How Istanbul became the Silicon Valley of the mobile gaming industry

  

Kaya Genç

In February 18, 2019, just after 9 30 p.m., the Turkish video game giant Peak broadcast a TV ad that felt more like a military recruitment video: bird droppings dapple an unsuspecting driver’s window, and when he brakes and looks ahead, he notices a rhinoceros blocking the road.

 

In Istanbul’s many coffeehouses, visitors traditionally play backgammon, bezique, checkers, dominos, boardgames, and Okey, a tile-based game developed in the mid-20th century.

“You never know what surprises life will place in your way,” a voice says. The scene cuts to black, and over the next three minutes, a message is slowly typed out across the screen: “Wake up… We’ll change the world. But first, we should introduce ourselves. If you think we’re joking, just change the channel and see how serious we are.”

Anyone who flipped the channel would have realized that the same commercial was playing across all of the national broadcasters simultaneously. For Peak, and by extension Turkey’s gaming sector, it was a bold, and expensive, show of force.

Over the last decade, Peak and other Turkish gaming studios have transformed Istanbul into the world capital of the “casual game” (otherwise known as free-to-play games) industry. Unlike AAA games, like Halo, Assassin’s Creed, or Final Fantasy, casual games are mobile-native, easy to learn, shorter to play and target the broadest audience possible. According to 2020 statistics, around 58.86% of all mobile game players are casual gamers. It’s estimated that the global market for casual gaming is worth more than $8 billion.

In March 2021, six of the Apple App Store’s top ten mobile games in the U.S. came from Turkish studios, including Basketball Arena, which asks players to steal the ball from opponents in head-to-head matches and go for slam dunks; the self-styled “super fun running game” Bounce Big, where players run around, collect items, improve the size of their backsides, and launch off pads (the winning player twerks at the end of each level); Deep Clean Inc. 3D, in which users scrub crusty iPhones and toilets; and Jelly Dye, in which players, well, inject dye into a jelly. And Istanbul has become a magnet for up-and-coming game developers.

Many of the industry’s biggest game studios, including Crytek and Voodoo, rent offices in Istanbul. Last year, gaming giant Zynga bought Peak for $1.8 billion, in its biggest acquisition to date, making Peak Turkey’s first unicorn. “We set out to show everyone that this could be done from Istanbul,” Peak’s co-founder Buğra Koç told Rest of World. “But first, we wanted to prove it to ourselves.”

On June 30, 2021, Istanbul-based Dream Games became a unicorn just four months after releasing its first game, Royal Match. The game has 6 million users, who help generate $20 million for Dream Games each month via in-game-purchases.

For Turkish developers, it’s been a heady time: Job boards in Istanbul are awash with posts for game developers, and top talent is regularly poached. The boom coincided with Turkey’s debt crisis, and the collapse of the Turkish lira. “Developing casual games became the American dream in this economically devastating time,” says Güven Çatak, founder and director of BUG lab, which offers undergraduate and graduate degrees on game design at Istanbul’s Bahçeşehir University. For some, game development has become a ladder to the middle and upper class.

But for others, the industry represents an empty promise. There’s a dark side to any boom, and developers report scenes of gaming sweatshops run by predatory contracts and worse, with developers expected to churn out multiple games a week, with no money up front. For those who burn out, a line of recruits is ready to take their place.

“After high school, Istanbul’s young game developers are chased and headhunted by vampirish publishers who sign them up on one-year contracts, which allow them to outearn their parents,” said Çatak. “For Turkish teenagers, the appeal of a career in game development is magnetic.”

At the turn of the 21st century, the list of successful video games developed in Turkey was short: the first game coded here was Keloğlan (1989), a Commodore 64 title based on a folk hero named Bald Boy. That was followed by Hançer (1992), an AMOS-coded strategy game focused on the inception of the Ottoman Empire, and the Tulip Warriors (1994), which garnered a small cult status for its recognizable setting (Istanbul) and original premise (players had to rescue the city from ignorance).

