We got game – story of the Finnish games industry
The rise of game development in Finland has been nothing less than stratospheric. In the past five years, the twin successes of Supercell and Rovio have helped propel growth from a 100 million-euro industry to two billion.
Yet, some 20 years ago when the industry first took root, such success was the furthest thing from the minds of the game developers. The Finnish economy in the early 1990s was taking tentative steps towards recovery after a severe recession had ravaged the country. For university student and budding entrepreneur Ilari Kuittinen, this was a time of opportunity.
Fuelled by a shared enthusiasm for computer games, a local grassroots demo scene had begun tinkering with its collective creativity. Little by little members of this hobbyist movement began turning professional, as their technical knowhow increased exponentially.
"Back then there were 20-30 guys somewhat loosely connected with games in Finland," Kuittinen recalls, who together with Harri Tikkanen founded Housemarque, Finland's longest running games development companies, in 1995.
"Basically it was games studio Remedy and us. Now, 20 years later you have 100 times as many people, and the leading mobile games developer in the world is from here. The world of the videogame industry has been moving so fast. It's been a rollercoaster ride."
Games development took an upward swing in the late '90s, a time when Housemarque's PC game Supreme Snowboarding racked up global sales of 1.5 million. Finland enjoyed its first flush of venture capital, with the industry's ranks quickly swelling in number.
At the same time, Internet connections switched from dial-up to Ethernet and a huge buzz surrounded mobile possibilities. The dot.com bubble swiftly began to inflate as many braced themselves for a saturation of mobile games.
However, as history would show, the party was over not long after it began.
"There are a lot of factors why the mobile revolution didn't happen in the early 2000s: networks and infrastructural things," Kuittinen states, adding, "mobile phones didn't develop as fast as was anticipated."
Licking its wounds, the gaming industry returned to its main focus: PC and console games.
The world of the videogame industry has been moving so fast. Basically it was games studio Remedy and us. Now 20 years later you have hundred times as many people, and the leading mobile games developer in the world is from here," says Ilari Kuittinen, CEO of Housemarque.
Distribution with ease
Although mobile games had failed to ignite, the local development scene in Finland was far from dormant. The arrival of game studio Remedy's Max Payne video game dropped a global bombshell when it landed on shelves in 2001, selling 4 million units globally.
By the time the franchise's second instalment arrived in 2003, the industry was awakening to the possibilities of digital downloads as a cost effective mode of distribution.
This enabled developers to narrow their focus and create smaller titles.
A handful of years later and the arrival of the iPhone and the App Store then opened the floodgates. For the overwhelmingly export-focussed Finnish industry, games developers could now easily reach an audience of millions worldwide.
Apple's touchscreen phenomenon impacted directly on the fortunes of Finnish telecommunications giant Nokia. Many of the highly skilled tech experts the company had cultivated were forced to harness their mobile development expertise elsewhere. Startups began emerging around the country. One such venture, Rovio Entertainment, took their smartphone-geared gaming experience to unprecedented levels when Angry Birds was released in late 2009.
And, when Supercell fine-tuned its micro transactions business model for free-to-play tablet gaming with Hay Day and Clash of Clans in 2012, the results were mind-boggling. In 2013 Japanese games giant Gung Ho/Softbank acquired 51 per cent of the company for 1.5 billion US dollars.
The steamrolling success of Supercell and Rovio benefited the Finnish startup scene as a whole, creating interest from abroad in the innovation possibilities here. This boost was acutely felt in the games industry. In fact, over 70 per cent of the 280 local games studios operating today are less than five years old.
"The kind of success we have seen in recent years feeds success," explains Mariina Hallikainen, CEO of 2015's Finnish Game Developer Award-winning studio Colossal Order, whose most recent PC game Cities: Skylines is tipped to reach two million in sales this year.
"Money attracts money. When investors notice that there are these big things happening in Finland they become interested, and then there's more opportunity."
The Finnish game industry has duly become an attractive investment target for foreign studios. The past two years alone have seen 70 million euros of private investor money from abroad boosting the industry. This is without taking into account the dizzying figure surrounding the acquisition of Supercell.
Tekes has helped facilitate the flow of capital, providing some 30 million euros in funding through its Skene – Games Refueled programme from 2012-2015. This financing has given the industry a competitive edge against big international studios by building momentum for many young studios during the early stages of their development. Thus, by the time they seek bigger funding rounds, many of the typical pitfalls associated with startup growth have already been worked out.
The growth of the Finnish games industry is not forecast to slow down either. The industry has begun showing signs of maturity, with an emerging 'second round' startup culture lead by the likes of games studio Next Games. Recently receiving accolades for The Walking Dead: No Man's Land, the studio was founded by design veterans from Rovio and Supercell.
"Finnish developers share their ideas and experiences. People are willing to help other out," says Mariina Hallikainen, CEO of Colossal Order.
Games of the future
The number of employees in games development is set to expand from its current total of 2,500, with the vibrant Finnish startup culture attracting talent from all over the world.
"We need to continue getting the best developers here," Mariina Hallikainen emphasises.
Meanwhile, over 20 institutions currently provide game education at all levels around Finland. Coupled with a willingness to embrace new development tools and technologies, this solid knowledge base is set to further capitalise on the financial boost the industry is enjoying thanks to the help of Tekes.
"If you think about the massive success we have had in recent years, these investments have really paid off," Hallikainen states.
Timeline of the Finnish Game Scene
1980's Home computers and game development as a hobby becomes popular
1986 First globally distributed commercial Finnish game Sanxion
1992 Assembly demo parties start
1995 First and still existing Finnish game companies are founded
1995 Tekes starts funding game companies' technology development
1996 Remedy releases Death Rally
1997 Nokia introduces "a worm game" in its 6110 mobile phone
1999 Housemarque's Supreme snowboarding becomes a first Finnish video game selling over 1 million copies.
2000 Dot.com & mobile hype: gaming industry employes 200 people in Finland
2000 Online community Habbo Hotel
2001 Remedy releases Max Payne
2004 First big mobile game studio acquisitions: Sumea sold to Digital Chocolate
2007 Apple releases iPhone and App Store
2008 Game industry employs 1 000 people in Finland
2009 Angry Birds becomes the AppStore's most popular game
2011 First big international investments to Finnish game companies
2012 Tekes starts its game business development programme Skene – Games Refueled
2012 Supercell's HayDay & Clash of Clans – one the world's most profitable mobile games
2013 Japanese SoftBank and GungHo acquire 51 % of Supercell shares for 1.1 billion euros
2014 Startup boom: 179 new gaming companies established in three years. Game industry employs over 2 500 people.
2015 Finland's game industry turnover exceeds two billion euros. Game companies raise nearly 80 million euros in private investments between 2012–2015.
Text: James O'Sullivan
Photos: Markus Sommers, Supercell
The story was originally published in Tekes Views Magazine 2016