On the anniversary of the war in Ukraine, NAVI CEO Yevhen Zolotarov opens up about the impact of the conflict on his personal life and the company.
This time last year, Yevhen Zolotarov was preparing to flee his home in the Ukrainian city of Hostomel, located northwest of Kyiv, with his wife and infant son. Russian forces had occupied a local military airport, and clashes had begun to shift to the nearby areas.
Zolotarov left everything behind and moved to Lviv, in western Ukraine, not knowing when he would see his home again or what he would find when he returned.
It turned out that his house was spared from the destruction that Russian troops have rained down on much of Ukraine’s territory since the start of the invasion because the bridge used to access his neighborhood had been destroyed. A mere three kilometers separated his house from the area that was occupied by Russian forces for several weeks.
Zolotarov returned to the Kyiv area in May, though it was only in August that he and his family reunited at home. Life went back to ‘normal’ for a while, but in the fall, Russia started launching a barrage of strikes on critical infrastructures across Ukraine, resulting in sudden and constant blackouts.
Just after New Year’s, he sent his family away while he stayed behind. Video calling helps him stay connected, and his wife sometimes visits him during his layovers in Europe, but that doesn’t make it any less difficult or sad.
“I’m okay so far,” he tells Dexerto. “I don’t know. It’s hard, I want to see my kid every day. Right now at least, the electricity problems in Kyiv are solved. Hopefully, if everything continues like this, we’ll be able to be together in Kyiv again in March or April.”
Like Zolotarov, millions of Ukrainians have seen their lives uprooted by the war in the last 12 months. Many of NAVI’s esports talents and members of the senior management team have moved to other countries, but most of the employees remain in Ukraine. Some are even fighting in the Ukrainian Army. (They are still on the company’s payroll, even though they aren’t working, and their jobs will be waiting for them after the war ends, Zolotarov assures.)
The last year has posed NAVI all sorts of challenges. In addition to launching campaigns to raise funds for the Ukrainian people, the company has also had to relocate players and staff to other countries. An in-house psychologist provides mental health support to those who need it.
“We haven’t dismissed a single person because of the war,” Zolotarov says, proudly. “Everybody is doing as well as possible, considering the circumstances.”
Building a sustainable business model
Zolotarov is speaking from a hotel room in São Paulo, which held the VCT owners’ meeting ahead of VCT LOCK//IN. NAVI are one of the 10 organizations picked by Riot Games to compete in Valorant’s international league in the EMEA region, alongside the likes of Fnatic, Team Liquid, and Karmine Corp.
NAVI’s successful application was, in Zolotarov’s eyes, a resounding victory for the organization, not only because it was the result of months of hard work in unprecedented circumstances, but also because he believes that Valorant’s partnership program offers “the highest potential” in esports at the moment.
Since the start of the war, NAVI have been cutting down on the number of esports titles in which they compete, with 12 teams at the moment (three of which are in CS:GO and two in Valorant). Zolotarov says that he doesn’t see many opportunities outside of the games NAVI are already involved in, with the exception of League of Legends.
In August 2022, NAVI were reported to be in the race to acquire a slot in the League of Legends European Championship (LEC). In the end, talks didn’t go anywhere, though two league slots changed hands that summer in mega deals.
“We had some talks regarding [entering] LEC,” he admits. “But as you know, the prices for LEC slots are super high. Right now, we have no plans for LEC. We’ll be looking around and seeing how things go.
“At the moment, the market trends are rather negative, and sponsorship money is decreasing for all esports entities, like TOs, clubs, studios and publishers. It’s not a good time for 30 million-plus investments.”
As the industry enters what has been commonly referred to as “the esports winter”, with declining viewership, layoffs, and reduced advertising budgets, NAVI seem to be in a better position than most other organizations.
Despite dropping “several partnerships” with Russian entities since the outbreak of the war, NAVI are still making money, Zolotarov says, in part because of their efforts in recent years to be less reliant on sponsorships. Not too long ago, sponsorship money accounted for “80 or 90 percent” of NAVI’s total revenue. That figure is now close to 50 percent.
“There is a huge part that comes from league revenue,” he says. “We are a partner in BLAST and in ESL. We have a partnership program in Rainbow Six, PUBG, Brawl Stars, etc.
“We are partnering with publishers in almost all games we are in and having revenue share sources. We are not that sponsorship dependent, and our business model is much more balanced than before. The other thing that helps us a lot is our relatively light structure. We don’t have tons of C-level staff, different presidents and vice presidents, etc., so no huge company payroll. Our C-level consists of three people (CEO, COO, CMO) and four mid-managers (Head of Media, Head of Merch, Head of Team Management, Head of Esports). So I can say we are quite a cost-effective company.
“We have been profitable since 2020, when we had a six-figure profit. 2021 was a record-breaking year by all accounts, and we increased our profit tenfold compared to 2020. Last year was not that successful but we were able to maintain a seven-digit profit, and we’re projecting the same for 2023. We are more than alive, I would say.”
With money much harder to raise now, more and more esports organizations have looked to expand their business models. Misfits Gaming Group launched a $20 million creator fund. TSM’s “real selling point” is, according to Forbes, the company’s tech businesses. 100 Thieves and FaZe, meanwhile, have developed into lifestyle brands. The former acquired gaming peripherals company Higround, launched an energy drink brand and is developing its own videogame. Meanwhile, FaZe, which became public last year, “has leaned heavily into merchandising and direct-to-consumer sales,” according to Venture Beat.
For many organizations, the esports side of the business has become something of an afterthought. But for NAVI, it remains very much at the core of their strategy.
