EGD News #94 — Helsinki gaming exits
Sent on August 6th, 2021.
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It’s Joakim here. Greetings from Helsinki! It feels good to be back in full working mode after a semi-vacation for the last few weeks. I’ve got two announcements for you:
InvestGame’s H1/2021 games industry report is out. To expand on the report, please join me, Anton Gorodetsky from InvestGame, and Micha Katz from Aream & Co on this live webinar on Thursday 12th of August, as we talk about gaming’s M&A, IPO, and investments activities from the first half of 2021. Sign up here.
I’m about to record a new Ask Me Anything episode. If you have questions that you’d like to ask, be it about starting a game studio, developing games and getting funding for a game studio, you can submit your question by going here.
Now, on to the news.
🇫🇮 Helsinki exits
After the recent announcement of Plarium acquiring Futureplay, a chapter in the story of Helsinki gaming startups comes to an end.
From 2013 to 2015, many mobile game studios were founded in Helsinki. Next Games, Seriously, Small Giant Games, Futureplay. All companies have now exited or IPOed.
What was common: founders had worked as senior managers at companies Sulake (Habbo Hotel), Rovio (Angry Birds), and Digital Chocolate (founded by EA founder Trip Hawkins).
I was at Rovio for six months during the spring of 2011, when Angry Birds was taking off, and I saw that the company was experimenting in extraordinary ways. Merchandising, IP deals, new platforms, all at the same time transitioning from premium to free-to-play.
But in my opinion, the clear advantage for the founders of the future startups was to experience the headcount growth and organizational challenges. After Rovio came up with Angry Birds and started scaling in the early 2010s, they went from 28 people in 2010 to an organization with over 800 employees by 2014.
Being a manager in this environment, you will pick up unique merits on hiring, decision-making, allocating resources, and leadership. All the same time, everything is happening rapidly, and you see what happens as decisions get made. Often quite risky ones. You also notice that not acting would mean that you don’t learn. And these people did act, and they did accumulate rare knowledge.
The same goes for founders who picked up skills at Digital Chocolate and Sulake. You were placed in an environment where you’d learn to be a manager and what building a big games business would look like.
Now that Futureplay has been sold and the founders have made their exits, we wonder. What is happening with the next wave of companies?
We have managers starting new companies. Several were formed during 2019. Skunkworks (ex-Next Games, ex-Rovio), Lightheart Entertainment (ex-Next Games), Playsome (ex-Next Games), with many others pawing the road for extraordinary results. We are still waiting to see managers who built their skills at Seriously, Small Giant Games and Futureplay, step on to the stage of building their startups.
📣 Most listened to EGD podcast episodes
During the first half of 2021, I published 26 new podcast episodes. And I also appeared as a guest on two different podcasts. Here are the top three most-listened-to podcast episodes from the first half of 2021.
Anton Gauffin, Huuuge Games (Jan 22nd, 2021)
Here’s my favorite highlight from this discussion with Anton Gauffin, founder and CEO of Huuuge Games.
I asked Anton how he approaches having a board and how to use the board for the company’s benefit. Here’s what he said:
“If I think what we’ve done with the board… Things change when you’re bringing in investors. The investor wants to have some involvement and dialogue. It’s been important to see how I can, as a CEO, succeed better by playing together with the board. For me, the board is like an extension of the team.”
“Founders must have discussion partners who can challenge them, make questions, and have a healthy debate and dialogue. Sometimes, it may feel to founders as a necessity that [the board isn’t] adding any value. But then I think you’re doing it wrong. Maybe you’ve chosen the wrong people?”
“I highly recommend taking time to make the right board hires. I’ve seen startups facing difficulties when the board has been messed up.”
Listen to the full episode by going here.
Hakan Ulvan, Bigger Games (Feb 16th, 2021)
This episode with Hakan Ulvan was great and we did lots of preparation for it. So I’m happy to share it with you once again. Here’s my favorite part from this interview with Hakan.
I asked Hakan about the game development boom in Turkey. This is what Hakan said:
“Whoever you went to and asked in Turkey that is it possible to create a global success from Turkey, everybody would have said that it will be very, very difficult. But now, after Peak’s success, everybody has seen that this is possible. You can create a global success from Turkey.”
“The Zynga deals accelerated [the ecosystem]. Investors and VCs started to see Turkey. Saying that there might be great companies there.”
