‘Our Northern star’: Finland’s game industry nears €2B turnover

Where once it was plentiful timber and mobile phones, now video games is Finland’s most obvious strength. 

The industry has grown dramatically in the last decade: new figures released this week put the turnover of Finnish game developer studios at €1.8 billion in 2014, up from €40 million in 2004.

A lot of this growth is thanks to Tekes, Finland's funding agency for technology and innovation and long-time investor in the country’s game industry.

A report published this week says Finland now has 260 game companies, with turnover soon projected to break the €2 billion barrier, or roughly 10 per cent of the country’s IT output.

When Nokia, once the pride of the country and world’s largest mobile-phone maker, was overtaken in the global smartphone race by Apple's hardware, and Google's Android software in 2012 and 2013, many feared what would become of the highly skilled workforce.

Nokia’s change of fortunes was a heavy blow and prompted Finns to reconsider where the country’s future strengths lay.

During the last 15 years, a time which saw the astonishing rise of Rovio and Supercell, two giant gaming companies with small portfolios of top-grossing mobile games, Tekes has funded over 100 game companies with almost €70 million – helping create what Tekes employees refer to as “our Northern star”.

Ilkka Paananen, Supercell’s founder and chief executive officer, has said his company would not exist without the seed cash received from Tekes.

The funding body understandably likes to propagate the legend, and freely talks up its role in developing the company: Supercell has for several years held the top-grossing rankings for Apple’s and Google’s app stores combined, and paid €260 million in taxes in Finland during 2013 – four times more than Tekes’ funding for Finnish game companies in 2004–2014.

Source: Tekes 2015

“Tekes is critically important,” said Miikka Lyytikainen, chief executive of Aniway, a game development studio. “Especially when there has been only a little support from Finnish VC's for the game industry in the past.”

According to research from Neogames Finland Association, a non-profit industry group, Tekes’ funding has been used as leverage for venture capital funding (VC). The total amount of VC investment in the Finnish game industry in 2014 was over €27 million.
 

Source: Tekes 2015   

Another person grateful for Tekes funding is Petri Järvilehto, co-founder of gaming company Seriously, which produced a game called Best Fiends that has been downloaded on mobiles over 15 million times.

“[Tekes] funding has enabled us to invest into our development process, analytics and tracking, creating a fully integrated tech stack that makes our game development and publishing competitive in a global market. With the funding, we have been able to 'lean forward' with our technology and R&D investments and have been able to scale up at a much faster rate,” Järvilehto says.

In 2012 Tekes launched a programme dedicated solely to the game industry called Skene – Games Refueled, which comes to an end this year.  

"Tekes will definitely continue game business development funding,” said Skene programme manager Kari Korhonen. “Finland is the place to be in game business. [We’ve] got the best talent, and that attracts investors.”

Of course, Finland’s gaming ascendancy is not all about Tekes cash – success has many fathers, said Koopee Hiltunen, director of the Neogames Finland Association.

He lists Finland’s, “strong gaming culture, the Nokia mobile heritage, technology know-how, and a strong game developer community sharing information with each other,” as other critical factors.

A lot of game companies can trace their lineage to the ‘80s and ‘90s – a time before Tekes funding, when Helsinki hosted huge demo competitions and thousands of participants would show off their prowess in coding, 3D graphics and music.

But despite the soaring value of gaming, it is not likely to ever get within touching distance of the economic impact on Finland that Nokia had. In 2007 the company was worth roughly €134 billion and accounted for 4 per cent of the country’s GDP. About 2,600 people work for game companies in Finland; at its peak Nokia once employed more than 125,000 employees.