The Swedish gaming industry absolutely booming and turnover has increased more than tenfold in 10 years. But the driving forces behind and what happens now? We explain!
What happened?
The US gaming giant Activision Blizzard, which is behind successes like World of Warcraft and Call of Duty, buying the Swedish gaming company King, with his success story of Candy Crush, for $ 5.9 billion, or about 50 billion. Just over a year ago bought Microsoft Mojang for $ 2.5 billion, or about 18 billion. Other high-profile acquisitions in the industry is the US Electronic Arts ‘purchase of the Dice 2003 and the French Vivendi’s acquisition of Massive Entertainment in 2002.
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What forces are behind?
Swedish gaming industry, which unlike the gambling industry does not develop games aimed at winning money, flourishing. Sales have gone from 650 million 10 years ago to today’s nearly 9 billion. As with other entertainment industries has proven relatively immune to downturns in the economy.
The industry is fragmented among many small players, 213 in all of last year. Only 6 of them employing more than 100 people, and the five largest companies in terms of turnover is King, Mojang, Dice, Avalanche Studios and good fifth Starbreeze, listed on First North.
According to the industry organization Swedish Games Industry, the value of the Swedish game developers to over 26 billion last year.
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Even among venture capitalists is growing interest in the industry. Last year Creandum invested $ 8,400,000 in the Uppsala-based tools developer Hansoft and in August this year wagered Google Ventures together with others Creandum SEK 50 million in King veteran Tommy Palms virtual reality General Resolution Games. Based in Karlstad Lars Wingefors and his company Nordic Games is another example.
Mobile is the industry’s fastest growing segment and accounted for 43 percent of the platforms for the Swedish game developers in the last year.
A review of the large purchases in the industry shows that transactions share some, but far from all of the underlying drivers.
In case Mojang was simply Markus “Notch” Persson as a result of internal strife dropped craving while Dice and King shared the need to back up future developments with a strong industrial player which also synergies were clear.
In Activision’s acquisition of King was the need to fill the hole on the mobile side as occurred in the US gaming giant with Kings proven process and the Kings share the opportunity arose to benefit from a whole new group of customers with few overlaps in the existing base.
What the shops, however parts of the Swedish companies, unlike in many other acquisitions we have seen, been able to retain its independence and culture. In some cases also profoundly influenced by the new owner.
In the case of Dice is the former CEO Patrick Söderlund today Vice President of Electronic Arts, the game engine Frostbite like Dice developed are central in EA’s new games and due to the strong expansion of Dice established a new studio in Los Angeles two years ago.
Part of the reason could be the reason for buyers, now mainly North American, looking right here.
Sweden, created something unique in the borderland between creativity and technical knowledge. Something the buyers of course, want to protect.
What now?
There are few threats to the Swedish gaming industry today and the Swedish game developers feel the wind. Many of the continued independence actors have a profitable growth, long-term owners, a confident leadership and the least dedicated employees where game development is far more than just a job.
Although there is always a price where a business can occur, this suggests at least for a relatively slow pace continues.
Next in terms of size Avalanche Studios, founded in 2003 by Christofer Sundberg and Linus Blomberg and First North-listed Starbreeze.
Other examples potential acquisition target’s Coffee Stain Studios, founded in 2010 by students at the University of Skövde and became known through the game Goat Simulator and the Malmö-based Mediocre founded the same year by Dennis Gustafsson and Henrik Johansson.
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