Russia’s Top Internet Companies Have Something in Common — They Need to Look Abroad

Earlier this year, Bloomberg ranked Russia as the 18th most innovative country in the world. Although it dropped four places from last year’s ranking, it remains clear that when it comes to technological innovation (and especially those pertaining to the internet), Russia is emerging as a global powerhouse. It is well known in the online industry that Russia is one of Europe’s fastest growing online markets with the number of new internet users increasing at a faster rate than the average. In February, Forbes released a list of Russia’s top 30 internet companies and online retailers. This article will take a look at some of these internet companies and see why they have been so dominant in their markets and what the future may hold in store for them.

Yandex and Mail.ru – leading the way for Russia

Yandex, the company behind Russia’s most popular search engine, and Mail.ru, a leading player in both email, social networking and online games, top the list of internet companies in Russia with reported revenues of US$ 1238 million and US$ 860.5 million, respectively.

Yandex’s main focus is making its search engine a one stop shop in terms of finding and delivering high quality results for its users. As internet users continue to rise in Russia, so is the demand for internet advertising. With over double the market share than Google, Yandex is benefitting from online advertising where ads are targeted at user searches and bringing in a lot of clients wanting to advertise via their search engine. In 2013, the search giant exceeded its annual sales forecast due to higher-than-expected demand for online advertising in the Russian marketplace, and figures are predicted to increase by 26 percent each year through 2015. Although Yandex also offers the opportunity to search in English, Turkish, German, French and other European languages, they remain specialists in the Russian market and will strive to maintain this audience in years to come.

Mail.ru has also benefitted from the rise in internet users over the past several years. However, as a significant percentage of the population are already internet users, the number of new internet users in Russia may soon slow. In light of the potential threat that the lack of new user brings to company growth, Mail.ru has some plans in store to help maintain growth and success in the market. The company is introducing new games and online services in order to attract more companies to advertise on their platforms. Mail.ru expects as much as a 24 percent rise in revenue this year after its 30 percent rise last year. In addition to its increased focus on advertising, last year Mail.ru began a US initiative by bringing a start-up called My.com to the heart of the Silicon Valley. myMail, myChat and myGames were the first products introduced and the apps offer an easier and more exciting way to manage email, communicate and discover new games. This international initiative will hopefully expand Mail.ru’s revenue as it increases its international reputation.

Game Insight – mobile and social gaming experts

Coming at number seven on the Forbes list of top Russian internet companies is Game Insight, a mobile and social gaming company. Although it is not the highest ranking company with games services, it is the only company that focuses on free gaming for mobile and social platforms. These “free-to-play” games, as they are described, are downloadable and can be played free of charge. Game Insight has published over 40 games for various platforms including iOS, Android, Facebook, VKontakte, Amazon among other mobile app stores and social networks.

Although not greatly known as a company in the US and other international markets, their games have created quite a following with more than 250 million users worldwide. Since its entrance to the market in 2010, the company has always had an international mindset “because we never wanted to be a strictly local company,” explained chief executive Alisa Chumachenko. Its global approach has undoubtedly made Game Insight one of the biggest internet companies in Russia and an up-and-comer in the global mobile and social gaming industry

Russian companies and international success

With the possibility of Russian internet user growth slowing down in the coming years, it is important that Russian companies realize that success in online markets will require both international and domestic approaches to their services. Additionally, with Russia’s entry in the WTO in 2012, it is only a matter of time before international companies become more competitive in the Russian market. For companies like Yandex and Mail.ru, which specialize in the Russian market, a continued focus on developing their services for this market will allow them to retain a strong following—but companies must be ready for an influx of new international competition as well as slower domestic internet growth rates in the future. So, if Russia wants to remain one of the world’s top innovators, they need to continue to expand their services that will keep their domestic users as well as look abroad to appeal to new international audiences.