We had the pleasure to talk during the WN Conference Cyprus’24, with David Stelzer, a veteran of the gaming industry, and now president of Xsolla. During his career, he has witnessed the monumental shifts that have shaped gaming over the last few decades.
From the early days of PC and console gaming to the rise of mobile and free-to-play models, Stelzer’s journey in gaming has paralleled the industry’s evolution. As President at Xsolla, a company that began as a payment solution provider for gamers, Stelzer has played a key role in driving the company’s expansion into a comprehensive monetization platform supporting over 800 payment partners worldwide.
Today, Xsolla not only simplifies global payment processing but also empowers developers with a robust suite of tools aimed at optimizing monetization strategies, building communities, and driving engagement. In this interview, Stelzer discusses Xsolla’s role in the gaming landscape, the growing significance of Cyprus as a hub for tech companies, and the emerging trends that game developers need to be aware of to thrive in the ever-competitive market.
Track record of reliability
You’ve been a key player in gaming commerce for years, and tell me a little bit about your journey, and how it has evolved as a company.
For me, I’ve been in the games industry for 20–30 years at this point. The industry has evolved immensely from, you know, PC console gaming, mobile didn’t exist. Watching, that evolution over time to casual games, to Facebook games, mobile games and the evolution into free to play. It’s been amazing to watch over that period, but it’s definitely we’ve seen those evolutions, and it continues to change on a kind of yearly basis at this point. Change happens I think faster over time, kind of like a Moore’s Law phenomenon.
As a company, Xsolla has evolved. You know, we started in 2009 with the main basis of finding ways for people to be able to pay for games or pay for things in games in places where they couldn’t do it. And so, the payments business, which is where Xsolla started 19 or so years ago, is very different from where we are now. So that’s evolved over time from a handful of ways for our founder to be able to buy games in Russia to where we are today with over 800 payment partners. And that’s just one line of our business.
We now support multiple lines of business, and probably have over 20 products at this point, intending to help game developers and players to have equal access to be able to both develop and play the games that they want to how they want to. And the main thing that we do is that instead of just doing the payments portion now we are a monetization company. We help developers figure out how they can make the most from the games that they make and keep the most that they possibly can in that process.
What sets you apart from other similar companies?
There are a number of things. So being in business since 2009, we’re a very mature company in the space. We have a long track record of reliability for doing what we do. We have best-in-class products in everything that we do. But for instance, one of the main things at that starting point, that entry point of where most people come in and work with us on the payment side is that several companies can process payments.
But not everybody can do the breadth that we do with the amount of partners. But also, we have we’re one of the oldest in the business of being what is called an MOR or a merchant of record.
As a merchant of record, we’re basically the back office for your company when you’re doing your video game sales.
So, we help process the payment, we do all the compliance and the tax work on the back end, and then we remit the balance of payment. So we take on all of those liabilities, and that’s a big distinction.
A pivotal place
Inside all of this, I have to ask about your presence in Cyprus, what’s the role of this country in your global expansion, and your plans for operations?
Cyprus has been I would say for probably about 12 years now starting to develop its presence with the gaming community. And that’s only grown over time.
Obviously, certain pieces of political climate within the world have brought more people to find Cyprus as their home, and Cyprus has been extremely welcoming to that community. That community is very heavy into technology and especially into games. As such, we find that we are working with over 30 companies that are based here in Cyprus now and that number is growing, and we continue to grow that relationship. We have over 13 people from our company currently working here in Cyprus.
We see this as a pivotal place within this part of the world, but also globally. We’ll continue to push for a greater presence in operation here.
Do you see Cyprus growing as a hub for tech and gaming companies in the future?
I think so. Based on, like we said, that friendly climate, the tax situation here, the tax scheme that’s very favourable for people being able to bring talent here. So, immigration is very favourable.
It makes for easy setup and a good place to be able to run the business. I think that labour will continue to be at different places around the world, but be fairly movable. The nice thing is that with that immigration scheme in place, it’s easy to move those pieces around and bring people here if you need to. But it’s also very friendly for people to work from other places in nearby regions, which makes the economies of scale work for the game companies themselves.
Web shops are here
Do you see any significant trends in terms of the monetization and distribution of shorts?
The biggest trends that are happening now are definitely with the Apple and Google lawsuits with Epic, and the regulation that’s been coming as a result of those, especially in the EU. It’s, it’s really opened up the door to have these off-store transactions happen where you can actually sell to your consumer outside the Google and Apple stores through customer web pages. We call those web shops.
