Opportunities and challenges for the games industry in Finland

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Table 19. Finnish game firms sorted by their revenue each year 1995-2006.

Revenue EUR / Year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Not available 2 7 6 2 5 7 9 14 9 3 10 18

Non-existent 2 4 3 5 5 6 6 4 6 14 9 6

0 - 199 999 3 2 7 5 7 8 6 11 13 13 17 23

200 000 - 399 999 1 1 3 1 6 5 2 2 7 6 5

400 000 - 999 999 2 3 5 6 4 9 7 8 10

1 000 000 - 2 000 000 2 5 4 5 3 7

2 000 000 - 9 999 999 3 3 4 6 9 7

10 000 000 - 99 999 999 1

A similar trend can be seen in the revenue as in the number of employees. Firms are becoming larger and there are also several small firms. The available data presented in the above graphs and tables is not absolutely inclusive of all the firms and their information. Thus, this presentation is an underestimation of reality. However, the available data does show that the games industry in Finland is growing and has recovered from the technology bubble of 2000. There are more and more large firms and also an active population of small firms. This indicates that the ability of the international games industry to absorb new entrants and their products has not decreased.

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and around 8% respectively, of the cultural exports by the top-30 firms. This exemplifies the attitude that games are not worthy to be acknowledged as cultural products even when the attention is on realised exports. However, there are also views more favourable to the games industry.

Himanen (2004, p. 11) states that the Finnish strategy should include the promotion of the cultural industries (including games) to be the spearheads in the creative economy in addition to the IT industries.

Perhaps the rejection of games as cultural products has to do with the primacy of financial realities in game production. Games are produced to make money and not as art for art‘s sake. In his book on creative economy in the Finnish context Wilenius (2004, p. 18) sees culture as something that may co-operate with businesses, but is not a business in itself. He sees potential in (1) building brands and company image with the help of ―cultural actors‖, (2) doing marketing by offering cultural experiences to key customers and subsidising culture production in order to create goodwill and (3) using culture to motivate the employees. Thus, in his view culture and business are completely different undertakings. Furthermore, Wilenius (2004, p. 34) defines cultural export as the exchange of cultural meanings between different cultural spheres. Again, this way of thinking excludes profitable business because there is no selling involved.

There are also other challenges for the games industry to face. One of them is industry related education. On the one hand, Koivunen (2004, p. 85) argues that the strength of the games industry in Finland is the ability of the Finnish education system to produce up-to-date competence. On the other hand, Bugbear‘s development manager Jussi Laaksonen states that the foundation of the Finnish games industry is a lively demoscene, which means that a large part of the game programmers and graphics artists have been trained through the competitions in Assembly events.

(Hatvala 2007) Games industry related education has emerged in recent years¹³ but it cannot be credited for the growth of the games industry as most of the skills are still developed through active participation in communities with similar interests and hobbies.

One challenge that the Finnish game firms have to face is the absence of domestic funding.

Eskelinen (2005, p. 9) states that the worst case scenario is that the development costs of console and PC games will be beyond the Finnish potential while the mobile games sector remains unable to fulfil the excessively optimistic forecasts. He adds that as the games industry is associated with large amounts of capital, high risks, fierce competition and global markets the emergence of super developers makes it increasingly hard for Finnish firms to enter the market (p. 52). The emergence of international ‗super developers‘ is mentioned as a trend and a threat in Koivunen (2004, p. 85).

In the Finnish Game Companies 06 report it is stated that the rise of the games industry in Finland is not a coincidence but a result of continuous investment in the sector (Neogames 2006, p. 8). From 2005 to 2007 game firms based in Oulu have been able to get both funding and consultations from the ELVI project funded by European Regional Development Fund and the City of Oulu (Åman et al. 2007). Another example is the Fenix Interactive Computing Programme financed by Tekes. In the final report it is noted that contrary to expectations ‗game and entertainment applications‘ turned

13 See Akimo 2007 on the plans of the launch of a games related Master‘s programme at the University of Oulu.

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out to be the largest application area in the Programme measured by both financing and the number of projects (Tekes 2007). The Fenix Programme funded games industry related activities, such as international networking trips, research projects and enterprise projects. (ibid.) From 2007 onwards game developers have been able to obtain partial funding for demo development from the Vertical Software Solutions Programme of Tekes (Bonnici 2007).

In recent years several Finnish game companies have been bought by international firms. In August 2006 Lukkari reported that around one mobile game company per month is sold abroad (Table 21).

One of these was the mobile game developer Fathammer based in Helsinki that became a subsidiary of the London based Telcogames in June 2006. The motivation of this acquisition was the rights to 24 new 3D games and the expected growth in the penetration of more developed mobile phones that will create the market for high-end games. (Myllylahti 2006) The most recent event at the time of writing was the acquisition of Universomo by THQ Wireless in May 2007. THQ reported the motivation for the acquisition to be, in addition to the mobile game development skills, the technological efficiencies that Universomo‘s porting solution can offer (Green 2007). These events raise the question as to whether the purpose of the Finnish games industry is only to produce promising firms for international heavy-league players to buy.

Table 20. Finnish mobile game firms acquired by international companies (based on Lukkari 2006 and Green 2007).

Firm Time Buyer Specialty

Universomo 5 / 2007 THQ Wireless Mobile game development

Fathammer 6 / 2006 Telcogames Mobile game development

Bitboys 5 / 2006 Ati Graphics processors

Oplayo 4 / 2006 Slice Wireless Video technology and mobile devices

Hybrid Graphics 3 / 2006 Nvidia Graphics software

Mr. Goodliving 5 / 2005 Real Networks Mobile game development Sumea 6 / 2004 Digital Chocolate Mobile game development

A further challenge for the Finnish games industry is its dependence on mobility. This issue is raised in the Neogames (2006) report but it is concluded that an ample number of PC and console games have also been developed in Finland. Mobile know-how is seen as a strength for the multiplatform games of the future. Of the 39 firms that responded to the Neogames (2006) survey 28 work on mobile, eight work on PC and/or console and four on other platforms. However, it is stated that the mobile platform is not as dominant as this would indicate because (1) some firms work on several platforms but at the moment mobile games account for the majority of their income, (2) the developers of TV SMS games are included in the mobile platform sector and (3) many of the firms in the mobile sector are about to move to other platforms as well. (Neogames 2006, p. 8, 13-14) Another important reason for the apparent domination of the mobile sector is the bias produced by the relatively low response rate to this Neogames survey. It is safe to say that a significant portion of the potential respondents did not respond. The response rate is not mentioned in the report.

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