The success factors of the Finnish mobile game industry - CLAUSTHAL UNIVERSITY OF TECHNOLOGY Anita Čupić M.-Nr.: 441159
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CLAUSTHAL UNIVERSITY OF TECHNOLOGY
The success factors of the Finnish mobile
game industry
Anita Čupić
M.-Nr.: 441159
Seminar Wirtschaftsinformatik
Dr. Andreas Harrer
Clausthal, July 2014.
ABSTRACT
This paper deals with the study and analysis of the success factors of the
Finnish mobile game industry. The first part of the work explains how the sub-culture
phenomenon, which ran strong in 80's and 90's in Finland, influences today's game
industry.
The second part is a discussion about the strong Finnish culture, advanced
education system and two important computer events held in Finland. The impact
they had on the game industry is explained. Influence of the home computer
Commodore is also mentioned. The answer on the question what happened to the
developers after the decline of Nokia is given. It is explained how they made a
positive impact on the industry.
After that, the global market and the huge turnover are described. It is
explained why Finnish games are more popular abroad than back home. The number
of employees in the Finnish game industry is shown in a statistic. The potential
growth of the industry in the future and the value of the entire branch are discussed.
The growth of industry wouldn't have such success without the support of the
government, Tekes and Neogames.
The following section discusses the weaknesses of the Finish game industry.
It discusses about the qualified workforce and why are they important for companies.
It explains how new smartphones and new platforms, which are introduced every
day, can cause a problems to companies. Global market, easy distribution and low
cost of development bring new competitors and new startups.
In the end, information and analysis of famous and successful companies
Rovio, Supercell and Remed are given. The future of the Finnish mobile game
industry is evaluated in the conclusion.LIST OF CONTENTS
1. Introduction .......................................................................................... 1
2. History ................................................................................................. 2
3. Strength ............................................................................................... 3
3.1. Culture and education system ......................................................... 3
3.2. Global market and turnover ............................................................. 4
3.3. Support of government, Tekes, Neogames ..................................... 6
4. Weakness ............................................................................................ 8
5. Analysis of companies ......................................................................... 9
5.1. Rovio ............................................................................................... 9
5.2. Supercell ........................................................................................ 10
5.3. Remedy ......................................................................................... 11
6. Conclusion ......................................................................................... 12List of codes and abbreviations CEO Chief executive officer IP Intellectual property
List of figures Figure 1 – Number of employees in the Finnish game industry source: Neogames http://www.neogames.fi/en/industry-info/ ........................... 5 Figure 2 – Turnover of the Finnish game industry core source: Neogames http://www.neogames.fi/en/industry-info/ ........................... 5 Figure 3 – Annual growth rate in the Finnish game industry source: Neogames http://www.neogames.fi/en/industry-info/ ........................... 6
1. Introduction
The Finnish game industry has been growing dramatically during the past
couple of years. The number of Finnish companies has risen from 20 companies to
150 firms during the past 10 years [1]. This paper deals with the study and analysis of
the Finnish mobile game industry and its factors that led to success. The beginning
discusses the culture of Finland, the history of gaming, number of game enthusiasts
and the level of required technology and knowledge.
The Finnish game industry has been able to develop several internationally
successful game titles. At the moment the most well-known Finnish game companies
are Rovio with its Angry Birds, Supercell with its Clash of Clans, Remedy’s Max
Payne series, Habbo Hotel by Sulake and others. The huge turnover of this
companies and the number of employees in the Finnish game industry are analyzed.
The future growth of the industry and the value of the entire branch are
explained. The big support comes from the government and non-profit organizations,
such as Tekes and Neogames. According to a study made by Neogames, the game
industry is the most significant cultural export product of Finland [2].
The seminar paper, designed for the purpose of analyzing the success factors
of the Finnish mobile game industry, helps in understanding the huge success of the
whole industry. The main idea of the seminar is to show why the cultural influence is
important, from where came these great designers and programmers, and what
strategies big companies use.
