Games as a Business (2022) by TechSavvy.Media

Games as a Business 2022

New Generation Illustration: Mads Skovbakke

The game industry is reaching adulthood Politics

Talent

Investments

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»We are amazing at making movies. Let’s transfer that to games which have far, far greater business potential«

Educational institutions play a key role in solving the game industry’s need for talent

The gaming industry is booming like never before. So why are investors still hesitant?

01.11.2022

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About: Games as a Business Beneath the entertainment and art of computer games lies a huge business. On a global scale, it is bigger than the film and music industry combined, and in Denmark it has grown explosively in recent years. The growth is driven by a new generation of successful game developers who, across genres, platforms, and local geography, are releasing hits played by billions of players worldwide. Although the industry has previously gained momentum by releasing big hits, something seems to be different this time around.

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»Games as a Business« is produced by TechSavvy Media. Editor in Chief: Sebastian Kjær Journalists: Anna Bernsen, Erik Lillelund og Sebastian Kjær Frontpage: Mads Skovbakke Layout: Vratislav Pecka Published by TechSavvy Media. Contact: sales@techsavvy.media

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A new generation is booming: The games industry is reaching adulthood Revenue in the Danish gaming industry has doubled in just one year, and the explanation can’t be found in a single, worldwide hit - but rather in a new generation of successful developers from across the country.

Ugly Duckling Games wants teachers to teach while gaming

The profits from the gaming success Deep Rock Galactic are now being invested in the Danish gaming industry

»We are amazing at movies. Let’s transfer that to games which have a far, far greater economy« The Danish gaming industry has grown through decades and is, once again, promoted as a future position of strength. But this time, something is different. Something that has the potential to make the industry explosive, says the CEO of the Danish Chamber of Commerce.

Filmby Aarhus on the gaming industry: «We need to improve on many different parameters if we are to be competitive«

The gaming industry should be Denmark’s next export adventure

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19 20-21

Editorial: The Danish games industry is accelerating

Educational institutions can play a key role in satisfying the gaming industry’s need for talent The Danish gaming industry lacks employees like never before. While some game studios are looking abroad to fill their vacancies, educational institutions have gradually begun to scale up their number of graduates.

Sybo insists on constant development

Crypto-economics should make Ember Sword a more vibrant gaming experience

Handball, football and Fortnite: Esports clubs are popping up like never before

Danish esports companies create exports and jobs

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The gaming industry is booming like never before. So why are investors still hesitant? While the Danish gaming industry is gradually turning over and exporting billions every year, gaming studios are still having a hard time finding investors for new projects. One of the reasons is a lack of investment precedents, venture capital funds say.

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It takes more than just money to be a successful video games investor

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The game industry is finding its footing in the fight against climate change

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10 years in the making: Today, Mads’ hobby project has become a lucrative gaming business Creative and genre-breaking indie games are booming. For 28-year-old Mads Skovgaard, it has become a viable career path. But the journey can be tough and full of disappointments if it is only driven by passion and lacks the business.

Games as a Business 2022

Editorial

The Danish game industry is accelerating

D Jesper Krogh Kristiansen Games Consultant, Vision Denmark

uring just the last 12 months, the Danish game industry has seen exits and investments worth more than $200 million, and Danish games and game developers are experiencing a new level of financial success, with revenue, export and profit numbers increasing all the time. All this underlines the basic premise of this publication: Games are a business, and there is money to be made and growth to be created by treating it as such. Games have traditionally always been difficult to understand or describe in general business terms, but we are now finally seeing a tremendous increase in the understanding and acceptance of the quirks of the games industry, as the sheer financial numbers continue to increase and sales and exits have reached a size that makes waves even outside of the industry. Driving the growth is the continuous innovation in both technology and business models, that has always characterized the game industry. Each new step leads to new opportunities and innova-

tions to be explored in a business that truly never sleeps. Change and evolution has been a part of the game industry since its inception, and continue to be, even if the global revenue has passed $200 billion a year. That’s why we at Vision Denmark are not just interested in the challenges that are here now, but also the challenges we see for the industry in the future. We expect the green transition, recruitment, bleed-over into other businesses, and increased utilization of research institutions to be some of the major issues, that we can help the industry solve in the years to come. If we can help solve those problems together with the Danish game industry and the support institutions, we will be able to boost the healthy growth of the sector even further, and use that magic mixture of creativity, aesthetics, fun, play, and storytelling that games are, to create even more fantastic experiences for people across the Globe. And as part of that build healthy businesses, jobs, and careers at the same time, accelerating into the future.

A new generation is booming:

The game industry is reaching adulthood Revenue in the Danish gaming industry has doubled in just one year, and the explanation can’t be found in a single, worldwide hit - but rather in a new generation of successful developers from across the country. Written by Sebastian Kjær

hrow a pizza around obstacles in the form of garden gnomes and fences aand hit the cat’s mouth. That is the simple concept behind the game Pizza Cat, which can be played on the social media Snapchat. This is just one of several games that the growing game developer Funday Factory from Aarhus has developed in close partnership with Snapchat. »Our vision is to create shared adventures - and we do that a lot on Snapchat. It is a very social platform that fits well with our multiplayer games,« Kristian Bang Nørgaard, CEO of Funday Factory, says. The team has grown to more than 40 employees and the company is still hiring constantly. The games are doing well in terms of both number of players and revenue, while Funday Factory is working on new game projects: They are developing a game in a large and wellknown universe, and are announcing their first co-op title for PC called »Don’t Die in the West.« »We have been working on original IPs for the past 8-9 years. Now we are in a good position, where we have the know-how and the finances to develop and finance them ourselves,« Bang Nørgaard says. A growing industry From Funday Factory and Brightstar Studio in Aarhus to Tactile Games and Ghost Ship Games in Copenhagen. From Slipgate Ironworks and Bedtime Digital Games in Aalborg to FRVR in Horsens. Funday Factory is just one in a long line

Søren Lundgaard, CEO and co-founder, Ghost Ship Games

of Danish game developers who have achieved massive success in recent years - not least commercially. The latest report from the Danish Producers’ Association shows an increase in revenue from DKK1.1Bn in 2018 to DKK 1.3 billion in 2019. And the preliminary figures for 2020 show an even more explosive growth, as the revenue will double to nearly DKK 2.6Bn. This shows that the gaming industry is well on its way into a new golden age, according to Jesper Krogh Kristiansen, gaming consultant in the audiovisual cluster Vision Denmark. »Over the past 12 months, we have seen acquisitions of Danish game studios for an estimated amount of DKK 1Bn. From my point of view, this is very positive, as it shows that Danish gaming companies have great value and can easily compete internationally - because the acquisitions are primarily international,« he says. Although the acquisitions mean that

Games as a Business 2022

business,« Kristian Bang Nørgaard from Funday Factory tells. This meant that the business had to be scaled back to around 20 employees while a new strategy was laid out and executed. A strategy that meant a shift away from consulting services and towards collaborating with partners on games. Today, this is also the case with their new, large partner, Snapchat; Funday Factory has co-ownership of the games and thus an upside if they do well. At the same time, the developer is working on a PC title that they fully own. This has all led them back to the size of 40 employees - and this time with a foundation where they can better facilitate future growth themselves: »The journey has taught us a lot and sharpened Funday Factory’s business strategy. Things are extremely easy when you are growing and everything is smooth sailing. Simultaneously, you find out exactly how difficult it is when everything is an uphill battle,« Bang Nørgaard says.

