Games developers in Turkey have reportedly attracted around $2.4bn in investments over the past five years from the likes of Tencent Holdings, Netmarble Corp. and Zynga Inc.

Their easy-to-play games have been downloaded hundreds of millions of times in a global sector expected to expand 9.3% this year to $160bn, according to data compiled by Newzoo International.

“The interest will likely continue,” Ozgur Karayalcin, deputy chairman of the Ankara-based Association of Turkey’s Game Developers, was quoted as saying on August 18 by Bloomberg.

Mobile-gaming startups in Turkey are enjoying the benefits of the marked depreciation of the Turkish lira, which boosts sales abroad that provide most of their income. Lower costs and the ability of Turkish firms to develop a game, test it and make it available for download within weeks are other draw cards, Karayalcin said.

Another plus is that Turkey’s government compensates developers for commission taken by Apple’s App Store or Alphabet’s Google Play Store.

‘Western companies step up interest’

“Coupled with lower development costs and a large base of software developers in Eastern Europe and in the Middle East relative to Western Europe and North America, this is leading many Western companies to step up their interest in acquisitions in the region, and in countries such as Turkey,” said Matthew Kanterman, a Bloomberg Intelligence analyst in Hong Kong. “At the end of the day, it comes down to the developer, the team and talent they’ve assembled, and the intellectual property they’ve built.”

San Francisco-based Zynga this month spent $168mn on purchasing 80% of Rollic Games, the Istanbul-based developer of Tangle Master 3D, which was among the most downloaded games in July, according to SensorTower Inc. Rollic’s Build Roads was the fourth most downloaded game in the US on IPhones on August 16, according to App Annie data.

Previously this year, Zynga acquired Peak for $1.8bn. Peak thus became Turkey’s first gaming unicorn. Peak’s Toon Blast had 600,000 downloads and earned $14mn in July, compared with 11mn downloads and $16mn for Candy Crush Saga, one of the most popular mobile games, according to SensorTower.

The number of new gaming startups in Turkey rose to 44 in 2019, the highest since 2015, when Startups.Watch records began, Bloomberg said. Six companies were set up this year, taking the number of gaming startups to 239.

“Fostering that ecosystem [for gaming startups] attracts capital, creates well-paid jobs, and eventually tax-yielding profits,” Roland Manger, co-founder of Earlybird Venture Capital, which exited Peak after investing in 2011, was cited as saying. “In five years, I can imagine that Turkey will be an even more significant hot spot of game creation and marketing.”