12. History
The success of the Finnish game industry traces back from 80's and 90's. That
was the time when the love for games, enthusiasm and game development were
born. Demoscene1 is the sub-culture phenomenon which ran strong in Finland during
the late 80’s and 90’s. The number of game enthusiasts in Finland was relatively
large compared to the size of the population [2].
They played games made by the others but designed their own demos and
introductions to games. Many of these gamers have had the desire to give their
individual contribution to the industry. Designers, programmers and electronic
musicians collected their valuable experiences from that time. The demoscene is
where it all started.
The Commodore had also a huge impact on the game industry. It was
introduced in 1982 and was a commercial home computer. There were a lot of
games available for it, and it allowed users to code games and other programs easily.
Computer's simplicity as a programming platform increased the enthusiasm of game
coders.
When Nokia dominated the global mobile industry, there was a large number
of Finnish companies developing games only for the Nokia mobile phones. After the
decline of the Nokia, many of Nokia's outgoing engineers started to reemploy
themselves in developing mobile phone games [3]. They had the experience and
were able to employ themselves in the game industry. Without such a strong history
and number of game enthusiasts the Finnish game industry wouldn't have had such
a big success today.
1
The demoscene - is a computer art subculture that specializes in producing demos, which
are audio-visual presentations that run in real-time on a computer. The main goal of a demo is to show
programming, artistic, and musical skills.
The demoscene first appeared during the 8-bit era on computers such as the Commodore 64.
23. Strength
3.1. Culture and education system
Many factors had a big influence on the success of the Finnish game industry.
One of them is a strong gaming culture in Finland which started in 80's. Today,
gaming in Finland is viewed as socially acceptable. The popularity of gaming in
Finland is about the same as in the U.S. Two thirds of the population plays a video
game at least once a month, but Finns play a lot more of those games on their mobile
devices [4].
Also Finns have a strong culture of storytelling, which helps in the creation of
intriguing games. It was not surprising that they wanted to develop the games.
Finland had the talent to do it well. Finland has the world's highest proportion of
people employed in information technology and communications - more than 8
percent. That is a consequence of having one of the world's most advanced
education systems [2].
Finland is famous for the quality of its education system. There are many
universities offering specialized gaming education development courses. Oula
University of Applied Sciences, Kajaani University of Applied Sciences, Aalto
University, North Karelia Municipal Education and Training Consortium / Pelitalo,
Metropolia University of Applied Sciences are just some of them.
The high level of knowledge is the foundation of the Finnish gaming industry’s
success. This expertise rises from the high number of skilled computer enthusiasts
that have made their passion into a profession. A good example of these skills and
devotion is the Assembly computer festival organized in Helsinki twice a year. Every
time, thousands of fanatics gather together to play, code and network in the world’s
largest computer carnival [5].
Also, the annually held event Slush in Helsinki since 2008 is regarded as a big
deal for mobile application developers. Slush has grown and became one of the
3leading events in the world. The main goal is to help the next generation of great
world-conquering companies to move forward.
3.2. Global market and turnover
The Finnish mobile game industry has many international successful game
titles. Rovio with its Angry Birds, Supercell with its Clash of Clans, Remedy’s Max
Payne series, Habbo Hotel by Sulake, are just some of them. More than 90% of
Finnish game production heads to the export market which makes many Finnish
game houses more popular abroad than back home [2].
For Finnish game developers the domestic market is not large enough for
considerable profit. Most companies aim their products toward the Northern
American market where the demand for games is remarkably higher because of the
larger population. Over half of the industry’s turnover comes from Northern America
and one third of the turnover comes from the Western European market. Finnish
games have not been effectively entering the Asian markets because of piracy,
different business culture, different cultural background and strong competition from
the Asian industry [2].