Nina Kelstrup, Chief People Officer, and Kristian Bang Nørgaard, CEO in Funday Factory.

the game developers will be on foreign hands, he believes that it is a great development for the industry in Denmark. »A lot of money is entering the ecosystem, and some of it goes into new projects. This can be seen, for example, in Ghost Ship (which was sold to the Swedish Embracer Group in 2021 ed.), which reinvests in other game developers in the Danish industry. The same applies to Slipgate Ironworks, who wants to develop the capacity for big and expensive blockbuster games in Aalborg - which is good for both Aalborg and the industry as a whole,« Krogh Kristensen says and adds: »It signals that the game industry is worthy of investments. It should be clear to politicians and investors that it is not just pocket money and toys - it

is actually an industry where you can make real money.« The foundation for growth A new generation of successful Danish studios has been established in recent years, but the road to success has been very different from company to company. Generally, there have been both ups and downs along the road. This also applies to Funday Factory, which started out as a one-man studio back in 2011. »In the first years, we grew quietly, but that accelerated tremendously towards 2017, where we were 40 employees and experienced rapid growth through a collaboration with Lego. Then Lego changed their strategy and chose other partners - and then we had to reinvent the

Why now? Ghost Ship Games was founded in 2016, released the game Deep Rock Galactic in 2018, and in November 2021 the studio had sold three million units before being acquired by Swedish Embracer Group. Thus, the game studio joins the ranks of new successes. But if you ask CEO Søren Lundgaard, who has 20 years of experience in the industry, there is no one good answer as to why the wave of successful Danish games is coming right now. »These are very different businesses, and each of them has a unique business model. It does not come from one thing, and some of it is random. But I think a big part of the explanation is that the gaming market is growing. There are new sub-markets flourishing that one can do business in. And had there been 20 more startups three years ago, we would have seen 10 additional successes right now. It’s just a question of volume the opportunities are out here,« Lundgaard says. Slipgate Ironworks is based on nostalgia for 90s shooters. Brightstar Studio combines blockchain and the NFT wave with a game in the MMO genre.

Acquisitions in the last 12 months:

Jesper Krogh Kristiansen Games Consultant, Vision Denmark

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The acquisition costs have not been announced, but the sales of these five prominent studios are estimated to have brought in more than DKK 1 billion.

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Ghost Ship Games (Embracer Group, via Coffee Stain Holding, August 2021)

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3DRealms (Embracer Group, via Saber Interactive, August 2021)

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Slipgate Ironworks (Embracer Group, via Saber Interactive, August 2021)

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Flash Bulb Games (Nordic Games, November 2021)

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Invisible Walls (Embracer Group, via Amplifier Game Invest, March 2022)

Tactile Games - which is the studio with the biggest revenue right now - is strong in free-to-play on mobile. And Ghost Ship Games itself has become successful with a Games as a Service model and a strongly community-driven game. The differences are great, but if Lundgaard must point out one thing that has changed since he started in the industry 20 years ago, it is that the Danish studios have embraced collaboration. »In the wake of the indie wave which started in 2010, the Danish game industry has gained much more community. You know each other and you help one another. Most people focus on a global market where they are not competitors - but rather want to help each other out,« he says. A maturing industry Although the successful games studios differ in both genres, platforms, and the path to success, Jesper Krogh Kristiansen from Vision Denmark sees one important similarity: All the companies are established by experienced people. In the hit-driven gaming industry, it often happens that a new studio’s first game only becomes a mediocre success or even a flop. This experience, however, should help make the next game successful. And the more employees who gain experience in the Danish gaming industry, the more opportunities they get to establish new, sustainable game studios with experienced people at the

helm, Jesper Krogh Kristiansen says. However, this is not the first time that the gaming industry has gained momentum which should make it a position of strength. The Danish game Hugo was a huge international success in the 90s. Hitman took the world by storm in the 00s. Subway Surfers found its way onto billions of smartphones in the 10s. Still, the industry has reached a higher level of maturity with the new wave of successes, according to Jesper Krogh Kristiansen: »Even though the new wave is in its infancy, I’m starting to see some signs that the bottlenecks will appear elsewhere this time. In the past, the biggest challenge was always funding, but today it is also about recruitment. It shows that the industry is growing and the scale of the need for talent has only grown larger with the industry,« he says. »The funniest time in 20 years« Funday Factory has been on a long journey with ups and downs, but today the company has come out on the other side with a stronger foundation and more experience. And in that way, the company may in fact be a symbol on how the industry has moved. »The industry has matured - there are a lot more people with 15+ years of experience now than there were 10 years ago. There are more and more spinoff studios from people with experience, and they start out with more knowledge and know-how, and already have a good network from day one. What we see now is really competent entrepreneurship,« Bang Nørgaard from Funday Factory says. Although the Danish game industry is progressing, there is still plenty of room for growth. Look no further than Sweden: In 2020, the industry had a revenue of €3.3 billion or around DKK 25 billion. »Compared to Sweden, we are still at a very fragile stage. But the number of successes is approaching a double-digit number, and I think that will have an impact on how the industry can move forward. We are starting to see the hockey stick on the growth curve,« Søren Lundgaard from Ghost Ship Games says and adds: »I am very optimistic on behalf of the Danish gaming industry. It’s definitely the funniest time of my 20 years in the industry.«

Games as a Business 2022

Danish game successes over the years 1990 Hugo Hugo became known on TV screens all over the world in the 90‘s, where viewers could call in and control Hugo with the buttons on their landline phone. The game was released on a multitude of platforms as well - from Commodore 64 to PC and Playstation. And according to the creator Ivan Sølvason, he managed to sell over ten million computer games in 14 languages and earn the company DKK 800 million before the adventure ended.

1998 Hitman (IO Interactive) The bald assassin was an instant success when the game was released in 2000 as the first major bet on a triple-A title in Denmark. IO Interactive was bought and sold multiple times in the following decades - even close to bankruptcy in 2017 - before the studio returned to Danish owners. And today, the studio is doing better than ever: In 2021, the World of Assassination trilogy reached 50 million players - and the studio reached a turnover of DKK 502 million ($78 million) in 20/21.

2010 Limbo/Inside (Playdead) It took Playdead four years to develop the grainy and gloomy puzzle-platformer Limbo, but when it came out in 2010, it became a reviewer favourite and an indie classic. Six years later, Playdead followed up with the spiritual sequel Inside, which has today received 31,559 »overwhelmingly positive« reviews on Steam. The studio is currently working on its third game.

2012 Subway Surfers (Sybo/Kiloo) Subway Surfers is a viral super hit for smartphones: the polished endless runner game simple took the world by storm. 10 years later, the main character Jake is still surfing urban scenes around the globe, the game as reached 3 billion downloads and still has over 100 million active players every month - which has made the game a golden business for the two Danish game studios behind.

2020 Penny & Flo and more (Tactile Games) Tactile Games has actually been developing games since 2009, but has really made its way into the huge, global market in recent years with a series of super-popular free games for mobile - including Lily‘s Garden, Simon‘s Cat and Penny & Flo. Revenue grew from DKK 430 million in 2019 to DKK 1.350 million in 2020.

2020 Deep Rock Galactic (Ghost Ship Games) Deep Rock Galactic‘s ravenous space dwarfs greedily digging into distant planets were already a success when the game was launched as »early access« in 2018. The full launch in 2020 has led to the sales of several million units. Since then, Ghost Ship Games has been acquired by Embracer Group - and the game is still in the top 50 best-rated on Steam among more than 60,000 titles.

2022 Ember Sword (Bright Star Studios) The game Ember Sword from Brightstar Studio has not yet been released, but even before its launch, the game has attracted a community of 250,000 gamers eager to play it. So eager, that they have already reserved virtual land in the game world worth an accumulated DKK 1,3 billion. The upcoming game in the MMORPG genre will be playable from a browser, and it embraces a blockchain-based economy - which might be the beginning of an exciting, new chapter in the Danish gaming industry.

