Video game enthusiast Aleksandr Agapitov is quietly building a $3 billion payment powerhouse

Aleksandr Agapitov is little known in gaming circles, let alone in the business world. Yet his company is one of the major players in the $135 billion (about Rs. 10,30,040 crore) video game payments industry, in which gamers spend real money to acquire virtual items. .

Xsolla, which Agapitov founded in 2005, allows video game producers to sell in-game digital items, such as “skins” that change a character’s appearance or virtual pets, in exchange for about a 5% reduction in sales. Its clients include some of the hottest companies in the industry, including Epic Games, Valve and Roblox, whose platform is a hit with kids. He owns 100% of the company, which grossed nearly $100 million (about Rs. 760 crore) last year.

Two investment banks estimated last year that Xsolla could fetch a valuation of up to $3 billion (about Rs 22,890 crore) if it goes public, according to documents seen by Bloomberg.

Even so, he is in no rush to do so. Agapitov, 38, who was born in Russia and moved to Los Angeles at 25, said he appreciates the freedom that comes with not having to answer to shareholders. His goal is to bring the company back to annual sales growth of 40%, up from 25% currently.

“I just like helping game developers make more money,” he said in an interview. “Wonderful innovations come from video games.”

According to data provider Newzoo, digital game revenue accounted for more than three-quarters of all revenue generated by the $180 billion (about Rs 13,73,110 crore) global video game market last year.

“There’s a desire to monetize beyond that initial purchase price,” especially for free-to-play games, said Julianne Harty, games analyst at Newzoo.

Metaverse Project

In February, Agapitov launched a project based on the metaverse called X.LA. It seeks to do for those who build things in the metaverse what Xsolla does for video game developers: give them a financial incentive to create.

The job requires wiring the codes and blockchain technology that underpins the metaverse, and Agaptiov brought a team of Xsolla employees with him to do it. If successful, a person who develops a part of the metaverse could get a “reward” in the form of virtual currency every time other users visit that location.

“Like in any other industry, it’s about how to get funding, how you get paid, how to find new customers, and how to interact with your customers,” Agapitov said.

Agapitov grew up in the city of Perm, about 1,127 kilometers east of Moscow. He studied math and computer science at a local university, but dropped out to spend more time with his girlfriend and earn money doing odd jobs. Around the same time, he combined his interest in early online payment systems with his love of video games. The result was Xsolla, which moved to California in 2009 after attracting the interest of a few big customers.

Xsolla offers over 700 ways for gamers to make in-game purchases, from using Visa and PayPal to regional options like WeChat Pay and Paytm in China.

“What I’m trying to do is like Shopify for video games,” he said.

© 2022 Bloomberg L.P.