In 2012 turnover of game development and services was 250 million euros. In
2013 it reached a turnover of 800 million euros, which means a growth of 260% from
the year before. The value of the entire branch is approximately 2,2 billion euros. It is
expected to multiply by 2020 [6]. The number of employees in the Finnish game
industry has grow from 1020 in 2009, to 2200 in 2013. In the future it is expected to
grow.
4Figure 2 – Turnover of the Finnish game industry core
source: Neogames http://www.neogames.fi/en/industry-info/
Figure 1 – Number of employees in the Finnish game industry
source: Neogames http://www.neogames.fi/en/industry-info/
5Figure 3 – Annual growth rate in the Finnish game industry
source: Neogames http://www.neogames.fi/en/industry-info/
Industry in Finland has been growing significantly faster than the global game
market. If the growth continues as projected, the turnover of the Finnish game
industry will be 1,49 billion euros in year 2020 [7].
3.3. Support of government, Tekes, Neogames
North Europe is famous for its high taxes. Finland government, in order to
support the game industry, doesn't tax as much the income as in other countries.
Over the past 16 years, the state has spent roughly 60 million euros in supporting
small game startups [8]. That support helped save an startup company called Rovio a
few years ago when the company was struggling to survive in its pre-Angry Birds
days.
Government actually promotes the Finnish game industry. In 2012 Finnish
Prime Minister, Jyrki Katainen painted his nails for the promotion of game. As a result
of that kind of thinking and the support, an organization named Tekes (the Finnish
Funding Agency for Innovation) was established by the authorities since the late
1990’s. Tekes has offered Finnish game developing companies public funding and
subsidies. Tekes funded the Finnish game industry with approximately 8.6 million
euros.
Tekes is the most important publicly funded expert organization for financing
research, development and innovation in Finland [9]. The CEO of Supercell, Ilkka
6Paananen, said that the enormous success of Supercell wouldn’t have been possible
without Tekes support [2]. They encourage innovative and risk intensive projects.
They are really selective, they support just the most innovative and newest ideas.
The other important organization in Finland and the coordinator for Tekes is
Skene – Games refueled program is Neogames. Neogames is a member based non-
profit organization established in 2003. Its main purpose is to help developers,
industry bodies, game educators and researchers. They also can help investors,
international game companies, and publishers to partner up with Finnish game
companies. Their services include organizing group trips to international events.
Neogames is also the information center of the Finnish game industry [10].
Without such a huge support of the government and organizations such as
Tekes and Neogames the Finnish mobile game industry wouldn't be the same as
now. Many important and big companies like Rovio and Supercell wouldn't have had
survived and have had a much success as now. It is possible that there wouldn't exist
so popular games and brands like Angry birds or Clash of Clans.
74. Weakness
The largest problem in the Finnish game industry is the lack of educated
people. The Finnish game industry is growing every year and parallel with it the need
for educated people. Progress of the mobile game industry is very fast and
sometimes in education is hard to follow changes, education falls behind. Without
qualified workforce companies cannot grow to be internationally credible. The
industry could employ more than 400 new workers every year but the amount of
graduates students in this field this is only 150 [2].
New smartphones and new platforms are introduced every day. Different
operating systems force developing companies to make versions for each system or
dedicate their game development to single system at a time [2]. That makes game
developing very hard and finding specialized developers for one platform may cost
the company money.
The third big problem is the threat of potential participants. Mobile game
industry is global and anyone who has the skill to develop a mobile game is
considered a potential competitor. With publishing channels such as GooglePlay and
AppStore, publishing a game is very easy.
The game company start-up scene in Finland is highly active, because of easy
distribution and low cost of development. The problem is that developers have a
huge competition from the start. Developing a successful game is not as easy as 10
years ago. There are many big companies and to develop a funny, interesting and
loved game, company need to invest in research, psychology, marketing, etc. The
other problem is that sometimes after a game becomes highly popular, it quickly gets
saturated with clones.