But gaming, more broadly, has always been a national pastime. In Istanbul’s many coffeehouses, or kıraathanes, visitors traditionally play backgammon, bezique, checkers, dominoes, board games, and okey, a tile-based game developed in the mid-20th century. In the 1980s, prompted by interest in gaming and the inability to buy consoles at home, entrepreneurs started opening “Atari salons,” essentially, kıraathanes with coin-operated arcade machines.

Indoor smoking was legal at the time, and Atari salons quickly developed a bad reputation for leading youth astray, poisoning them with nicotine, stealing away their pocket money, and making them lazy and academically unsuccessful. As the web took off, internet cafés copied the Atari salon formula. The first Turkish internet café opened in 1995 in Istanbul; around 30,000 other internet cafés followed over the next 17 years.

The real genesis of Turkey’s mobile gaming industry came in 2001, when İhsan Karagülle, then a 28-year-old coding teacher, wrote a simple program that indicated whether dial-up systems were working in the remote eastern region of the country where he was teaching at the time. The program proved popular, and he soon added a chat feature and a digital version of okey to keep users busy as they waited to get online. He hosted everything on his website, Hakkarim.net.

“Our user base grew super fast,” Karagülle told Rest of World. As tens of thousands of people logged on at the same time to play okey from kıraathanes and their homes, Karagülle had to rent servers in Istanbul and Ankara to keep up. “We had to create [digital] salons and organize sitting arrangements.”

Hakkarim.net monetized okey by building a franchise model and renting out these digital salons. Soon, hundreds of people were paying between 800 and 1,000 lira ($92 and $115) to run their own digital salons, where they could advertise companies, products, and services. Karagülle’s program could handle up to 743 salons, and, at the height of Hakkarim.net’s popularity, from 2010 to 2013, up to 60,000 people played simultaneously.

In a 2010 interview with the BBC, a Turkish farmer compared running a Hakkarim.net salon to being an Ottoman-era tribal chieftain: “Nobody can disagree with you. Imagine having a hundred subjects, kicking anyone you like out of your town, and making an administrator of anyone of your choosing and endowing them with power.”

Karagülle, meanwhile, saw them as 21st century alternatives to kıraathanes: “We’re good at bringing Turks and Kurds together. … The game smashes their prejudices.”

But soon the disrupter was disrupted. “When mobile gaming boomed, we started to lag behind,” Karagülle said. “In the good old days,” he continued, with a note of defeat in his voice, “more than 50,000 users played simultaneously.” By the fall of 2021, that number had fallen to 21,830. “We’re operating at half capacity,” Karagülle told Rest of World.

Just as Karagülle was launching Hakkarim, Peak’s co-founder Buğra Koç was busy honing his skills in the field of social gaming. Then a product manager at Mynet, a Turkish Yahoo-style web portal, he had noticed that Turks devoted most of their time online to chatting, followed by playing their beloved board games — backgammon, chess, and okey. 

Mynet owed its popularity to its arsenal of services, including email, news, sports, horoscopes, and audio streaming. In 2001, the company “decided to place all those people around tables and make them play board games,” Koç told Rest of World. Mynet’s free games platform, rolled out in the midst of a crushing financial crisis, was a smash hit. By 2012, Mynet’s games reached 12 million monthly active users; that year, Mynet was Turkey’s third most visited website after Google and Facebook.

Koç founded Peak as a mobile gaming company with a group of friends in 2010, with cards and board games as the company’s “starting point.” Peak would develop free-to-play (F2P) social games, and make money by selling cheap ads at scale. “We dreamt of creating a global consumer technology company from Istanbul,” says Koç. “We knew that F2P mobile games are the future of the entire business and a new way of socializing. So, we doubled downed on that idea.” Mynet’s success had shown them that F2P was the right model; globally, retail games were losing market share, especially in the aftermath of FarmVille’s immense success on Facebook. Koç was convinced that it was impossible to convince most Turks to pay to buy a game.

But there was little know-how in Turkey in terms of how to build F2P games. Koç said, “We had to play by ear and educate our team members.”

