Opportunities for Russian game market to go global, sales surge by 280%!

Russian game market sales surged by 280% and has opportunities to go global

Industry News

Opportunities for Russian game market, sales surge 280%!

Shoptop learned that recently, electronic products stores and sellers in the Russian market have noticed an increase in consumer demand for game consoles.

What is the Russian game market like? How can Chinese sellers get a piece of the pie?

• Star Rail mobile revenue exceeded 120 million US dollars in less than a month
• Sales skyrocketed by 280%! Game consoles are selling like hotcakes in Russia
• Industry Analysis | Sales skyrocket by 280%! Game consoles are selling like crazy in Russia

Today, let’s explore the potential business opportunities in the Russian game market together.

A. Popular Game Consoles in Russia

According to a report by Russia Posts English, in the first quarter of 2023, the sales of set-top boxes (game consoles connected to TVs or monitors) on Ozon increased by 2.8 times. Compared with 2022, the average expenditure on set-top boxes increased by 24%. The number of sellers of such gaming devices increased by 77%.

Source: Google

At the same time, Russia’s top consumer electronics retailer M.Video-Eldorado also pointed out that in the first four months of 2023, its game console sales showed “double-digit growth”.

In addition, the sales of game consoles on Avito, a classified advertising website in Russia, also increased. In the first quarter of 2023, the demand for Nintendo electronic products from Japan increased by 27% year-on-year, and the demand for PlayStation and Xbox game consoles increased by 22% and 15%, respectively.

In 2022, due to geopolitical factors, many game companies suspended providing products and services in the Russian market, and the demand for game console rentals increased.

In December of last year, after the adjustment of the parallel import mechanism in Russia (which allows retailers to import products from abroad without the permission of the trademark owner, which can be simply understood as “gray market”), the market began to recover.

The market and retailers point out that the disc version of game consoles is the most popular, and it is expected that the demand for game consoles and physical games will increase by 2023.

Image source: Google

In October 2022, a survey conducted by Russian internet giant VK showed that 55% of Russian respondents would choose to relieve stress through gaming, while 37% believed that gaming provided an opportunity to experience another reality and temporarily distract from other issues.

From the perspective of game development, China’s gaming industry once experienced a long period of stagnation and struggled to compete with foreign giants in terms of game content. However, Chinese manufacturers have unique advantages in gaming hardware.

According to Russian media, the production capacity of almost all participants in the global gaming console market is located in China, and most of the gaming consoles imported by Russia also come from China.

Data from 2019 showed that “Made in China” gaming consoles accounted for more than 96% of the sales of gaming consoles in the United States. Previously, Nintendo outsourced almost all of its Switch gaming console production to contract manufacturers in China.

Image source: Google

According to data from the General Administration of Customs, the export volume of Chinese gaming consoles and their accessories from January to March 2022 was 44,490 tons.

Nowadays, the Russian gaming market is experiencing new vitality. What opportunities can small and medium-sized companies seize?

B. Opportunities for Small and Medium-Sized Companies to Enter the Overseas Market

For small and medium-sized enterprises, the main way to seize opportunities in the gaming market is through hardware.

1. Retro Gaming Consoles

Due to geopolitical factors causing a shortage of next-generation gaming consoles, interest in retro gaming consoles among Russians is increasing.

According to data from Russian AliExpress, from February to October 2021, demand for retro gaming consoles among Russians grew by 250%, and sales of retro models accounted for 65% of total gaming console sales. Russians spent an average of 1,500 to 2,300 rubles on retro gaming consoles.

Source: Google

Among them, Sega and Dendy were the two best-selling brands in the late 1980s and early 1990s.

Data from June 2022 shows that demand for Dendy, Sega and other game consoles in Russia has increased by 58% compared to the same period last year.

In fact, not only in Russia, but also in many regions such as the United States and Europe, retro game consoles with controllers and portable versions are selling well due to the influence of the TikTok nostalgia trend.

Retro game consoles are small game entertainment devices and are also considered electronic products. Overseas consumers also value the quality of the products. Therefore, sellers should cooperate with manufacturers or brands with higher quality when choosing retro game consoles.

In addition, from the consumer’s perspective, they hope that retro game consoles can be equipped with high-definition screens, long battery life and large memory space.

2. Game console peripheral products

In addition to game consoles, small and medium-sized sellers can also pay attention to some game console peripheral products. For example, game console protective cases, tempered glass screen protectors for game consoles and other peripheral products are also selling well.

Source: Amazon

Through searching on the Amazon US site, it can be found that game console protective cases are available in full travel protection cases, half-case protection cases like phone cases, and personalized sticker protection cases, with values ranging from less than 10 US dollars to nearly 100 US dollars.