Sponsored: This article is made in collaboration with Ghost Ship Games

Ghost Ship Games wants to fill the void:

The profits from the gaming success Deep Rock Galactic are now being invested in the Danish gaming industry With three investments in Danish gaming studios in one year, Ghost Ship Games has become the most active seed investor in the Danish gaming industry. The game studio hopes it can open other investors’ eyes to the huge potential of the industry.

dventurous space dwarfs greedily digging themselves into alien planets have become such a huge commercial success for the game studio Ghost Ship Games that they have now started investing part of their profits in other, upcoming game developers. »It is a gap in the market that has been left behind by Capnova (discontinued venture fund that invested heavily in the gaming industry at an early stage, ed.),« Søren Lundgaard, CEO

and co-founder of Ghost Ship Games, explains. »And investments are needed, especially at an early stage if the industry is to thrive. We have just seized that opportunity.« The gaming company is still busy developing and expanding its own game, Deep Rock Galactic, but is now simultaneously seed-investing in the Danish gaming industry. A move Lundgaard believes is absolutely crucial if the Danish gaming industry is to be as successful as the neighbours in Sweden.

Søren Lundgaard CEO and co-founder, Ghost Ship Games

Games as a Business 2022

»We have been inspired by the Swedish model: Those who have sold their game studio have chosen to invest their earnings back into the industry. We have not seen this in the same way in Denmark - but we are trying to change that now,« says Lundgaard. Aiming for the long term hits Over the past year, Ghost Ship Games has invested in three very different game developers: Ugly Duckling Games, Half Past Yellow and Games Swing. A range that is necessary as an investor in the hit-driven industry. »We are not philanthropists; we expect a return on our investments. But we have a very long horizon - if it takes 10 years to become a commercial success, that’s fine,« Lundgaard says. Ghost Ship Games invest significant amounts of money in young studios, knowing that many of them may never be commercially successful. However, expectations are that those who do manage to produce a hit will make up for it. And without those early investments, they will never get the chance to unleash the potential that ultimately drives the entire industry forward.

The 3 first investments from Ghost Ship Games:

The founding team behind Ugly Duckling Games - the second studio Ghost Ship Games invested in.

A new, big muscle in the industry The CEO hopes that Ghost Ship Games can help foster the next generation of new, Danish gaming successes. At the same time, he wants other Danish investors to realize the potential in the Danish gaming industry. »We certainly hope to inspire others to invest in the gaming industry as well. The potential for striking a good deal is enormous, so it’s a bit wild that we do not have competitors in the investment market in Denmark right now,« Lundgaard says.

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Games Swing (January 2021): Started developing the game Stikbold - A Dodgeball Adventure during a Game Jam at ITU - which they later decided to commercialize. The studio is currently working on its spiritual sequel which will be published by the giant Ubisoft.

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Ugly Duckling Games (September 2021): Develops »Drama Studio« which is an animation tool targeted at schools - a kind of virtual theatre that supports teaching. Their mix of game mechanics and EdTech has led to 26,000 licenses being sold to Danish schools in four months.

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Half Past Yellow (January 2022): Develops small, whimsical games that push the boundaries of what a game can be through gamejamming and rapid development. The first games already have hundreds of thousands of players, and with their effective framework their big, international hit is just a matter of time.

Ugly Duckling Games wants teachers to teach while gaming

he research project »Sæt Skolen i Spil« already showed it five years ago: using commercial computer games as a vessel for teaching helps students learn - across age groups, abilities and gender. But the project also proved it challenging to unleash the potential: »It is difficult to help teachers use and understand commercial games well enough to use them directly in their teaching - despite the opportunities,« Tore Neergaard Kjellow, who is one of the people behind the research project, says. For that reason, he joined forces with Lars Kroll Kristensen and Pelle Sølvkjær Christensen and founded the game studio Ugly Duckling Games, which develops games that remove those barriers and make it easy to integrate the computer games into teaching. More than digital math The first game from Ugly Duckling Games - Drama Studio - is a virtual theatre where students create 3D animated sto-

Drama Studio is a virtual theatre that helps students tell stories in an fun, collaborative and engaging way - which is easily incorporated into teaching.

ries together. This way, it works just as much as a creative tool powered by game mechanics. »The children must find the gaming experience so captivating, that they want to go play it in their free time as well. At the same time, it has to be useful enough for the teachers to start using it in their teaching right away,« Neergaard Kjellow explains. During the last four months, the young company has sold 26,000 Drama Studio

licenses to Danish schools. Their goal, however, is much bigger: to engrain their new game as a standard tool across the education system. »Traditionally, educational games address a certain skill in a certain subject in a certain grade. Drama Studio is relevant throughout students’ education because it is a creative, collaborative tool. And then, of course, it is used for something else in kindergarten than in high school,« Neergaard Kjellow says.

Brian Mikkelsen on the game industry:

»We are amazing at making movies. Let’s transfer that to games which have far, far greater business potential« The Danish gaming industry has grown through decades and is, once again, promoted as a future position of strength. But this time, something is different. And that »something« has the potential to has the potential to make the industry explosive, says the CEO of the Danish Chamber of Commerce. Written by Sebastian Kjær

omputer games constantly tread the fine line between culture and business. Sometimes the cultural sector’s perception of the game industry has made it difficult for the industry to be taken seriously as a commercial player. But in fact, Brian Mikkelsen, CEO of the Danish Chamber of Commerce, believes that it is precisely the mixture of culture and business that will make the industry grow explosively in the coming years. »I think it will be the new growth industry. I believe that all the cultural businesses are going to experience a renaissance because we need experiences. And I think computer games will provide business opportunities in themselves, but also through synergies with other industries,« Mikkelsen says. Danish furniture design and Danish films are already doing well abroad. And Mikkelsen believes that the same creative muscles puts Denmark in a particularly interesting place when it comes to the gaming industry. »In the world we live in, stories are important. Stories allow classic, Danish furniture to sell all over the world, and so can Danish games,« Mikkelsen says. »We

already have the prerequisites: games are a creative business and creativity is something we teach in primary school.« Not just nice to have The gaming industry is an extremely international market where success can be effectively scaled and exported to the rest of the world. Mikkelsen already saw this during his time as Minister of Culture in the 00s, when the game Hitman from Danish IO Interactive became a global sensation in a matter of months. A success that has been followed by several Danish games since. But also a success that requires a focus and nourishment of the industry if the successes are to flourish continuously. »I think computer games were seen as something that was nice to have, in the past. It was something kids played while Astralis became their heroes - but the business potential wasn’t commonly recognised. But the industry has proven its business potential, and now it’s time for action - it’s an industry we need to focus on,« Mikkelsen says. According to the CEO, more game developers must be educated, and it must

Games as a Business 2022

Brian Mikkelsen, CEO of the Danish Chamber of Commerce

be easier to attract talent from abroad so that the industry’s talent shortage can be met. It must be more attractive to invest in the industry - also for the Danish Growth Fund. And on a softer level, he believes we need to further acknowledge the successful role models the industry has already created. »We are so proud of Danish film. Imagine if David Helgason from Unity was as big a hero as Thomas Vinterberg,« Mikkelsen says. »Not to disregard Danish film, but David Helgason has created 100 times more value for the Danish society in terms of jobs and tax revenue than Thomas Vinterberg.«

An inevitable momentum Brian Mikkelsen was previously both Minister of Business to Minister of Trade and Industry, and thus had the political responsibility for handling the gaming industry. This was at a time when the industry renewned its momentum and was predicted a role as a growth engine - just as it is today. However, he believes that the gaming industry’s climate is different this time: the industry has reached a maturity, both culturally and businesswise, that it did not have just five years ago. »Previously, computer games were a niche aimed at a narrower audience

- but now it is for everyone,« the CEO says, adding that he himself occasionally plays the football game Fifa with his children. »The business community must acknowledge the great business opportunity. With a younger generation of politicians who are used to playing computer games combined with pressure from the population, the politicians will probably be convinced of its potential - and then resources will come to the industry,« Mikkelsen says. »We are amazing at making movies. Let’s transfer that to games which have far, far greater business potential.«

