Investors Look To Turkey, Middle East For Next Wave of Social Games

By Nicholas Lovell

In the week where Zynga is rumoured to be filing for its US IPO with an expected valuation north of $10 million, where do you look for growth in the social games market?

The answer, according to Peak Games, may be surprising. The fourth largest Facebook market in the world, with 28 million users, is Turkey. It’s just 2 million users shy of the UK’s 30 million, and is growing at twice the rate.

Peak Games was formed in October 2010 to make social games for the Turkish, Middle Eastern and North African market with seed capital of $2.5 million. Eight months later, they have reached 10 million monthly active users of their Facebook games, and just announced a $5 million investment by Germany’s Earlybird Ventures.

CEO Sidar Shan explained, “The Turkish market has been slow to grow. Back in 2001, I founded a browser-based games business but the market was tiny. Seven years later I sold it to media group Dogan for a couple of million dollars. But since then, a combination of purchasing power growth, Internet penetration and increased use of credit cards has combined to make the market vastly bigger than it was even three years ago.”

The success is not limited to Peak Games. Gameforge, another leading free-to-play games company backed by Accel, has stated that about ten per cent. of its user base is in Turkey. The number is broadly similar for browser game business Bigpoint and social games business wooga. Alexis Bonte, CEO of browser game company eRepublik says, “twelve months ago, Turkey wasn’t even in our top thirty countries. Now it is number five, having grown ten times as fast as the rest of the company. It’s about ten per cent. of our business, mainly paid via credit cards, and we don’t even have a Turkish language version of our game.”

A good Turkish game monetises as well as games in any Western market

Many investors, faced with the opportunity to invest in Turkey, immediately assume that the market is hard to monetise. It has historically been a tough market for games, with consumers lacking the money to buy high-end consoles and their expensive games, while piracy has been rife.

The emergence of free-to-play business models, where 95 per cent. of users play for free, subsidised by the five per cent. of users who spend tens, hundreds or even thousands of dollars, has changed this dynamic. Jens Begemann, founder and CEO of wooga, says “With the right payment methods, a good Turkish game monetises as well as games in any Western market.”

There are some fundamental differences. Peak Games’ most popular title is an online version of Okey, a game that is similar to be Rummikub, and has been installed 14 million times. Unlike many social games, Okey is not mainly monetised by virtual goods. The company offers a $6 month subscription which allows users to enter chat rooms, create virtual avatars and socialise.

Rina Onur, founder and Chief Strategy Officer of Peak Games says “People in emerging markets often don’t have the same social opportunities that Westerners are used to. Woman and girls in Middle Eastern territories can’t visit clubs and bars to meet people, so an online social environment is incredibly appealing.”

Peak Games has big ambitions. They already have ten Facebook games available to play. The Turkish, Middle Eastern and North African Facebook market is currently 55 million users, and forecast to grow five-fold to 250 million by 2015. Jens Begemann is similarly optimistic. “There are still some challenges with Facebook Credits, but Facebook is working to resolve those. Once they are ironed out, the Turkish market will really fly.”

via Investors Look To Turkey, Middle East For Next Wave of Social Games – Tech Europe – WSJ.