3. Other gaming hardware

Whether it is for console gaming, PC gaming or mobile gaming, spending on gaming hardware is increasing rapidly. These hardware include consoles, PC gaming hardware, controllers, headphones, keyboards and mice, etc.

Chinese manufacturers of game controllers such as Beboncool, iPega, and Thunderobot have entered a period of rapid development. With the advantage of high cost performance of domestic products, some products are even better than the hardware devices supporting Nintendo Switch, Microsoft Xbox, and other products.

Image source: Google

In addition, according to Technavio’s report, driven by the growth of the global esports market, the gaming headset market is expected to grow by $788.08 million between 2020 and 2024.

In this type of gaming hardware product, sellers should also pay attention to a trend, that is, customization.

For example, in the 2022 Google Hot Search Products Top 100, “Custom gaming keyboard” is on the list.

DIY customized keyboards can customize the color and texture of each key cap as desired. Ceramic keycaps are the most popular keycaps and breakthrough searches in 2022.

4. Esports Chairs

Esports chairs have become a must-have item for many professional and hardcore gamers. Unlike regular chairs, esports chairs come with lumbar support and headrests, which can provide players with a comfortable gaming experience.

In 2022, the search volume for professional esports chairs on Google has increased by 900%.

Image source: Google

It is worth mentioning that there are also many companies that make esports chairs among Shoptop’s customers, such as Shenzhen Chuangzhuo BASETBL. The company sells large furniture products such as office chairs, esports chairs, and lifting desks to five European countries through Amazon and has achieved impressive sales performance. After cooperating with Shoptop to build independent websites and overseas marketing, its conversion rate and brand overseas visibility have greatly improved.

A report released by Absolute Reports shows that the global esports chair market is expected to reach approximately $1 billion in 2022, with a compound annual growth rate of 10.96% during the forecast period, reaching $1.87 billion by 2028.

5. AR/VR gaming equipment

With the continuous development of technology, AR/VR games have gradually entered people’s lives, and the graphics and sound effects of AR/VR games have reached a very realistic level, making players feel like they are in another world. At the same time, the demand for VR/AR gaming equipment is also increasing.

Source: Google

In addition to traditional VR glasses products, the new generation of VR/AR gaming equipment also includes tactile gloves, motion-sensing clothing, chairs, and other devices, which make users feel that their entire body has entered a 3D digital world, further narrowing the distance to the metaverse.

Supported by the continuous release of new software applications on gaming platforms and the increasing number of global users, the VR/AR gaming equipment industry still has great development potential worldwide in the future.

TikTok Officially Sues Montana, USA: The Ban is Unconstitutional and Baseless

After being completely banned by the state of Montana, TikTok fought back! According to a report by Bloomberg on May 22, TikTok filed a lawsuit with the Montana state court that day, accusing the ban announced by Montana last week of being “unfounded” and violating the right to freedom of speech in the U.S. Constitution, and demanding that the court block the ban. “Montana has issued these extraordinary and unprecedented measures, based on nothing more than speculation,” TikTok emphasized in the lawsuit, stating that Montana “did not cite anything” to support the claim of “data leakage,” which ignored the reality that TikTok does not and will not share U.S. user data, and ignored TikTok’s “substantial measures to protect user privacy and security.” TikTok stated that the ban also violated the First Amendment to the U.S. Constitution and provisions of the Constitution that limit state power. TikTok spokesperson Brooke Oberwetter said in a statement on May 22, “We are challenging Montana’s unconstitutional TikTok ban to protect our business and the hundreds of thousands of TikTok users in Montana…We believe that our legal challenge will prevail based on a series of very strong precedents and facts.” In response to TikTok’s accusations, Emily Flower, a spokesperson for the Montana Attorney General, said that “We anticipate a legal challenge and are fully prepared to defend the law that helps protect the privacy and security of Montanans.” On May 17 local time, Montana Republican Governor Greg Gianforte officially signed a bill banning entities from providing TikTok downloads throughout the state, making Montana the first state in the United States to completely ban TikTok. The law stipulates that it is illegal for Google and Apple’s app stores to provide TikTok applications within Montana’s borders, and the law will officially take effect in January 2024. The governor’s office said in a press release that “The penalties will be enforced by the Montana Department of Justice, and any violators will pay a fine of $10,000 for each violation, with an additional $10,000 fine per day during the violation period.” On the day the law was signed, American industry scholars speculated that the law would “almost certainly” be overturned for being unconstitutional. In fact, as early as the drafting stage of the ban, the media speculated that the ban on TikTok might face many legal challenges because it violated the First Amendment of the U.S. Constitution, which gives users the right to freedom of speech. On March 24 this year, the New York Times published an article titled “Banning TikTok Has a Problem: The First Amendment.” The article pointed out that if the U.S. government tries to ban TikTok, an important communication platform, the First Amendment of the U.S. Constitution will definitely regulate it, and the government must meet the strictest scrutiny of the First Amendment, because the enforcement of this ban will be a pre-restriction of TikTok’s potential users’ speech. At the very least, the government must demonstrate that the ban is essentially related to important government interests. However, whether the U.S. government can prove that this comprehensive ban is tailored to these interests seems doubtful. On April 26, the Wall Street Journal published an article stating that in addition to the First Amendment of the U.S. Constitution, the ban will also face legal challenges related to U.S. interstate commerce and deprivation of citizenship, and according to relevant laws, the U.S. government cannot announce that an entity has committed a crime without trial proceedings.