Filmby Aarhus on the gaming industry:

»We need to improve on many different parameters if we are to be competitive« It will require a national effort if the Danish gaming industry is to permanently take an international lead, according to the business park Filmby Aarhus, that houses a creative cluster of gaming companies. Written by Erik Lillelund

ilmbyen in Aarhus hosts a creative business park with over 100 companies within film, games and media. Including a number of Denmark’s most prominent game studios like Bright Star Studios, Ahoot Media and Funday Factory, who through the incubation environment Gameslab get access to workshops, events, knowledge sharing and play-throughs. But the local and municipal initiatives cannot stand alone, if the Danish gaming industry is to truly flourish and unleash the potential that many experts have attached to it. It will require a national effort to seriously strengthen the ecosystem around the game studios, says Steen Riis, Head of Filmby Aarhus and The West Danish Film Fund. »It’s not just about pushing one single button. Our neighboring countries all have a fully-fledged ecosystems consisting of better networking opportunities, financing solutions, education and labor. That is why we need to improve on many different parameters if we are to be competitive and improve the framework for the gaming industry in Denmark,« says Steen Risom. In contrast to the film, television and advertising industry, where three times as many are self-taught specialists (33 percent), the gaming industry is more in demand for technically founded labor when developing new big game titles.

Steen Riis, Head of Filmby Aarhus and The West Danish Film Fund

»It is not our job to provide the answer, but in fact to help the industry define what they need. And many of the companies are calling for the education system to be correctly constructed in relation to the demand in the market,« Steen Risom explains. Nevertheless, Denmark is now home to a number of international mega successes such as Ghost Ship Games, Slipgate and Unity, which all accounted for a considerable part of the industry’s total

turnover of DKK 2.65 billion in 2020. That is why the potential for a new Danish leadership position is evident. »We have companies in Denmark that can potentially go very, very far. But if we are to continuously foster international gaming successes, we need to be sharper on all aspects of the ecosystem. From education to the established game studios being motivated to reinvest in the ecosystem,« Steen Risom says.

Games as a Business 2022

Sponsored: This article is made in collaboration with the Danish Chamber of Commerce

The gaming industry should be Denmark’s next export adventure Denmark is the hotbed of iconic game classics like the Hitman series as well as the world’s most used game engine, Unity. But the Danish gaming industry is much more than that. In recent years, we have seen high growth numbers; the industry grew as much as 80 percent from 2019 to 2020. If we do it right, the potential is even greater and can really boost Danish exports: Danish Producers’ Association: Huge potential attracts foreign investors The huge potential has made many foreign investors travel to Denmark to meet the promising games companies. This is clearly shown by the interest in the annual industry event Copenhagen Matchup. Among the 80 investors and game publishers who eagerly tried to strike a great deal last year were major global players such as Nintendo, Microsoft, and Ubisoft. Foreign investors making capital available for companies to grow and develop is obviously great. But if we want the companies to establish themselves in Denmark, it would be advantageous to have more Danish inventors involved in the gaming industry – especially in the early stages. »We hope more Danish investors will realise the opportunities that exist in the gaming industry. Especially a large player like The Danish Growth Fund. Unfortunately, it seems that the Growth Fund is hampered by a more traditional approach to investing. We are in dialogue with them about this and have strongly encouraged them to get involved in the gaming industry’s growth potential,« Charlotte Enevoldsen, Deputy Director of the Danish Producers’ Association says. Vision Denmark: We need to speak up for the gaming industry Traditionally, there has been a lot of

focus on the film and music industry when it comes to the creative professions. And there are a lot of great, Danish films and music albums, but we need to recognize the many talents who help create games at the highest, international level as well - especially from a political point of view. »There is no doubt that game development is a Danish position of strength. We have seen several major foreign acquisitions and investments aimed at Danish games companies - especially during the past 12 months,« Jan Neiiendam, CEO of the business cluster Vision Denmark says and adds: »This position can undoubtedly be further strengthened with the right frameworks and conditions. This way, we can anticipate the challenges, like green transition and recruitment, that are already lurking on the horizon - which are precisely some of the areas we work with at Vision Denmark.« Danish Chamber of Commerce: It is also about the business climate Talent shortage is a major theme across industries, but in the gaming industry the shortage is nothing new. For many years, it has been difficult to hire enough developers, and the opportunity to bring in IT specialists from abroad is limited by the current rules. »At Danish Chamber of Commerce, we believe that the gaming industry provides a window into some of the challenges that many companies struggle with. Among other things, it is far too difficult to find enough suitable developers, and there is lacking a closer connection between the Danish gaming educations and the real needs that the companies have,« Ulla Rønberg, chief consultant at Danish Chamber of Commerce, says.

Charlotte Enevoldsen Deputy Director, Danish Producers‘ Association

Jan Neiiendam CEO, Vision Denmark

Ulla Rønberg Chief consultant, Danish Chamber of Commerce

Slipgate Ironworks create first person shooter games. This is a screenshot from the action game Ghostrunner.

Educational institutions can play a key role in satisfying the gaming industry’s need for talent The Danish gaming industry need employees like never before. While some game studios are looking abroad to fill their vacancies, educational institutions have gradually begun to scale up their number of graduates. Written by Anna Bernsen

ust a few years ago, it was difficult to get a foot in the door of the Danish gaming industry. That is not the case anymore. The industry is growing massively, and today it is hungering for more qualified employees, which has resulted in Danish game studios looking abroad or paying large sums to be put in contact with a candidate. The great demand is also felt at The Animation Workshop, which is part of VIA University College. »There is a need in the industry that neither we nor the universities alone

will be able to satisfy. Because when you look at the composition of a team in a gaming company, there is a need for many different competencies that you cannot find in a single educational institution in Denmark,« says Kasper Kruse, head of The Animation Workshop. The Animation Workshop offers three different bachelors in animation, and each year around 65 people graduate from the school. From 2023, VIA University College will also offer a new education targeted at the gaming industry.

Games as a Business 2022

The Animation Workshop is well-regarded for its top educations aimed at the international film and game industry.

Kasper Kruse Head of The Animation Workshop

»VIA trains software engineers already, but from next year on we will offer a new software engineering program specializing in XR (Extended Reality, ed.) and gaming. We have not yet laid out the entire program yet, but we plan for the software engineers and animators to collaborate during their training,« Kruse says. When the new software engineers have completed their training, they could very well end up as employees at game studios, Kruse says. But there could also be a need for their competencies in the more traditional industry, as more companies look towards the metaverse. In any case, the gaming industry must be activated when the new engineering program is launched. »Many of the teachers in the animation programs are guest teachers from the industry, who teach their core competencies. We will probably use the same model in the new programs. That is why it is important for the industry to be actively involved in the education system, because in many ways it is also an investment for the companies themselves, as they will probably train their future colleagues,« Kruse says. Potential for more students at ITU As the gaming industry is still relatively new, there are only a few core educations

that are linked to the sector. This is the conclusion of the Labor Force Analysis of the Digital Visual Industry, which has been conducted for the Producers’ Association and Vision Denmark. In 2019, 162 students graduated from the core educations, and among them, there is relatively low unemployment, while the wage development for many of these educations has been higher when compared with other industries. In other words, there is no stopping the gaming industry. This is also noticeable at the IT University in Copenhagen, where 50 people graduate annually from the MSc in Games. »There is absolutely a lack of talent in the industry, and we would like to educate more people, but we can’t all of a sudden graduate twice as many. I do think, however, that we could accept 5-10 more people into the program annually,« says Miguel Sicart, who has 20 years of experience in the gaming world and is an associate professor at ITU. Despite the demand for labor, Miguel Sicart is not a supporter of a BSc in Games. »A bachelor’s degree should be a broad education that gives you a solid foundation on which you can build your specialization. Gaming is already a specialized field combining multiple disciplines. We would be educating students to work in a very narrow career path,« Sicart says.

