Kinguin was launched in 2013 and we managed to scale the operation considerably, from 3.5M USD revenue in the first year to almost 85M USD with a staff of 150 five years later.
From the start, our business model was unique. Nobody else operated a truly specialized, highly automated gamers-focused marketplace with a minimal frictioned experience.
The shift from physical to digital within videogames distribution was just starting to accelerate at scale. (Graph below)
The fragmented merchants community (mostly physical distribution businesses) discovered a major new distribution channel to improve sales in the physical space.
In 2015, based on the European Directive for VAT (Council Implementing Regulation (EU) No 1042/2013), Kinguin became the only fully compliant marketplace with full service on behalf of its merchant community. The full service which includes automated reporting of VAT duties to EU’s 28 countries. This enabled small businesses to operate at scale within the European market and compete with established distribution businesses. On other platforms, merchants face significant hurdles when responsible for reporting VAT duties and face potential liabilities.
Between 2015 and 2018, Kinguin witnessed and engaged in the phenomenon known as esports, and quickly realized that esports was the next frontier of gaming. Small developers and major publishers alike spent major enormous resources developing their esports strategies, with varying levels of success. As a small business, our strategy was to bring considerable value to the community and tackle esports from angles that were either seen as too early, or completely overlooked by other brands.
Initiatives like early major cooperation with the world’s best esports brands (Team SoloMid, Cloud 9, Fnatic, NiP, G2 Esports, ESL, and Dreamhack), developing our own professional esports team, or building the Esports Performance Center in Warsaw, Poland were often considered a standard benchmark in the industry and an inspiration for major brands to follow. This enabled us to achieve something we did not have before – a truly recognizable brand by millions of fans worldwide.
In the same period, many other businesses tried to emulate the Kinguin model, bringing intense competition to the market and lowering margins for all parties. The video game landscape itself also changed considerably. The rise of MOBAs and free- to- play gaming like Fortnite and APEX in the western hemisphere brought additional challenges to Kinguin and similar platforms. Closed ecosystems, highly engaging, addictive game mechanics, low barrier-to-entry and free-to-play models encouraged us to rethink some of the fundamentals behind our current business models.