Koç partnered with Sidar Şahin, a 28-year-old college dropout who had spent a year in China researching in-game purchases and virtual goods — video game development elements he would master at Peak. Koç and Şahin first invested in the development of digital adaptations of okey games. Peak’s selling point, their company decided, would be reliability. “Although more than 99% of our users pay nothing,” Koç said, “we offered a 7/24 customer service line.” They would be the IBM of okey games.

“Our strength was the social nature of our games. They might not have perfect animations and technical qualities but they satisfied the needs of the day.”

The strategy paid off, and the company developed a solid following. When Peak released Komşu Çiftlik (“Neighboring Farm”) in 2010, a sort of Turkish FarmVille developed for Facebook, demand was immense. More than 1 million people followed its Facebook page.

“Our strength was the social nature of our games,” says Koç. “They might not have perfect animations and technical qualities, but they satisfied the needs of the day.” While other developers struggled with mobile, Peak went full throttle.

From there, Peak pivoted to other casual games: Toy Blast, released in 2015, has players match similarly colored cubes; Toon Blast, released a couple of years later and featuring Cooper Cat, Wally Wolf, and Bruno Bear, has players blast cubes and create combos to pass levels and help these characters travel around the world. These games found admirers, and even alleged imitators: in 2016, Peak filed a lawsuit against Hasbro, claiming the company had copied entire levels and design choices from its game Toy Blast. (The lawsuit was settled in 2017, out of court, for an undisclosed figure.)

Peak’s success — by the late 2010s, the company employed around 100 people — popularized the game developer industry in Turkey. The pace and quality of the workday at Peak was different than in traditional Turkish workplaces: developers were welcomed to agile spaces that offered employees self-determination and independence, qualities that many young Turks strive for but can’t find within Turkey’s oppressive political atmosphere. It was an attractive pitch, but it also belied an industry dependent on a brutal pace of work that left many developers overworked and undercompensated.

Güven Çatak, the BUG director, warns that although the current casual game industry in Turkey is thriving, it is also unsustainable and “based on super-fast consumption.”

Each year, BUG welcomes around 70 freshmen who hope to make it big in the gaming industry. “Parents in their 40s who relish games are more enthusiastic about sending their kids to our programs. They even force their children to become gamers,” Çatak told Rest of World. “‘You must enroll in this program, and we’ll have our own company,’ they say.”

At the outset, “everyone wants to do the next Assassin’s Creed,” said Çatak. But after a few months, “they face Turkey’s socioeconomic realities. Especially now, when the times are tough, people have to earn a living.” Students, Çatak says, tell him: “I am studying this thing I love passionately, but I’ve got to earn money for my family.”

While some well-heeled students see gaming as a shortcut to even greater affluence, there are also many who are unable to afford tuition to study gaming at university. Developing cheap games at volume becomes a lifeline. “They set up gaming teams to pay for the school fees,” says Çatak. Legions of young developers who come in hoping to work on top-tier games have to settle for working on F2P games for, in many cases, exploitative wages.

“If you can make a hit game, you earn a huge revenue,” said Çatak. But the odds of making a hit are infinitely slim. He compared the industry to a roulette wheel, with publishers at a distinct advantage. “The teams are the chips. The publisher has so many chips that wherever the ball falls, it ends up earning money.” A hit, Çatak added, can take care of a publisher’s spendings for a year or two. But for individual developers, a big hit may never come.

It’s true that the industry is supporting a growing sector of tech workers in Istanbul. “Thanks to casual gaming, you can now live in Turkey comfortably,” says Çatak. “Global companies pay wages in dollars, and they can spend more because the exchange rate makes manpower cheap.”

“To earn their wages they’re forced to churn out new ideas. They’re being milked. We can think of them like sweat shops.”

He points to the offices of Gram Games (founded in 2012 in Istanbul and acquired by Zynga) and Masomo (founded in 2015, in İzmir) as particularly appealing places to work. “They stream their events and parties on their YouTube channels; they offer holidays, private insurance. Their conditions are so good that, to those looking from outside, their employees seem to live in theme parks.”