Photo: Workshop/VIA University College

Miguel Sicart Associate professor, ITU

Slipgate Ironworks is located in Aalborg, but only 25 of the organization’s 200 people work here. The rest are located all over the world.

Overseas talent Danish Slipgate Ironworks is one of the game studios that has a hard time finding the right talent in Denmark. That is why the studio is hiring employees who live abroad. »The talents we need in order to create our productions are extremely difficult to find in Denmark. By having freelancers working remotely, we can find the right talent anywhere in the world. It also means that the freelancers can work where and when they want, which is an advantage for many,« says Frederik Schreiber, CEO of Slipgate Ironworks. In total, the game studio has an organization of about 200 people, but only 25 of them work at the office in Aalborg. However, Slipgate Ironworks gives everyone the opportunity to move to Denmark and work. The game studio even has an employee whose only job is to take care of residence permits and the like. Because even though working remotely creates flexibility, there are disadvantages as well. »When you work on a larger project, it is a drawback that you cannot turn around and ask your colleague for advice, because the colleague may be in a completely different time zone. Therefore, I would definitely hire more locally in Aalborg, if it was an opportunity,« Schreiber says. Therefore, Schreiber is also positive about the prospect of more Danish educational programs targeted at the gaming

industry. However, the director of Slipgate Ironworks has some clear views on what it should include. »If I were to do a software engineering education in Denmark, I would focus on the programming language called C++ and low-level programming. In Denmark, few people are trained in the language, despite the fact that it is a competence that almost all game studios need or at some point will need,« Schreiber says.

Frederik Schreiber CEO, Slipgate Ironworks

Disrupted industry The gaming industry is constantly evolving and is time and again disrupted. Therefore, the game educators also have an obligation to teach the students the subjects that are most relevant to the industry. »One of the ways we keep the curriculum updated is to collaborate with the local industry. We have two employer’s panels that meet twice a year, who have access to the courses and give us feedback and suggestions in order to improve them,« Sicart says. Kasper Kruse is also aware of the industry’s rapid development and the need for cross-disciplinary collaboration. »If you want to put together an effective game team, you need people with a wide variety of skills and backgrounds. So the need to link the more creative competencies with IT competencies is huge. Therefore, the educational institutions must complement each other and cooperate, as far as that is possible,« Kruse says.

Games as a Business 2022

Sponsored: This article is made in collaboration with SYBO

SYBO insists on constant development It has been 10 years since SYBO released their mobile smash hit Subway Surfers. The company has grown and matured tremendously since, but SYBO still manages to stay creative and convince the best talents to join their journey.

he Copenhagen-based game studio SYBO hit a clean home run when they released the game Subway Surfers almost 10 years ago. Since then, it has been played on billions of smartphones around the globe - a long journey that has grown and streamlined the company. »You could say that in the first years we were infinitely creative - in many different directions. Since then, there has been a more strategic direction, so the tree has been trimmed to grow upwards instead of just sprouting outwards,« Mathias Gredal Nørvig, CEO of SYBO, says. However, it has been important to him to stick to the original company culture while growing. SYBO’s core values anno 2022 originate from the studio’s infant years; including the company’s views on creativity and quality. And to this day, SYBO is still trying to maintain the balance between wild creativity and targeted growth - budding and growing upwards. »There is no secret formula. We have experimented in attempts to tread new paths, and we have made mistakes along the way, which have been wildly uncomfortable. But it is necessary if we want to reach our full potential,« Gredal Nørvig says. More appealing than ever Just because SYBO’s huge hit is 10 years old, it does not mean that the company is stalling - neither financially nor creatively. Subway Surfers is constantly evolving, it is still a viral hit after so many years, all the while the game studio is working on new, secret projects. »We’re hiring like crazy, and we get some really talented people, who we manage to relocate to Denmark,« Gredal Nørvig says. The fight for talent is global and insanely competitive. The mere fact that foreign developers move their families to

The super-viral mobile game Subway Surfers from SYBO will soon be able to celebrate its 10th anniversary.

Denmark to work at SYBO is a testament to the industry’s perception of the studio as an attractive workplace that is still pushing forwards. »Even though we cannot compete with the big studios’ salaries, we still manage to attract the best because we are on this journey. There are many components to it, but I actually think that our culture is the decisive factor when the final choice has to be made,« Gredal Nørvig says. Neverending evolution In most companies, the journey from 10 to 140 employees means a journey from the Wild West to more organized operations. But even as SYBO has grown and matured,

it is still a creative, young, and successful company that insists on innovating. In practice, this means listening to feedback from employees as more of them join the journey. To listen closely to their games’ fans, on whom the studio is deeply dependent. About not being complacent just because you previously released the world’s most downloaded game. »It is important that we don’t just let go because we think we are in control. We insist that we are not done developing as a company. The future is a moving target, and we are doing cool things - but we are not done and we don’t have all the answers. There is still a lot we learn on the fly,« Gredal Nørvig says.

Crypto-economics should make Ember Sword a more vibrant gaming experience Bright Star Studios’ upcoming game will challenge World of Warcraft with a new take on the genre. For example by letting players buy and operate virtual land plots and cities in their game in order to make the universe more alive. Written by Sebastian Kjær

ince World of Warcraft saw the light of day in 2005, it has been the gold standard for how to create a magical, virtual universe that is still relevant almost 20 years later - and has earned staggering sums along the way. A new game studio from Aarhus is currently working on the game Ember Sword, which will challenge the genre’s giant by adding fresh elements to the game experience. Among other things, with a new technology that makes it possible to play Ember Sword directly in the internet browser - across mobile, PC and console. An artificial intelligence that always lures the player on new adventures in the game. And a blockchain-based economy, which gives players the opportunity to buy and develop the land in the game, so that the experience becomes more vibrant for other players. And 35,000 players have already pledged to buy DKK 1.2 billion worth of land plots in the game. »It was not what we expected. I always thought the game would be great. But we started with 2D, which became 3D, and the 15,000 land plots have become 150,000. And it could be even bigger, the demand is there, but we also had to set ourselves a goal that is realistic to achieve,« Mark Laursen, CEO and co-founder of Bright Star Studios, says. The first version of the game will not arrive until the end of the year, while the full experience is expected to be ready in 2025. However, the game has already earned staggering amounts before it

was even released thanks to its blockchain mechanic, but the CEO promises that they are first and foremost trying to create an excellent game - which has the potential to show a new commercial path for the gaming industry. An open gaming economy As a former professional World of Warcraft player, it was obvious for Mark Laursen to throw himself at a game in the same genre, and use his experience to improve the flaws and shortcomings he had experienced. And one of the wishes from the getgo was an open economy, where he as a player could trade in the swords, armour and other rare items he found on his adventures. »The original concept was just a crypto-based, digital currency that allowed players to trade with each other. Gear and skins worth billions of kroner are already being traded in the big titles today - the publishers just don’t allow it which makes it a black market. We would rather open up the economy and activate trading as part of the game in a safe and secure way,« Laursen says. Blockchain proved to be the obvious technology for the purpose, as it made it easier for the new studio to add the marketplace without having to build a huge, financial setup. At the same time, the technology instils credibility: Developers can not tinker with the rules of the game’s economy - e.g. a certain skin’s rarity - once they are established on the blockchain.

Mark Laursen CEO and co-founder, Bright Star Studios

Games as a Business 2022

Ember Sword uses the blockchain to establish how rare an item is in the game. At the same time, the plan is to enable video clips from the gaming platform Twitch to be saved along with the sword, so that the next owner can see which monsters it has previously killed before buying it on the game’s open, crypto-based marketplace.