“It’s a business model that is different from ours,” Zolotarov says of his competitors’ interest in the creator space. “We will be cooperating with some international content creators in Valorant, but we are not considering this as a change in our business model. It’s kind of a tryout thing.
“The reason we haven’t built a streaming alliance or community is that we’re operating in our home region, where the monetization of one viewer is very different from how it works in North America.
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“But even in NA, if we look at FaZe, I’m not sure that’s the best business model,” he adds, in a reference to the North American company’s plummeting stock. “They’ve built a really huge brand with enormous engagements and reach, but costs are too high and the revenue needed is not there yet.
“Personally, I think we should do what we are good at but look around at the same time. Things should not be black or white. The lifestyle approach also gives you a higher viewership, which may bring you higher league revenue because your KPIs in some leagues are not only tied to your performance. We should do everything, but we will still focus on esports.”
From a strategic perspective, not much has changed for NAVI in the last 12 months. The two state-of-the-art gaming penthouses that the organization launched in Kyiv in 2021 are practically empty as hosting bootcamps in the country is impossible while the war rages on. But NAVI’s headquarters in the Ukrainian capital still burst with activity, while the company is ramping up its infrastructure in Berlin with an office and a gaming house that will serve as the Valorant team’s base for the VCT league.
NAVI made a statement of intent with the signing of the core of FunPlus Phoenix’s highly successful Valorant team, which was joined by 2021 world champion Mehmet ‘cNed’ İpek. The decision to move from a Russian-speaking lineup to an international project is part of an ambitious agenda to elevate NAVI’s global profile. Content around the Valorant team will be done in English only — “even if it’s English with an accent,” Zolotarov notes — to capitalize on the game’s growing audience.
This international expansion will happen without NAVI ever losing sight of their roots. The organization is making an effort to produce more Ukrainian-language content around the CS:GO and Dota 2 academies, and special projects for Ukrainian fans — such as a new NAVI esports camp — are under consideration.
“We will always be a Ukrainian club,” Zolotarov says. “But at the same time, we want to be a global brand.”
Opening the gates to international talent
As much as Valorant is the esport that the industry is the most excited about for 2023, CS:GO remains the jewel in NAVI’s crown. It is the franchise that put the organization on the map, over a decade ago, and that consistently flies Ukraine’s flag high at the biggest venues.
But NAVI’s CS:GO team have been a far cry from the dominant side they were in 2021. The war in Ukraine and the removal of Kirill ‘Boombl4’ Mikhaylov due to outside-the-game factors took their toll on the squad, robbing them of an era. Results have been lackluster, and star player Oleksandr ‘s1mple’ Kostyliev’s criticism of his teammates and public questioning of his coach’s decisions have made it all too clear that there is some strife behind the scenes.
Andrii ‘npl’ Kukharskyi’s promotion to the main team has been met with criticism in the CS:GO scene. Two months after his first match, he still looks out of his depth, and the team continues to miss the firepower that was provided by Denis ‘electroNic’ Sharipov on a regular basis before he took over as in-game leader.
To be fair, the talent pipeline in Ukraine has not supplied many interesting non-AWPing prospects in recent years, and things are likely to get even worse in the future because of the war.
Last year, NAVI had their eyes on Timur ‘buster’ Tulepov but quickly ended their interest in the Kazakhstani player due to his ties to Russian organization Virtus.pro.
Is the decision to stick to Ukrainian talent politically motivated?
“To be honest, it’s a difficult topic but I don’t see how we could buy a player from a Russian club, even if they are covering themselves with Armenian flags,” Zolotarov says, referring to Virtus.pro. “Long term, of course we want to focus on Ukrainian talent, and this is shown with our academy project, which is currently made up of Ukrainian players only.
“But such changes take time. We know we can’t put 16-year-olds on the main roster. They need to spend a couple of years inside the system to know the expectations, the rules, etc.
“We want to be a club where the best Ukrainian players are going to play. At the same time, we are building a global brand, so there is a chance that we will consider international players for all disciplines. Our academy projects may become international relatively soon.”
As we enter the second year of the full-scale invasion, Zolotarov says that the impact of the war on Ukraine’s esports industry is hard to predict and will largely depend on how long the conflict lasts.
NAVI are committed to doing their part to help Ukrainian esports through the academy project. At the same time, Zolotarov sees the recent growth in the viewership of Ukrainian-language broadcasts and CS:GO teams like Monte, B8 and IKLA as positive indicators for the future. The first two are still in contention for spots at the BLAST.tv Paris Major.
“The main thing is that for young players to develop there are a lot of difficulties,” he explains. “They’re unable to bootcamp, they can have problems with electricity, with traveling, etc.
“If the war ends this year, we as Ukrainian gamers will come back stronger. But if it’s going to be a frozen conflict for many years, I don’t know. But I want to stay positive”
After a period of much confusion in which the focus was on raising awareness of the crisis in Ukraine and figuring out how to operate under extremely difficult situations, NAVI are pushing full steam ahead with their expansion plans. Despite narrowing down their focus and prioritizing specific esports in the last 12 months, the organization is still keeping an eye out for opportunities in new regions and new games.
At home, the work to help the Ukrainian population doesn’t stop. Just two months ago, NAVI raised half a million dollars through UNITED24, a global initiative launched by the President of Ukraine, Volodymyr Zelenskyy, to collect donations to help the country.
As he waits to reunite with his family at their Hostomel home, Zolotarov offers a reminder that humans are able to adapt to even the direst situations. In a parting message, he asks that the esports community continues to back his country.
“As you can see, we have survived,” he says. “We are strong, and such difficulties — if you can call war that — only make us stronger. Keep on supporting us. Keep on supporting our country, as the outcome of this war will affect the whole world. We will be doing the best we can, both for Ukraine and on the esports servers.”