MIDAS SHARE TIPS: Gaming firm tinyBuild is a winner for investors thanks to diverse strategy and its founder’s social media savvy
In 2011, Alex Nichiporchik and Tom Brien, both keen gamers, decided to develop a title of their own.
Turning to crowdfunding site, Kickstarter, the duo were backed by Markus Persson, creator of the world’s most successful video game, Minecraft.
Inspired by their famous funder, Nichiporchik and Brien spent two years working on their idea, and in 2013 the pair founded video gaming firm tinyBuild, just as their first game, No Time To Explain, was released.
Quirky: TinyBuild boss Alex Nichiporchik created survival game Hello Neighbor
The game was a critical flop, but Nichiporchik had cunningly also released it on YouTube, where he invited select ‘influencers’ to play it. The strategy worked and sales soared.
Today tinyBuild has 40 games in its portfolio, a pipeline of several more and a social media following that dwarfs competitors.
Run by Nichiporchik with Brien as creative director, tinyBuild shares are £2.55 and should move higher as the business expands.
Video gaming has become one of the world’s most successful sectors, generating annual revenues of about £125billion – larger than the film industry.
TinyBuild is a relatively small player, but it has several strategic advantages that differentiate the group from its peers.
Nichiporchik knows a number of game developers in Eastern Europe who provide their services at a much lower cost than their Western counterparts.
TinyBuild’s most successful game to date, for example, is Hello Neighbor, created by a team in the city of Voronezh, some 300 miles south of Moscow.
Nichiporchik is a classic millennial too. Coming of age as the internet was taking off, he and his team are exceptionally savvy in their use of social media, piquing interest in new titles through clever pre-launch ploys, creating a global fanbase for all their games and running chatrooms to keep gamers onside.
MAGIC TOUCH OF £200M EX-REFUGEE
Perseverance: Alex Nichiporchik’s tinyBuild was listed on the UK’s AIM market in March this year
Alex Nichiporchik is a true citizen of nowhere. Born in Latvia in 1988 to a Ukrainian mother and Belarusian father, he and his family were left stateless when the Soviet Union collapsed in 1991.
But this did not stop him from pursuing his passion – gaming. Watching his mother play video games throughout his childhood, Nichiporchik was hooked before he could even read.
He dropped out of school in his early teens to become a professional gamer and, when that failed, turned his hand to gaming journalism.
The young Latvian moved to the Netherlands in his early 20s, where he was classified as a refugee, even though the country of his birth had by then joined the European Union. He then went to America, where tinyBuild was officially founded in 2013.
Doing business as a citizen of nowhere had its challenges, but Nichiporchik persevered and tinyBuild was listed on the UK’s AIM market in March this year. It is now is now valued at more than £500million, making Nichiporchik, with a 38 per cent stake, a very wealthy man. Aged 32, he now has a green card but remains stateless and has never been able to vote.
His parents still live in Latvia, where his mother is a competitive gamer, ranking top five in the world in Harvest Honors, a game which is played by two million people.
These chatrooms also allow tinyBuild to see what is popular in the gaming world and stay at the forefront of evolving trends. Just a few years ago gaming on mobile phones was virtually non-existent.
Today, it is increasingly widespread and tinyBuild is busy ensuring that its games can be played on phones, as well as computers and consoles, such as Xbox and PlayStation.
Nichiporchik is more aware than most of the need to build a business that can withstand change in the outside world. Growing up in Latvia in the 1990s, he saw his parents lose their money five times in a row as the economy struggled to wean itself off Soviet era practices.
Armed with this experience, Nichiporchik has been determined from the start to turn tinyBuild into a longterm, sustainable business.
Most video game firms concentrate on developing and releasing games. Nichiporchik wants to do more. Hello Neighbor has already spawned three games, two more are on the way and there are books, comics and an animated series, all highly successful.
TinyBuild intends to pursue a similar strategy with other popular titles, such as Totally Reliable Delivery Service, a game about terrible couriers that came into its own during the pandemic.
TinyBuild has been growing through acquisition too, often buying game developers so it can both create and release games.
The company publishes its 2020 results on Tuesday and brokers forecast a 33 per cent increase in sales to $48million (£34million), rising to $52million for the current year. Profits are expected to rise 28 per cent to $19million, with further growth this year and next.
Midas verdict: TinyBuild has had a strong debut on AIM but Nichiporchik is intensely ambitious and the shares, currently at £2.55, should go far. An exciting buy for the adventurous investor.
Listed on: AIM Ticker: TBLD Contact: tinybuild.com or Yellow Jersey on 0774 778 8221