Distributed game development With its blockchain-based business model, Bright Star enables players to monetize their achievements in the game, but the CEO stresses that this does not mean you have to buy anything to play it. If you fight your way to a rare, cosmetic upgrade for your sword, it can be sold and converted into old-fashioned cash - while items that make the player stronger or getting the hero to the next level can only be achieved by playing. The game’s economy does however gives players a monetary incentive to participate and engage in the game making the virtual world come to life. A principle Ember Sword also makes use of in its ‘Artist Workshop’, where players can design and sell cosmetic items for the game. And a principle that especially applies to the trading of virtual land plots in the game: »The goal of an Massive Multiplayer Online game is that a lot of people play it at the same time. But if you look at the cities in some of the big games - for example, World of Warcraft - they do not change; you meet the same people and shops each time you visit. By letting the players own and operate parts of the game, they participate in creating a living universe available to all players, where the landowners get a share of the sales that take place in their city,« Laursen explains. Thus, he heralds a future for Ember Sword, where the game’s earnings are distributed between content creators, landowners and the game studio itself through the blockchain. A model

Laursen expects will lead to a better gaming experience. »No one has found the recipe for making a good blockchain game yet, but we only use a blockchain because we

have a clear vision for doing so. Developing the good game is our first, second and third priority - and the blockchain is just a small part of the game,« Laursen says.

The gaming industry‘s many business models: Even though the gaming industry is young, its business models have been constantly changing. Sales of physical copies and digital licenses have always played a big role, but right from the start, unit sales were followed by arcades, where you could buy yourself one play at a time. Later, the Hugo showed that games can also be licensed for TV stations, and since the turn of the millennium, the range of possible business models has grown tremendously: •

Game as a Service: Since World of Warcraft was launched in 2005, it has required a $15 subscription per month to play. The revenue ensures the continuous development of the game.

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Free 2 Play: The esports giants League of Legends, DOTA and Counter-Strike

are free to play. In return, they make money by selling, among other things, cosmetic upgrades in the game - socalled skins. •

In app purchases: Mobile game developers quickly discovered that it was lucrative to get players to download their app for free and pay for a game currency in the form of jewels or blackberries inside the game instead, which could then in turn be used to progress faster in the game.

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Play 2 Earn: The latest addition utilizes blockchain technology to create the game‘s own, more or less complex, economy, which can be used to reward those players who are particularly skilled or active in the game.

Ember Sword wants to solve 3 problems in the MMO genre: •

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High friction: It is cumbersome and time-consuming to download a game and keep it updated. That‘s why Bright Star Studio has developed a technology that allows players to access their game directly in the browser and start playing in a matter of seconds - whether from the computer or the phone. Low engagement: MMO roleplaying games offer amazing peak experiences when the big dragon has to be killed, but also many hours of

grinding for resources and training the character. Bright Star has developed an AI Game Master that creates a more vivid experience automatically and in real-time. •

Closed Economy: Players do not have the ability to translate the value they have created inside the game once they have finished playing it. Bright Star changes that with its open marketplace where cosmetics and land plots can be bought and sold for cold cash.

Handball, football and Fortnite:

Esports clubs are popping up like never before In a few years, esports has become a regular fixture in public sports clubs, who are queuing up to engage young gamers in meaningful gaming communities. Written by Erik Lillelund

ven though people are still getting together when the city’s children play a match for the local football club or the youth teams clash on the handball court, esports have today taken its place in society and the associations. »Children and young people get a great deal out of being part of communities in an organized framework where one’s competencies are recognized. It develops many social skills when they learn to communicate with each other, to express emotions, help each other as a team and generally be add value to others,» says Christian Cramer, former esports consultant at the public sports organization DGI and one of the driving forces behind the national efforts on the subject. Since 2017, when DGI first launched initiatives to integrate esports into communities, it has only gone one way: Up. In just five years, about 200 associations have been formed and with 7.200 active members, all training Fortnite, Counter Strike, FIFA or another game at competition or leisure level. The training is similar to any other sport: the coach sets out with a presentation of the focus area of the day, which the players train through isolated exercises. Then usually a training match followed by an evaluation of the process made. »Just like if they practiced football, they grow as individuals. You learn as a person

to celebrate success and to reflect on defeats,« explains Christian Cramer. The sport’s newfound recognition sport means that many children and young people who would otherwise sit isolated in their room are now more physically active as part of team building with their esports team. In addition, they can easier share their experiences in the gaming world with others. »Parents are happy that the time that children invest in the games is much more clearly translated into competencies and good habits,« Christian Cramer says, who a few months ago resigned from his position at DGI and founded the platform EHUB, which aims to make it easier for coaches and volunteers to arrange esports training.

Christian Cramer Former esports consultant, DGI

FACTS •

Between 2017-2022, about 200 associations with 7.200 active members were founded

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Denmark is one of the world‘s leading nations in esports with two world champions in the football game FIFA and the world‘s highest ranking Counter-Strike team

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Over 60% of Danish continuation schools have esports as an elective or main subject to study.

Games as a Business 2022

Sponsored: This article is made in collaboration with the Danish Chamber of Commerce

Danish esports companies create exports and jobs

Jasmina Pless Head of Entrepreneurship at the Danish Chamber of Commerce

In just a few years, esports has become a fast-growing global billiondollar industry. The transition from a niche in cybercafes to a global entertainment industry with sold-out stadiums has transformed esports forever. Esport is growing massively both in the form of associations and companies, but esport is also an industry that sparks growth far beyond its own domain. Denmark has really made a splash on the international esports scene, where Danish players are at the top of some of the biggest games; Counter-Strike, League of Legends and Fifa, to name a few. Every year, the Danish company BLAST hosts one of the world’s largest Counter-Strike tournaments, where 500.000 fans are watching from all over the world, and the Danish teams Astralis and Copenhagen Flames are at the top of the world rankings in Counter Strike. The rapid growth of esport on a global scale has also led to the growth of new business models related to esport. The industry creates both exports and jobs for Denmark, but esports is also an industry that creates growth far beyond its own domain. As there is a large overlap between people with specialized IT skills and who are interested in esports, gaming can be used as a recruitment tool to find great IT talent. Copenhagen Capacity and BLAST have, among other things, collaborated to attract international IT talent to Danish companies, and both the Royal Danish Army and many large companies have seen the potential in attracting employees with esports skills to their departments for cyber defense. The reason being, that many of the qualities gamers gain by joining a team makes them perfect for an IT security department where it is im-

portant that you think fast and work as a team against a common enemy who is sitting on the other side of the screen. With the many new opportunities and business models within esports, it is important that we unite the industry. Therefore, Dansk Erhverv has brought together the esports industry in a new business network, which consists of approximately 15 companies with esports at the core of their business. The association Esport Danmark is also part of the network as a link to the Danish esports associations. One thing is clear: a strong association for esports and a well-functioning industry of commercial esports companies are each other’s prerequisites - just as we know it from other sports such as football.