But the cadence of working in the F2P industry is grueling, especially at smaller and poorly funded studios. “From casual gaming teams, one game per week is often expected,” Çatak said. “To earn their wages, they’re forced to churn out new ideas. They’re being milked. We can think of them like sweatshops.”

“After a while, this creates burnout,” Çatak says. “You’re consumed. Your creative energy is drained.” He compared these small studios to “mice running in their cycles” and warned that “they’ll be stuck there for a year or so.”

Peak’s co-founder Koç, who now leads Zynga’s Turkish operation, shares these concerns. He says casual games “have become a bread gate” for many people, but that the struggle to stay on top is exhausting. “People are constantly testing gaming metrics: ‘Which prototypes should I produce?’ they ask. ‘If I produce one prototype a week, it would make 52 in a year, which would give me a 5% chance of winning, and so I can make two or three good games a year.’”

A typical contract offered to Turkish game developers by one distributor, seen by Rest of World, offers a glimpse into the conditions of success. “The Parties agree that the CONSULTANT shall be paid 10% of the Net Profit generated by the COMPANY,” it reads. “The Fee that can be paid to the CONSULTANT for a game can be between 20.000,00.-USD and 100.000,00-USD.” For a Turkish games developer, that is the ideal scenario.

But the contract also contains the following clause: “In case Net Profit cannot be generated by the COMPANY or the Net Profit is below the amount of 200.000,00-EUR, the CONSULTANT will not receive any payment.” Meanwhile, peanut-sized fees are wired to Turkish developers to keep them afloat. “In case prototypes of ideas shared by the CONSULTANT are prepared and tested, if (i) the CPI shall be below USD 0.30, or (ii) day one retention value shall exceed 30%, the CONSULTANT shall be paid TRY 1,000 (one thousand Turkish Liras).”

In other words, the game is rigged. If enough users don’t return to the game, and the distributors can’t make a massive profit, the developer earns almost nothing. Devoting all their energies to churning out prospective hits that must prove themselves on first-day metrics, they often end up with the miserly fee of “TRY 1,000,” which, as of mid-September, 2021, equals just over $100.

In a newly published report by the gaming agency Gaming in Turkey, Erdinç İyikul, Riot Games’ country manager, described 2020 as “a year of great progress.” İlkay Tepe, Turkey country manager of Danish gaming peripherals company SteelSeries said it was “the most lucrative year ever” for the gaming sector. Gaming in Turkey’s founder, Ozan Aydemir, said: “We see that the pandemic increased the growth rate of the game industry, and the gameplay times increased by 30% during this period. The number of players in Turkey has reached 36 million. The size of the game industry is over $880 million.”

And investment in Turkish game studios continues to boom. Zynga bought Rollic for $168 million; Index Ventures, Play Ventures, and David Helgason invested $6.6 million in Bigger Games; London Venture Partners invested $4 million in Coda.

“Before Covid, we used to compete with cinemas, theaters, and cafeterias that shared our goal of stealing the maximum amount of people’s free time. Covid worked in our favor,” said Koç. These days he’s pondering how to adapt okey to augmented reality and VR sets.

A few miles away from his studio, just beneath Galata Kulesi, a medieval stone tower in central Istanbul, sits one of the city’s most famous kıraathanes, which has been here since 1891. Bank employees come here, as do lawyers and financiers who play backgammon, 51, king, quay, and other card and board games around the clock. A few hundred meters away, in Cihangir, another kıraathane houses a fountain in its garden, which dates from 1751.

Today, numberless kıraathanes stand on the edge of bankruptcy in Turkey. To survive, kıraathane owners had to sell their chairs and tables; a recent YouTube documentary on an Anatolian kıraathane shows an apocalyptic scene of overturned, dusty okey boards piling up on tables in an otherwise empty coffeehouse. Despite the current era of success, Turkey’s video game development sector remains in a precarious spot. The industry’s constant churn, Koç warns, could backfire, leaving Turkey’s game developers burned out, shortchanged, and at a loss. For F2P developers like Peak, that dilapidated kıraathane in Anatolia is a warning sign: no boom lasts forever.