Gaming Startups in Finland: From Boom to Bust?

Analyzing Finland's games Industry in 2024: why aren't there any new hit companies in the 2020s?

Today, no successful companies are emerging in Finland's games industry. As a local investor in Helsinki, Finland, there aren't many new startups I can confidently invest in or see the potential for growth. From my perspective, Finland has lost momentum.

Things were different in the 2010s. Ten years ago, Supercell had just been acquired by SoftBank. Rovio was a significant developer with Angry Birds, and we had companies like Small Giant Games with Empires and Puzzles. The mobile studio Seriously emerged with its Best Fiends franchise, followed by Reworks with Redecor. These companies reached several hundred million exits. Now, there aren't any contenders for that milestone.

Why has this situation occurred? It's not unique to Finland; it could happen anywhere with specific intentions made before, during, and after a certain period. I believe three factors are essential: the market, leadership, and bootstrapping.

Firstly, the market. You could say that Finland's gaming successes in the 2010s were due to the knowledge built during the era of older Java mobile games and Facebook's canvas games. But the markets played an even bigger role. The App Store and Google Play were astonishing compared to what had happened before; people could release their games independently, with free-to-play monetization, and satisfy various niches within an unsaturated market through highly profitable user acquisition.

Fast forward to 2024. Large incumbents dominate genres, with 400-600 people working on a single game. They’ve built systems to propel UA to be unreachable, leaving little room for small startups raising a few million to make an impact. This shift in market dynamics has led to today's situation, where fewer new gaming companies emerge and thrive. What market characteristics led to the rise of the Finnish game devs in the 2010s are now in the past.

The second aspect I want to focus on is leadership. Back in the 2000s, most companies were still built hierarchically. You had to have talent that had broad management skills. People with experience in game development, recruitment, and P&L were needed to build and manage the companies effectively. These people learned the ins and outs of company building through management, and they went on to build the big Finnish game companies of the 2010s.

So, what has changed in leadership?

In the 2010s, the games industry witnessed the flat hierarchy phenomenon. Teams were empowered to make decisions without the consent of company management. Collaboration among team members was essential, but the independence of teams brought about leadership silos. What was the function of the manager? To make games. Independent teams recruited talented developers, developed games, tested them, and grew successful ones. This didn't necessarily provide the leadership experience needed for success in building companies, which may be why the founders of 2024 are less capable when leaving big companies to pursue success with their gaming startups.

Finally, I want to mention Nokia's influence in the early 2000s. At that time, most Finnish game developers were part of Nokia projects like making games for the N-Gage platform. Many developers had opportunities to attack the market and practice leadership skills within Nokia's gaming initiatives. It was a good setting; they could build games, build companies that were bootstrapped, and learn from their experiences. Talent grew from these situations. In the 2020s, Nokia is no longer present, and the landscape has changed significantly.

In today's realm of VC funding, game developers are immediately pushed into the staged financing journey, where they are expected to raise a new round every 18 to 24 months. There is no Nokia that allows for bootstrapping, to learn to build the company and the right teams before success becomes binary.

Final words

In a future piece, I will highlight how a new way of making games can become a reality. Look out for that later in the spring.

(Photo by Alexandr Bormotin on Unsplash)