The game industry is booming like never before. So why are investors still hesitant? While the Danish gaming industry is gradually turning over billions every year, gaming studios are still having a hard time finding investors for new projects. One of the reasons is a lack of investment precedents, venture capital funds say. Written by Erik Lillelund

Games as a Business 2022

he idea that the gaming industry is a phenomenon reserved for a nerdy niche segment has gradually become so outdated that it has eventually been put aside. Luckily. Today, the world population is gaming like never before - on computers, consoles or telephones. The global gaming industry has an annual turnover of more than DKK 200 billion. dollars - much more than both the film and music industry. In 2020, the Danish gaming industry had a turnover of approximately DKK 2.65 billion kroner according to the industry’s own estimate - a colossal increase of 184 percent since 2017. Nevertheless, our neighbouring countries are still far ahead in the area with industries that are many times larger. In Sweden alone, sales in the same year amounted to DKK 24.5 billion kroner. In December, this prompted a number of game studies and the Producers’ Association to call for wider recognition of an industry in enormous growth from the Danish investment world. Investors and venture capital funds are reluctant to invest because it is a difficult area to analyze, critics said. And there may be something to that. »The history of investments and experience are both hugely important in assessing the potential of very early game startups. And both we (PSV) and the Danish ecosystem in general lack history and therefore many investors are left with only a subjective assessment of whether a game startup is good or bad. And that is both insufficient and a very risky background to make an investment decision based on,« Anders Bach Waagstein, co-founder and General Partner of the Pre Seed Ventures (PSV) Tech01 fund, explains. At PSV, they actively invest in companies such as Gamerpay, which work structurally in the gaming industry as a trading platform for ‘skins’ across various game titles. But they are still hesitant when it comes to investing in studios that produce or publish the games themselves. Here, the Danish ecosystem around the gaming industry lacks some experience and some exits, Anders Bach Waagstein says. »What we have seen in the b2b-SaaS area, for example, is that over a number of years, generations of successful companies have emerged, from which new teams and companies with new solutions have sprung up. This is how an ecosystem is built. Experience simply creates sharper projects. At this point, I would think that we in the gaming

industry still lack generations 2 and 3,« Anders Bach Waagstein says. The chicken or the egg Organizationally, there are also dilemmas in the industry. In contrast to, for example, Sweden, that has the dedicated industry organization Dataspelsbranschen, Danish game studios still belong to the Producentforening along with a number of other creative and visual professions. And when game developers apply for public funding, it must be done through the Danish Film Institute (DFI). That means that the game studios focus too much on art and culture, and too little on becoming a large and sustainable business, says Søren Gleie, CEO and founder of the stock-listed game studio Trophy Games, which in addition to developing games also invests in other gaming companies. »It is unfortunate that the only grant system in Denmark is under DFI, where there have strong criteria for artistic and cultural values. That means many small studios or game developers shape their product in that direction - and it dissolves the commercial mindset in these potentially large gaming companies before they have even started,« Søren Gleie says. The Trophy Games-CEO greatly misses a broader recognition at the societal level that can help fulfil the potential in the Danish gaming industry. »It is unambitious that we do not have our own industry organization in the gaming industry, but must ‘share’ with the film industry. It should almost be the other way around. The film industry is nothing in terms of size in relation to the game industry,« he says. When it comes to the lack of investment, it is in many ways the story of the chicken or the egg. It’s a Gordian knot that demands people in all parts of the ecosystem to become better at working with game titles as investments, the Trophy Games-founder explains. »The venture capital funds see it as an investment just like anything else. And we have not yet reached a point where game-startups today have the necessary experience in the team from other exits or the required professionalization that makes it easier to get investors on board. But at some point there will be exits, and then we will see a completely different traction and willingness to invest - I have no doubt about that at all,« Søren Gleie says.

Søren Gleie CEO and founder of the stock-listed game studio Trophy Games

Anders Bach Waagstein Co-founder and General Partner of the Pre Seed Ventures (PSV) Tech01 fund

Sponsored: This article is made in collaboration with Nordisk Games

Nordisk Games wants to fund, support and challenge creators to make the best games in the world. To accomplish this, the team behind it consists of gamers and game industry veterans.

It takes more than just money to be a successful video games investor A wave of acquisitions has hit the game industry, but surprisingly little information is available on the process. Nordisk Games shared their insight on the support needed to succeed in a consolidating industry.

ordisk Games may not be one of the oldest video game companies, but its solid track record of providing strategic guidance, operational support and growth finance makes it well placed to share the process of equity investment into game studios. According to Sofie Filt Læntver, VP of Value Creation at Nordisk Games, all of this begins with the onboarding process: it is essential to ensure that any potential partnership is the right fit for both parties. In addition to considering what value the studio can add to Nordisk Games’ portfolio, it is equally important to consider what Nordisk Games can add to the studio. »Right from the very beginning of the process, there are lots of questions -

besides the pure financial match - that need consideration by both sides,« Læntver explains. »Are we the right match for each other? Can we build the right levels of trust that are needed to collaborate? Do we have common goals and similar levels of ambition? Can we have fun creating amazing games and growing the company together?« User research made accessible Nordisk Games offers a wide range of support to their portfolio studios in order to help them find new ways to flourish and grow – including leadership training, business development, market research, and access to their network of industry partners to support growth.

Games as a Business 2022

Last year Nordisk Games acquired Flashbulb Games - a Copenhagen-based studio who pioneered the genre of construction games.

However, one of the more radical initiatives was building a state-of-theart user research lab at the company’s headquarters in Copenhagen. This allows the studios in the Nordisk Games family to commission research and gather data that can help them develop new content, gameplay features, stories etc.– essentially making good games even better and minimising commercial risk. »I’ve seen user research make the difference between a game failing or succeeding,« says Jonathan Bonillas, user research manager at Nordisk Games, who has years of experience in leading user research teams, »But there are still plenty of game studios that don’t do it. Should they be? Absolutely. But are they doing it? No – and that’s often because of cost. It’s an expensive, luxury support department. You’re talking about getting a bunch of scientists together to conduct science on your game.« Previously, user research labs were only available for the biggest studios, but Nordisk Games has made it accessible by providing it across multiple studios. What that research looks like is entirely down to the studios. Research can begin at any stage of the development process, from pre-concept ideas and what features could be considered for a

game’s sequel to live-testing on multiplayer elements and DLC. »Every study is customised and tailored to the client’s specific requirements,« Bonillas explains. »We can do studies focused on the core mechanics and features of games and we’ll ask users questions like ‘are they fun and engaging? What do you think of these features?’ Or it might be that the developer is thinking about introducing a game design idea but doesn’t know how players will respond, so we’ll do market research and get that data for them.« In it for the long haul By focusing on shared knowledge and leadership, quality, data, business and culture on a journey of continual improvement, Nordisk Games is supporting the studios in its portfolio to unleash their creative potential. Done with the right partners, this investment approach should lead to long-lasting and successful relationships that deliver the best games globally - and hopefully some profits in the process. »Today we have a support catalogue of different areas we can help with, and are currently creating more Labs within Market Research, building on IP expan-

sion and self-publishing knowledge hub,« Læntver says. The games industry is an increasingly consolidated market with still bigger players. Still, Nordisk Games says it is pretty content riding in the backseat. And that doesn’t mean sitting back and letting the studio do all of the work. »I think – and I’m very respectful of this – that a lot of developers are afraid that you’ll come in, take over and suddenly start making all of the key decisions,« Læntver says. »That’s not how we do it here. If we don’t trust our partners to do the best job, then why bother investing in the first place?«

About: Nordisk Games •

Nordisk Games was founded in 2016 and made its first studio investment in January 2017.

•

Since then, the company has welcomed seven more game studios into the Nordisk Games family, helping them grow and strengthen their value offerings.

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Nordisk Games invests in studios with the intention of sticking with them for the long haul.

The gaming industry is finding its footing in the fight against climate change The game industry has only recently begun to unite the industry in an attempt to battle climate change. But the industry is moving fast, and the focus is not only on what the game studios themselves can do but also on how they can nudge the players to make sustainable choices.