The Livestreaming Sales Trend Sweeps Southeast Asia and Tiktok Directly Boosts Sales

For those who have seen livestreaming sales in China, they should have a rough idea of how popular it is in China.

The livestreaming sales market in China is large enough and has enough potential to incubate so many forms of livestreaming.

Take Douyin (the Chinese version of Tiktok) as an example. According to online estimates, in 2022, the annual growth rate of Douyin’s e-commerce transaction scale will reach 70%, and the e-commerce transaction scale will approach 1.5 trillion yuan.

At this time, the total online sales of e-commerce in China is only about 13 trillion yuan, which means that the sales created by Douyin’s livestreaming sales alone account for 11% of China’s total.

Since livestreaming sales is so popular in China, what is the situation with livestreaming sales overseas?

Last year, I wrote an article about livestreaming sales overseas. At that time, the situation was not as popular as it is now, not even a little bit.

Especially in Europe and America, manufacturers simply couldn’t handle it, and even local livestreaming shopping couldn’t be done.

Even Douyin, the leader of livestreaming sales in China, suffered a setback.

Recently, Douyin’s overseas version announced the temporary postponement of the full development of its North American store.

In addition to the possible ban by the North American government, the reason is also due to the comparison between Tiktok’s livestreaming e-commerce performance overseas and in China, which is really relying on the defense.

According to LatePost’s data, the monthly average GMV (total transaction amount) of Tiktok’s livestreaming e-commerce in the UK market is only 24 million US dollars… just over 100 million yuan. In China, the monthly average GMV used to be hundreds of billions.

However, although TikTok’s live streaming e-commerce is not doing well in the UK, it has found its own market in Southeast Asia, where the economic conditions are not as good as those in Europe and America. Even the sales volume far exceeded the official expectations.

For example, in 2022, Indonesia, the largest live streaming e-commerce market in Southeast Asia, has a monthly GMV of up to 200 million US dollars, nearly eight times that of the UK market…

Especially during Indonesia’s local shopping festival-“Eid al-Fitr” promotion period, not only did the order increase by 493%, but the GMV also increased by 92%.

This momentum has made many Chinese manufacturers who smell the copper smell directly abandon the “poor and remote” UK live streaming e-commerce market and turn to Indonesia to embrace these Southeast Asian “golden mountains and silver mountains”.

As a critical reviewer, I couldn’t help but be curious. What’s so special about live streaming e-commerce in Southeast Asia that attracts so many people to consume?

As a result, after taking a stroll, I found that it looks similar to live streaming e-commerce in China.

It’s just a host selling goods in front of the screen.

But this form of live streaming e-commerce is also the same in Europe and America. Why is it only successful in Southeast Asia and China?

Let’s first talk about why this live streaming e-commerce doesn’t work overseas.

The specific reasons are roughly that consumption habits are different and the price advantage is not there.

In addition, due to the distance, the cross-border logistics in foreign countries are relatively slow. All these reasons have led to the fact that when viewers have time to watch live streaming, they have already placed orders directly in offline or online stores.

But these disadvantages are almost non-existent in the Southeast Asian live streaming market.

The reason lies in TikTok’s Southeast Asian model, which really caters to local tastes.

There has always been a saying in doing business in Southeast Asia, called “to win Indonesia is to win Southeast Asia”.

The Indonesian market has a population of 271 million and the live e-commerce market accounts for 70% of the entire Southeast Asian market.

Moreover, nearly half of the people in this country are TikTok users, and this user base provides a good foundation for TikTok’s development of live e-commerce.

Unlike the occasional small actions taken by the United States, the Indonesian government’s attitude towards TikTok is relatively mild. Due to TikTok’s huge user base, banning such national-level applications in the situation of coveting young local voters is a risky move.

