Russia’s invasion of Ukraine has been almost universally condemned by the international community. Sanctions from around the world mount by the day, the Kremlin’s financial system has been utterly ostracized by global financial institutions, and the Biden administration recently unveiled a fresh, axis-tipping embargo on Russian energy imports. These are unprecedented efforts, and they haven’t been limited to the crucible of Capitol Hill. In fact, video game and entertainment companies, many of which often remain apolitical in their messaging, have either halted sales or service in Russia or made changes to their offerings around the world.
Microsoft has suspended all new sales of products and services in Russia in accordance with the economic parameters set out by Biden’s foreign policy arm, and have added that they will continue to “help cybersecurity officials in Ukraine defend against Russian attacks.” Nintendo and Sony are not American companies, and therefore they aren’t beholden to U.S. regulations, but the former delayed Advance Wars 1+2: Re-Boot Camp without specifically naming the invasion, (instead citing “recent world events,”) while the latter suspended all sales, including the launch of its newest game, Gran Turismo 7, in Russia. That’s just the tip of the iceberg. We’re in the midst of a historic economic rebuke to the Kremlin, and few major publishers are sitting on the sidelines.
So why are these companies sticking their neck out like this? It depends on the situation.
The Many Reasons Entertainment Companies Are Limiting Their Business in Russia
Some studios seem to be genuinely reacting to mounting public pressure. Those include EA, which removed all Russian players and teams from FIFA 22, and Epic which has suspended commerce in the country but is keeping its communication tools accessible. (Activision has gone a step further, raising $300,000 in support and matching any employee donations to Ukraine on a two-to-one-basis.)
It is surprising to watch the games industry take a hardline stance on a political fracas this hot to the touch. But the invasion of Ukraine remains a black-and-white polarity in the general western consciousness, and that has provided the scaffolding for massive, publicly-traded companies to grind their heels in on the right side of history.
Ukrainian officials have made it clear that they want all hands on deck — no matter the industry — in its united front against the invaders. On March 2, before many of these isolation measures were announced, Mykhailo Fedorov, Ukraine’s vice prime minister, beseeched the games sector to “temporarily block all Russian and Belorussian accounts,” and to terminate any planned esports events in the two countries.
How Business Constraints Have Led to Some Company Actions
But other reasons for the boycott are murkier, and less politically charged. Nintendo, for instance, has halted shipments to Russia because of, in the corporation’s words, “considerable volatility surrounding the logistics of shipping and distributing physical goods.” Amazon, on the other hand, has chalked up their suspension of service (including Russian Twitch streamer payouts) to the array of Biden sanctions which prevents U.S. companies from sending aviation, defense, and shipping components, along with higher-tech items like semiconductors and telecom equipment,” to the country.
Other reasons for the boycotts are less politically charged.
This is conjoined with the fact that many of Russia’s third-party monetization options have been decimated. PayPal, Mastercard, Visa, and American Express are no longer functioning in the borders, which makes it impossible for companies who rely on that payment infrastructure to serve Russian customers. Epic, for example, announced that Fortnite competitive players are eligible to win cash prizes until “Epic’s payment service provider is able to resume prizing support for players residing in Russia.”
Other social-facing companies, like TikTok, have departed the region in response to the Putin administration’s newly-unveiled censorship policy, which threatens legitimate jail time to anyone caught spreading what the Kremlin defines as fake news — a truly ominous reach of power that makes media dissemination in the country more or less untenable. (The New York Times, for instance, has moved all of its journalists out of Russia.) This thinking was echoed by Netflix, who pulled out of the country after refusing to carry a set of pro-Russian channels, after a new law required all streaming services with over 100,000 subscribers to carry state-run propaganda.
Overall though, most of the exclusion seems to stem from authentic social sensibilities. It’s mirrored by gamers themselves; as of this writing, an Itch.io bundle has raised $5.2 million in donations for Ukrainian refugees. Resistance to Putin’s war has become a mainstream conviction across the hobby practically overnight.
Exerting Cultural Pressure Instead of Purely Economic Pressure
Regardless, the gaming publishers and entertainment mega-corps instituting these sanctions are going to face some financial blowback. This is not a decision they’ve made lightly when every company is beholden to shareholders and the demands of endless growth. GamesIndustryBiz notes that Take-Two is one of the companies halting sales in Russia, despite the fact that Grand Theft Auto Online is the third most popular game in the country by monthly active users.
That’s a sizable, if temporary, shrinkage to Take-Two’s market share, which will likely be represented in its next earnings call. Despite that, GamesIndustryBiz reports that video games represent less than one percent of Russia’s total consumer spending. It is unlikely the Kremlin war machine will be crippled by an acute dearth of cosmetic shops.
At the end of the day, Russia simply isn’t a major component of either the games or movie industries’ portfolios. GamesIndustryBiz reports, overall, the country is a mere six percent of the buying power in European video game consumer spending, while, as The Atlantic noted, Russia was only the ninth-biggest market in 2019. It is, without a doubt, easier for companies to rebuke Russia — especially when the country’s economic index is scheduled to shrink as much as 11 percent and potentially languish in an interminable recession.
“This is a small drop in the bucket for these companies compared to other markets,” said Shon Hiatt, an associate professor of management and organization at USC, in an interview with ABC. But all of these moves, collectively, are not such a small drop in the bucket for Russia’s economy, and as Time noted, the more companies that do this, the more volatile the Russian economy becomes. That acts as a key type of “diplomatic leverage” in situations like this. Moves that force a company like Twitch to halt payments to Russian Twitch streamers affect those people’s livelihoods, absolutely, but the wider, collective effort is, in the long run, meant to put pressure on those in power by weakening such a core pillar of a country’s stability, especially on a worldwide platform – its economic standing.
Editor’s Note: The war in Ukraine is an ongoing, painful and emotive topic. IGN urges community members to be respectful when engaging in conversation around this subject and does not endorse harassment of any kind.
Luke Winkie is a contributing writer to IGN. Follow him on Twitter at @luke_winkie.
Author: Jonathon Dornbush. [Source Link (Why Games and Entertainment Companies Are Pulling Support in Russia), IGN All]