“At the same time, it seemed like all these talented people in Turkey started to see that there’s actually this gaming industry, and it’s possible to create something great there. Lots of talented people are working in management consultancy or banking or whatever. And they also have seen that there might be great opportunities, there might be great career paths in gaming.”
“People’s families, loved ones, or whatever, have some ethics on your career choices in Turkey. And even people who are not in gaming, they started to see that there might be something there.”
Listen to the full episode by going here.
Phil Sanderson, Griffin Gaming Partners (Feb 12th, 2021)
I’ve known Phil Sanderson for close to ten years, ever since I pitched Next Games to him back in 2013, when he was still a Partner at IGC Capital. Here’s my favorite highlight from this discussion with Phil.
I asked how Phil sees the recent boom and M&A activities affecting things going forward.
“Companies are trading at pretty high multiples in the public markets, and they’re being able to buy companies at lower multiples. So there’s an immediate value that’s being created because they’re trading at that same EBITDA multiple or revenue multiple. So there’s been a lot of M&A recently. But there’s also been a lot of high valuations look at Unity and Roblox and discord and other companies that are valued at eight to $40 billion and growing. So there’s a lot of stock to be able to purchase companies with.”
Listen to the full episode and read the transcript by going here.
🎙 Podcast with KooPee Hiltunen
I’ve known KooPee Hiltunen for nearly twenty years now, ever since I started building games companies. KooPee is “The Guy” in the Finnish games industry; he knows everybody and knows everything about the Finnish games industry. He represents Neogames, a non-profit association whose mission is to coordinate and support the growth and development of the Finnish game industry and its ecosystem. In this discussion with KooPee, we talk about a recent 2020 report on the Finnish games industry, how we got to this impressive size, and what things look like for the Finnish games industry?
Here are my highlights from the discussion.
Why is Finland doing so well in gaming?
The first mobile boom guided the Finish games industry towards the mobile. The promise of WAP and Nokia N-Gage [failed in the early 2000s], but still we were able to grow. I think the key was that we were focused in mobile game development way before anyone else. When the perfect storm with App Stores happened in 2008 and 2009, we were more than ready. We knew what it is when you are making developing a game to the small screen, the business practicalities, and things like that.
How do we develop more gaming clusters?
You need to have long-term funding. Communal funding is usually European Union-based project funding. So when the project ends, there is no funding, and there is no cluster activities after that at all. These project types are not the way to develop a sustainable ecosystem. We need to have funding for 5 to 10 years, at least, in order to achieve some goals.
Often, the governmental types don’t understand gaming. And of course, the gaming industry is still a new phenomenon in Finland. But those people who are making the decisions are still thinking about them more like the old industries, brick and mortar stores. That kind of stuff.
Listen to the full episode by going here.
📃 Articles worth reading
+ 10 biggest video game acquisitions of all time — “Within the first six months of 2021, the games industry experienced $60 billion worth of deals, with 44 percent of that figure accounted for by those in mobile games.”
+ How to Write Creative Fiction: Umberto Eco’s Four Rules — “Umberto Eco wrote Confessions of a Young Novelist in his late seventies. But having published his first novel, The Name of the Rose, only twenty-eight years earlier, he considered himself a newcomer to fiction writing. Looking back on his career so far, Eco reveals some valuable insights into his writing process. In this post, we’ve extracted four of the key lessons for fiction writers from Confessions of a Young Novelist.”
+ The UX of video game tutorials — “For a long time, it has been customary for tutorials to be a part of the First Time User Experience (FTUE). Usually, this meant that the journey would start from installing the game, followed by a rundown of the UI, adjusting preliminary settings, and being thrown into a tutorial. For newer games, logging into platforms and collecting player permission was adjusted somewhere in that flow.”
+ Designing premium pass systems in games — “Every couple of years there is a new metagame format pops up and swoops the hearts and minds of game designers. From Saga Maps and 4X to Card Collections, new concepts arrive from nowhere, and then suddenly it looks like everyone is copying the pattern afraid to miss out on the next big thing. The Premium Pass mechanic is one such case. Now, in the summer of 2021, it seems that almost every successful free-to-play game has its own implementation of this structure. If you are interested in what makes this mechanic tick, read on.”
💬 Quote that I’ve been thinking about
“Do first things first—and second things not at all. The alternative is to get nothing done.” — Peter Drucker
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I hope you have a great weekend!