With users as the foundation, the rest is how to promote their own live e-commerce.

First of all, when buying things, the most important thing for strong competitiveness is definitely low prices, which is very attractive to the people of Southeast Asia.

A friend who is engaged in cross-border e-commerce in Southeast Asia said to the negative reviews that:

In Southeast Asia, happy users, happy sellers, and happy platforms are key to doing business.

The vast majority of products sold to Southeast Asia are low-priced goods. Among them, the best-selling products are small items such as cosmetics and jewelry. Most of the beauty products on TikTok are sold by Chinese merchants.

On the one hand, this is because the goods are relatively light and the shipping costs are cheap.

A hot-selling whitening body lotion in Indonesia

In addition, local people do not care much about the quality of the products, as long as the price is lowered.

For example, among the best-selling products on TikTok in the past 7 days, the ones that rank high are mostly cheap beauty products and clothes. The top-ranked beauty product costs only $2.73, which is less than 20 yuan when converted to Chinese currency.

In other Southeast Asian countries, the situation is similar. You can even find a sticky toy that sells for only 0.03 US dollars on the sales charts in Malaysia. It brings back some bad memories of my childhood.

These products from China have been offered at very low prices on e-commerce platforms, which perfectly cater to the local consumers’ spending habits.

In addition to the low prices, the logistic costs for the merchants have also been compressed to a minimum in Southeast Asia.

For cross-border e-commerce, customs and shipping fees have always been the biggest expenses.

Amazon’s logistics and shipping fees are shown in RMB.

Shipping fees for cross-border e-commerce in Indonesia.

In Southeast Asia, the distance is shorter, so not only the delivery time is greatly reduced, but also the shipping fees are less than half of those in Europe and the United States.

Furthermore, according to Rest Of World, most TikTok merchants in Indonesia have local physical stores, and many of them ship products from their own homes. They can even enjoy free shipping subsidies from TikTok.

Yes, Indonesian merchants not only have reduced operating costs but also receive generous subsidies from the platform.

Some even say that you can survive just by eating platform subsidies even if you cannot sell many products.

Although it may be exaggerated, TikTok has to offer subsidies to compete with the two major e-commerce platforms, Shopee and Lazada, in Southeast Asia.

In the early cooperation between JD Indonesia and TikTok, TikTok basically subsidized according to the proportion of GMV.

In order to attract merchants, 3.2% of new merchant orders on TikTok are commission-free. Even after the comprehensive adjustment now, the commission is still 1% lower than Shopee.

Not only subsidies for merchants, but also a payment system tailored for Southeast Asian consumers.

For example, online payment in Southeast Asia is not as developed as in China, and consumers often need to go through very cumbersome security verification steps to complete online transactions.

When I found a good product and was ready to buy it, I chose the product and was ready to pay with one click. As a result, four or five verification codes popped up for us to enter.

With too many verification codes to enter, it becomes annoying and we might not buy it directly.

TikTok has cracked this situation through a payment method called COD cash on delivery. In other words, consumers consume first and then pay, creating impulsive consumption and opening the door to convenience.

Moreover, when the goods are already in your hands, you can’t avoid paying when you see the sincere (or fierce) face of the courier. This postpones the trouble of consumer verification codes, giving a feeling of being indecisive.

Data shows that cash on delivery accounts for 70% to 80% in Thailand, 40% to 50% in Indonesia, and more than 90% in Vietnam.

TikTok’s payment plan is a targeted solution.

In Southeast Asian market, TikTok has not been disappointed.

As a new member, TikTok surpassed veteran cross-border e-commerce platforms Shopee (26.5%) and Lazada (20.1%) with a usage rate of 27.5% in Ninja Van’s survey in November last year.

In live streaming business, TikTok is only 5 percentage points behind the veteran e-commerce platform Shopee.

Moreover, with the increasing investment of TikTok in the Southeast Asian market, not only did TikTok complete the annual transaction volume of 2021 in just six months in 2022, but also its user growth rate is the steepest and fastest among various social media platforms.

Based on TikTok’s current performance, it is estimated that Shopee and Lazada will start to feel the pressure.

Although most outsiders are not optimistic about live streaming going abroad, they believe that it is just a result of the platform’s strong subsidies and miraculous results.

However, I think that in this relatively unknown Southeast Asian market, it is possible to produce different results.

Especially after the subsidy level gradually decreases, the Southeast Asian market can still unexpectedly maintain its vitality. Afterwards, TikTok will focus all its attention on the Southeast Asian market.

Perhaps, the next time the Chinese live streaming boom happens, it will be replayed in Southeast Asia.

The above information is from Sohu, Xi’an Evening News, and The Paper.

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