85. Analysis of companies
5.1. Rovio
Rovio Entertainment is a company founded in 2003 and creator of the globally
successful Angry Birds game. Rovio’s reach extends far beyond Finnish borders, with
current employees representing more than 38 nationalities. The company is
especially attractive to young people who are ready to show their talent. Rovio
regularly brings new talent to the field through training programs [11].
In its early stage the company developed mobile games to order for Nokia and
Electronic Arts. Rovio was able to make good games but not so successful as
company wanted. After some time the company started making games of their own
instead of just selling them to others. Owning the IP of a hit game would prove 50
times more valuable than making games for others. The company still made games
for others, but the focused was on developing games of their own [2].
Angry birds was published for the iPhone in December of 2009 [2]. It became
an international phenomenon within a few months of its release. Angry Birds has
been downloaded 2 billion so far, making it the most downloaded game brand ever
[12]. „The secret of success of Angry Birds is not from technological innovation, but
from the design with the idea of 'returning to original simplicity, properly seizing the
audience's psychological needs, and perfectly applying the product development and
marketing elements, such as the unique 'interactive marketing.'“, said Mikael Hed,
CEO of Rovio [3].
Angry birds it's successful combination of addictive gameplay, comical style,
and low price. Many versions of Angry Birds are created. Its popularity led to versions
of Angry Birds being created for personal computers and gaming consoles. Angry
birds is a very popular brand in the whole world and the company is focused on
selling the products such as soft toys, fishing gear, posters, clothing (T-Shirts and
hats), paintings, printed cards, etc.
9Rovio´s total full-year revenue is: 2010: €6.5 million, 2011: €75.6 million, 2012:
€152.2 million. After three years of very strong growth they invested in business
areas, such as animation and video distribution. The movie animation production
team is located in Los Angeles and is working on the first Angry Birds film that will be
premiered in 2016.
5.2. Supercell
Supercell is successful Finnish company with the highest monthly revenues.
The company made $892 million last year, a profit of $464 million before taxes. Clash
of Clans makes $4.6 million every day, up from $1.9 million last year, according to
digital-game researcher SuperData [13].
According to Paananen, CEO of Supercell, the most important aspect to
consider when building a next generation game developing company is finding the
right people. Most of Supercell’s employees have over 10 years of experience in
creating and selling commercial games. Finding the right person for specific project is
difficult, and Supercell is willing to suffer when waiting for quality workers [2].
In Paananen’s opinion games should be developed from the beginning to a
specific platform, otherwise they would not succeed. When they developing the
games for bigger screens they put more effort into quality. They think tablet is the
ultimate game platform. They are sure that in three to five years ahead most people
will consume entertainment from tablet [2]. „When Steve Jobs first introduced the
iPad to a very skeptical world, he called it “magical”. We now know what he meant.
Our inspired vision is to create some magic of our own that lives up to the awesome
potential of these wondrous devices.“, is written on their official web page [14].
Supercell has another good strategy, it not celebrate only successful game
launches, but failures as well. When they have unsuccessful project, they gather
together for an event. At these events employees and work teams openly discuss
about what went wrong with the product, and how are they going to do better next
time. Although Supercell had two hit products (Clash of Clans and Hay Day) in 2012,
they had to kill three products as they were not performing as expected [2].
10They want to avoid what happened to Zynga2. Zynga's revenue decreased in
comparing to few years before. They think that's important to keep expanding and
updating their existing games so players never reach the finish line. But Paananen,
who has had enough time in the gaming industry to know what genuine success
looks like, is confident that Supercell knows its users better than others. He also
believes that “Hay Day” and “Clash of Clans” are only going to be even more popular
in two years time and for them when they launch a game, it’s not the end, it’s the
beginning [15].
5.3. Remedy
Developing company Remedy was established in 1995. The company’s first
successful title “Death Rally” that was made in 1996. Highly successful games
include Death Rally, Max Payne, Max Payne 2: The Fall of Max Payne, Alan Wake
and Alan Wake's American Nightmare.