We are probably the largest builder of those web shops, with over 400 of them already launched. And those allow a game developer to sell IAP or other pieces of their game directly from a web page. By doing so, they don’t incur the 30% from Apple and Google, they only incur the payment processing charges. But now they can actually know who their consumer is. They can talk to them, they can have this relationship, they can create a back and forth, and they see more of the data about how spending works and what the consumers are doing than that being behind the walled gardens in the app stores.
Now, it doesn’t mean that the app stores are going away, but there’s definitely this trend to be able to have both of these so that you can try to get a lift on your business from being off store, but also still getting the normal mainstream and frictionless process of being on the store. And so we have means of doing both of those. We have our SDK that works with Apple and Google. What that allows the player and the developer to do is it allows the developer to give options besides Google Pay or Apple Pay to pay the way that they want to pay without having to go off-site or off the game. It just, looks like it’s part of the checkout process. So that’s the in-game way that we deal with it. And then the outside-of-the-game way we deal with it is through these web stores, which are becoming increasingly more popular. We like that direct-to-consumer strategy, and we try to get the behaviour of the consumer that you know, I play here on my mobile device, but I want to go pay on the web.
Talking about strategies, what are some marketing trends developers must be aware of and what strategies do you recommend for game developers to successfully mark their games?
I think that they have to realize that, and they know this, that user acquisition has become hard and expensive. So, trying to find other ways to reach the consumer, where the consumer is in the places where they play. Again, being able to have these direct relationships, whether it’s through a web page, or activating influencer campaigns where they can actually incent the influencers to talk more and play more of these games and organically bring an audience. Those are different ways to look at the user acquisition funnel where they can get better traffic and may not be any cheaper, but at least it’s more of a higher quality, I would say.
Communities are the key
I was about to ask about influencer marketing and also community building. How important is it for a developer?
I think they’re both. I won’t say they’re one and the same. I think influencer marketing is one piece of community development. But I have plenty of people who have started up studios over the years. As our business has moved into this model of free-to-play and has to build a very large audience, I think the community manager and the people who build the community should be one of the first hires in a studio, as they’re one of the most important.
If you release a game into nothing, you can expect to get nothing back, right? And so, that community person is managing all aspects of that, right? So, it’s, you know, what’s the voice of the community? What do we want to talk to them about? How do we want to position this game? And then using the influencer out there is one piece of that, right? Like we’re going to speak to this piece of the community here in one way. But the influencer is targeted at finding that audience that we don’t know how to talk to necessarily directly or in the way that they want to. They’re going to be influencers, going to talk to them through the game.
What’s key advice that you can give the game developers, and indie developers about building, and sustaining a successful game and community?
Start early. Like I said, know what your game is about and who it is that you’re targeting and build your community early and talk to them all the time, even when the game is not ready. It, builds a sense, of camaraderie and understanding and, want and helps people look forward to what’s coming. I would also say, you know, use as many of the tools out there as possible.
All of our tools and services are free to use. You don’t pay for anything until you start to make money. And they’re extremely powerful, having to build those yourself as a startup studio or even as an established studio. We help save you millions of dollars, not just in the building, but I think people often overlook like many people are technically proficient enough where they believe that they can build the thing, but they forget about the maintenance of the thing and keeping current and how many people it takes to do those types of things.
Companies like ours are purpose-built for that. And so, all the millions of dollars that we spend on R&D and product and keeping our tools up to date is to your benefit as the developer where you can take those millions of dollars or manpower or whatnot and put them into actually making the best game rather than the plumbing, so to speak.
That was one of my questions. How can developers best leverage Xsolla tools?
I think the obvious answer is to use them. You know, use them, use them early, use them often. It starts with getting educated. Understanding what our stack can do for them, and getting in to set your game up with the hooks to be able to use those tools as early as possible. For instance, while you may not need the payments until the end of your cycle, we have a product called XBE, which is the Xsolla back end, which helps set up your game to do all of those things later. So, you’d want to start that early in your production cycle to help build out your game for how it’s going to run in the background. That will hook into payments later, that will hook into game sales later, etc.
Getting educated, getting in touch with our business people who are happy to educate and talk to you about what the right products are for your game, and then we can be there with you every step of the way.
And lastly, what’s your message to developers, to your audience, to your customers?
Don’t be afraid to just go and build, build and fail. Build and succeed. We need more people to just be building in the games industry. We’re in very hard times right now. It’s very easy to be cautious. It’s very easy to try to build into the trends or to what’s popular but be true to what it is that you want to make. High quality, in my opinion, always wins over building something fairly standard into the trend.
