strict lockdown was suddenly announced, Lazarescu says EA had to “adapt our way of working and streamline remote work for more than 1,700 people in a matter of days, in March 2020. We needed to react quickly, adapt to the new reality, and come up with solutions that would allow us to continue our work and do so in a way that was safe for all of us.” However, Lazarescu adds that while the effort was “fantastic”, “I certainly miss being able to be in the studio, feeling that invisible creative energy tying us all together”.
When I caught up with Postolache, Amber’s entire staff had been working from home for just over a year. What started as a two-day pilot to see how well prepared the company was to shift to home working for a short period became the status quo for the rest of 2020 and into 2021 and will, Postolache says, lead to permanent changes after the pandemic ends.
“I’ve never been a huge fan of the work from home concept and I’m mature enough to admit I was wrong,” he says. Amber was able to deliver on all its commitments as well as continuing with its international expansion. Now that with mass vaccination an end to the pandemic is in sight, Amber is looking at what a return to normal will look like, and Postolache envisages a range of options for different teams with some departments continuing to work from home while others, such as testing, return to the office, and creative teams adopt their own hybrid models.
He says the pandemic has been a “blessing in disguise” when it comes to recruitment as it forced Amber to change its approach to recruitment. Pre-pandemic, Amber would identify good people and try to persuade them to move to Bucharest. But with everyone working from home it no longer matters if someone is working in an apartment in Romania — or Ukraine, Spain or somewhere else in the world. “By changing our mindset and no longer acting as a magnet to bring talent to us, we have significantly expanded the reach we have for our talent.”
The funding challenge
While the pandemic has given the gaming industry a boost, there are other issues the industry has to face. Per points out that this is a risky business — which also makes it difficult to secure finance. The Carbon Incubator, a spinoff from Amber set up to help turn startups into viable video game development businesses, supported an initial round of companies of which Metagame was the most successful. However, when the incubators’s management were looking for investment to fund a new batch of startups they earned the “very hard lesson” that “investors don’t like incubators”. They put the initiative on hold and are currently rethinking it, but Butnariu, co-founder and general manager of the incubator, says “the idea would be to resume the activity because we care about what we were doing, helping studios grow.”
Another issue raised back in 2018 was the lack of support from the authorities, especially in comparison wth international gaming hubs like Montreal. This isn’t to say there has been no help — the government has supported the RDGA when it attends international fairs to present the Romanian industry — but Per and her colleagues have been working intensely to secure more support. For the last two years they have been meeting government officials and MPs, as well as examining support schemes in other countries, with the aim of having in place a scheme 100% dedicated to the game development industry in Romania.
According to Per, the RGDA’s efforts have met with a “good reception”, not least because the industry is a source of original IP. “Original IP is very important for the growth of any country. Games products that are innovative, culturally relevant and successful all over the world which have original IP created by Romanians are interesting for the authorities,” Per explains. This is in contrast to the many business process and software outsourcing companies in Romania that create great jobs and bring in tax revenue but aren’t creating original IP. As a result, Per says, “we have hopes that our efforts in public affairs are going to pay off.”
Analysing the market
What drew IT companies to Romania — and other parts of Central and Southeast Europe — was a combination of lower costs than Western Europe and a skilled workforce, though of late there has been more emphasis on skills and Romania’s experience in game development than simply on cost. With around 6,000 people in the industry, Romania is now among the top three to four hubs for game development in Europe.
“Romania is an always-evolving market that has a great pool of talents,” says Ubisoft’s Pana. “This allows us to continue growing and subsequently bring in even more innovative projects. We want Ubisoft Romania to remain the place where people can evolve and develop their skills. For us, it is also important to show all Romanian developers working abroad that it is possible to create the best entertainment experiences for millions of players worldwide right here, in their own country.”
“I think Romania has so much available talent and many people that are passionate about gaming. Especially in the past years, we’ve seen a lot of new games coming out of Romania. This inspired me personally to make games, and which eventually made Kolibri Games open their second studio in Bucharest,” says Kolibri’s Sovu.
As EA marks 15 years in Romania, during which time it has grown into one of the biggest entertainment and technology companies operating in the country, Lazarescu points out that it’s no longer easy to attract talent in the competitive Romanian tech sector. “Currently, the number of graduates exiting universities with the relevant area of expertise for our industry is unfortunately not large enough to sustain the level of growth companies and businesses would like to have. With that said, the quality of those graduates is high, especially in certain areas such as engineering,” he says.
“The challenge is even bigger when we look at certain specific talent areas, such as game design, user experience and animation, which are incredibly rare and usually the result of very ambitious and determined self-taught individuals, rather than the product of the educational system. There are now so many opportunities to join the gaming industry and build a successful career in this field, but there’s still a disconnect in terms of adapting the curriculum to jobs available in the real world in order to ensure a high quality and consistent year-on-year supply of candidates that can immediately find a role after graduating. If this were to happen, I believe we could become one of Europe’s leading industry entertainment and technology hubs. The potential is there, and we will work hard to fully realise it — that I have no doubt about it. It’s only a question of how fast we can get there.”
If we were to look for a model of where Romania might go from here, we only need to look as far as Poland, by far the largest and most developed game development market in the emerging Europe region. The sector in Poland is three to four times as large as in Romania. It is also supported by the government, being declared one of the National Intelligent Specialisations, and very well funded with numerous video games listed on the stock exchange. Romania hasn’t got there yet, though there is speculation Romanian developers might consider listing on the Bucharest Stock Exchange in future.
Per notes that since 2020, Romania has started receiving interest from Polish companies that have a lot of capital. “The market in Poland is oversaturated so companies are looking towards the next best market to invest into and find the next original IPs that are going to be successful. They are looking to Romania to buy out studios with original IP and then maybe go on the stock exchange in Poland with that IP.”
Overall, studios in the CEE region employ over 20,000 people, with almost all of the sales (90-95%) generated from international consumers and only a small share on domestic markets, according to an RGDA report.