They are convinced that the most important is getting a game ready for
market. Is crucial to make sure the game is fun. Consumers are always in the first
place. The market is far more competitive today than it was even two or three years
ago.
The award-winning Max Payne was released in 2001. The Max Payne is a
game with an intense story about a New York based policeman. It totally
revolutionized the action genre with cinematic use of slow motion and dramatic
narrative-driven gameplay, becoming one of the best-selling PC games of the year.
The greatest innovation of the game is its slow bullet time parts. Max Payne was
even made a Hollywood film that was premiered in 2008.
2
Zynga - is a provider of social game services founded in July 2007 in San Francisco,
California, USA
116. Conclusion
Within the seminar paper, the most important information about the Finnish
game industry are explained. It discusses the history and its influence, the strong
gaming culture and advanced education system. It explains why Finnish games are
more popular abroad than back home. It describes the huge turnover, which wouldn't
have had such success without the support of government, Tekes and Neogames.
Special attention was paid to the main weaknesses. Information and analysis of
famous and successful companies, such as Rovio, Supercell and Remedy are given
in the end.
Tekes alone contributes several million Euros each year to the Finnish gaming
industry. Other organizations, such as the government and the non-profit
organizations, like Neogames have been established to help the industry and to allow
outside investors and developers to come to Finland. As a result the turnover is
expected to multiply by 2020 and the number of employees will grow. With such a
strong gaming culture, technology, advanced education system, great support, big
companies, new startups the future of gaming in Finland is bright.
Anita Čupić
12Literature [1] Neogames (2010 – 2011). The Finnish Games Industry http://www.neogames.fi/wp-content/uploads/2013/05/Finnish-Games- Industry-2010-2011.pdf [2] Härmä A. (2013), The success factors of the Finnish mobile game industry: a strategic overview. Bachelor's thesis, Turku University of Applied Sciences [3] News Analysis: The secret of Finnish game industry success http://news.xinhuanet.com/english/world/2014-03/09/c_133171396.htm [4] Koon Boon Kee (2013). Supercell Beats „Angry Birds‟ From Obscurity to $3 Billion Value; Why a Finnish Gaming Company Is Worth $3 Billion http://bambooinnovator.com/2013/10/17/supercell-beats-angry-birds-from- obscurity-to-3-billion-value-why-a-finnish-gaming-company-is-worth-3- billion/ [5] Karjalainen T. (2012). Finnish gaming industry is much more than Angry Birds http://www.finland.ca/public/default.aspx?contentid=239190&nodeid=4132 5&contentlan=2&culture=en-US [6] Neogames Industry info http://www.neogames.fi/en/industry-info/ [7] Tekes The game industry of Finland http://www.tekes.fi/Julkaisut/the_game_industry_of_finland.pdf [8] Kuittinen T. (2013). Operation Badland - How Individualism And Government Support Fuel Finland's App Miracle http://www.forbes.com/sites/terokuittinen/2013/06/19/operation-badland- how-individualism-and-government-support-fuel-finlands-app-miracle/ [9] Tekes Tekes – the Finnish Funding Agency for Innovation http://www.tekes.fi/en/tekes/
[10] Neogames We bring the Finnish game industry together http://www.neogames.fi/en/# [11] Rovio Who we are http://www.rovio.com/en/about-us/Company [12] Rovio (2014). Rovio entertainment reports 2013 financial results http://www.rovio.com/en/news/press-releases/495/rovio-entertainment- reports-2013-financial-results [13] Brustein J. (2014). Finland's New Tech Power: Game Maker Supercell http://www.businessweek.com/articles/2014-06-05/clash-of-clans-maker- supercell-succeeds-nokia-as-finlands-tech-power [14] Supercell About Supercell http://www.supercell.net/about [15] Mckenzie H. (2012). Supercell is Accel‟s fastest growing company ever. http://pando.com/2012/11/27/supercell-is-accels-fastest-growing-company- ever-and-it-has-a-ball-pit/
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