Written by Anna Bernsen

he gaming industry is still at level 1 when it comes to sustainability. Because while we know how many tonnes of CO2 the clothing industry and the aviation industry emit each year, the gaming industry’s total emissions are still unknown. »We do not yet know the carbon footprint of the gaming industry, but we know that there are many sections of the gaming industry that can be made more sustainable. Game studios, distributors, event organizers, and end-users can do their part to adapt to a more sustainable everyday life,« says Susanne Hodges, Office & Project Manager at Nordisk Games. Hodges is also Project Lead on the Nordisk Games initiative PlayCreateGreen, an online handbook that through advice and examples from the industry, guides gaming companies to more sustainable initiatives. »Whether you are a small company working on your first game, or a large company, with many game productions, the question is often: Where do we start if we want to be more sustainable?« Hodges says, and highlights some examples from the handbook: Companies can, for example, furnish the office with recycled furniture, make sure to turn off all electronics when the

work day is over, and switch to electricity from renewable energy sources. The companies can also try to influence their end-users in a more sustainable direction by, for example, incorporating an ‘eco-mode’ in the game that is less energy-intensive, or nudging the players to turn off their computer or console after use. Sybo surfs on trees The UN’s environmental initiative Playing for the Planet Alliance is also advocating for a greater focus on sustainability. When the alliance was founded in 2019, one of the big goals was to bring the gaming industry together to reduce its carbon footprint, and ensure that companies have the right tools to measure progress. Today, the alliance includes 30 gaming companies and seven trade associations, of which 60 percent of them have committed to being carbon neutral or negative by 2030. One of the gaming studios that helped launch Playing for the Planet Alliance is Danish Sybo. »We are a company with a strong purpose: We really want to entertain, but we also want to do something good with the platform we have. This means that since the founding of the company, we have invested money into impact projects

Susanne Hodges Office & Project Manager, Nordisk Games

Games as a Business 2022

and, for example, have donated money to build wells. We have a big impact because we have such a large reach,« says Mathias Gredal Nørvig, CEO of Sybo. 100 million people play Sybo’s hyper-popular mobile game Subway Surfers every month, and if the company can move them in a greener direction through the game, they actually have the opportunity to move far, far more, than by becoming CO2-neutral themselves – which they are also working towards. Nørvig elaborates that Sybo is very aware of how the company communicates the green agenda to its users.

Sustainability at Sybo

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Sybo has implemented a number of green initiatives within the company, for example, the game studio has solar cells on the roof, organic food in the canteen, while Sybo also compensates for the CO2 the company emits.

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»All companies can do something. But there are also things that are more difficult for us to influence, for example where in the world our servers are located,« says Mathias Gredal Nørvig, CEO of Sybo.

Sybo risks scaring everyone away if they simply tell users that they are doing everything wrong, and have to turn their everyday lives upside down in order to become greener. Instead, it’s about involving people in the journey through games. In November 2021, Sybo invited all players to participate in the Subway Surfers Play 2 Plant event, released as part of the World Tour Vancouver update. Players traveled from leafy Vancouver to a faded version of World Tour New York to transform the surrounding tracks and buildings into a green and grassy environment by surfing through the streets on their selected hoverboards. »The point is that you can influence the world in a greener direction because it is undeniably nicer to run in a place that is green and lush than grey and dying. At the same time, we show that it is possible to influence the players in a more sustainable direction without it becoming moralizing,« Nørvig says. The Play 2 Plant event sprouted from a collaboration between Sybo and Ecologi, as the goal was to plant trees in Subway Surfers and around the world. With the help of the Subway Surfers players, Sybo planted more than 200,000 trees in the Subway Forest during the Play 2 Plant event.

10 years in the making:

Today, Mads’ hobby project has become a lucrative gaming business Creative and genre-breaking indie games are booming. For 28-year-old Mads Skovgaard, it has become a viable career path. But the journey can be tough and full of disappointments if it is only driven by passion and lacks a business-model. Written by Sebastian Kjær

ou have the opportunity to become a mighty wizard who only gets more powerful as he kills huge spiders and giant dragons. You can fight, build or trade your way to better equipment and a larger colony. Or you can just wander off exploring the vast, magical world. The extensive and colourful pixel universe in the computer game Necesse was developed by the one-man army Mads Skovgaard. A world he began to shape back in 2012 when he was no longer just interested in playing games but also wanted to make them. »It started like so many others with an interest in games - which became an interest in game design, programming and art. And then I just kept developing it in my spare time until 2019, when I decided to give it my all for half a year. And since then I have been able to make a living from it,« Skovgaard tells. He characterised his own development process as extremely long and unfocused. Typically, he spent a few hours on the game each day while working full time elsewhere. But today, he is 28 years old and passion has become a full-time job. Since Necesse was released on Steam two years ago, he has sold 20,000 copies - which is enough to pay himself a current salary on the fun side of DKK 100.000 each month. Something he was not considering at all when he started out 10 years ago: »I did not see it as an opportunity. I thought of it solely as a hobby - so the

Although Ideas Lab is an Aarhus initiative, the incubator works as part of a national ecosystem. This means that the incubator is integrated with initiatives and organizations such as Vision Denmark and Game Hub Denmark, with which they collaborate on everything from pitch training to coaching and competence development for the gaming industry.

fact that it has become my job is almost more a dream than reality,« he says. Indie teams need business Although many indie games like Necesse begin their journey under cramped conditions, the genre has exploded over the past decade. On the gaming platform Steam, which is the largest distributor of games for PC in the world, there are currently 60.000 games available, and according to VG Insights, over 95 percent of them are released by indie developers. However, the explosion means that the market has become much more competitive. The huge supply makes it difficult to break through, and while indie games

make take up 95 percent of the virtual shelf space they account for only 40 percent of revenue. Thus, several years of development can end without any pay, if the business part is not considered early. To help the indie developers on their way, Filmby Aarhus has opened the incubator Ideas Lab, where budding gamers can sit under the same roof, gain an understanding of the games business and not least learn from their peers, Christian Nyhus, Head of Incubation in Ideas Lab, explains. »Of course, we want the entrepreneurs to grow up and become financially sustainable - and we would love for them to grow big. But we start by making structural

Games as a Business 2022

Mads Skovgaard Developer of Necesse

Christian Nyhus Head of Incubation, Ideas Lab

Mads Skovgaard describes Necesse as a kind of Minecraft meets Diablo: The game contains settlement, crafting and mining features - combined with a combat focus, where you develop you character by fighting bosses with friends.

help available regardless of the size of the companies and expand the help from there,« Nyhus says. The risk profile is also different in the small indie teams. They do not require large amounts of funding to get the game finished but rather time and guidance while refining their craft. »There is a completely different approach to indie games. Here, developers try to evolve the game continuously with a soft release, then collecting feedback while developing at the speed possible for them,« Nyhus says. »Most Danish game entrepreneurs are driven by creativity before commercial interests. Here, the primary thing is to create the cool game - and then everything else must come afterwards.« The ecosystem around Filmbyen includes everything from one-man bands like Mads Skovbakke with Necesse to Funday Factory with 40 employees. That way, they can inspire each other, and the newcomers can see what it takes to make a commercially sustainable game. And especially on the business side, Nyhus believes that indie developers have a lot to gain by being part of the incubator. »We can make a clear difference by helping with strategic and managerial decisions, contact with the investor communities, the public business support system, fundraising - all the things they do not really have the capacity or network to lift themselves yet,« he says. Full indie Even among indie developers, it is common to raise money to develop the

game. But Mads Skovgaard has chosen the true indie road: He has paid for the entire development and even built his own game engine from scratch. And today, he is willing to go to great lengths to hold on to this freedom – even when Necesse hopefully becomes so successful that the one-man army becomes a game studio with more employees and more game titles. »I really want to fight for independence from software, publishers and investors. I have no one to answer to, and as a creative, that’s a huge advantage. Then it’s only driven by creativity and passion - and then I imagined the money came a little by itself. Which they have started to do,« Skovgaard says.

What are indie games? •

Indie is short for »independent video game», which means that the game receives neither financial nor technical support from a major publisher.

•

While hundreds of people are needed to develop the largest, new computer games, there is typically only one person or a small team behind the indie games.

•

The number of indie games has exploded in the last decade - not least thanks to tools such as the game engine Unity, which has made it both technologically and financially possible for small companies to make games that gather millions of players.

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