Ahead of the game

Published: 
April 2016

Finland has become a global market leader in the lucrative mobile gaming industry. Could the country’s unique business culture be the key to its success?

Rovio, Supercell, Zynga, King and Kabam...a new generation of mobile gaming firms are swelling the ranks of the billion-dollar businesses. Over the past few years, the arrival of digital platforms like the AppStore have transformed the gaming sector, allowing even the smallest of firms to reach a global customer base and make spectacular returns. Supercell, for example, had around US$7 million revenue per employee in 2013 – seven times that of companies like Google.

One country that has been quick to seize the potential of this new high-growth sector has been Finland. From Rovio’s Angry Birds to Supercell’s Clash of Clans, Finnish firms are behind many of the blockbusters and its gaming industry generates annual revenues of around €2bn. But how did a country with just 5.5 million people at the very northern tip of Europe become a leader in the market, when Australia’s once-promising gaming industry appears to have stalled?

Now a research project is exploring the factors behind the Finns’ astonishing success. The work is being carried out by Professor Peter Liesch at UQ Business School, in conjunction with Professor Elizabeth Rose at Otago University, New Zealand and Professor Irina Mihailova at Aalto University, which is located in Finland’s capital Helsinki and has close links with the gaming industry.

Until the middle of the 20th century, Finland was relatively isolated from international markets and heavily reliant on the timber trade. The roots of today’s gaming industry undoubtedly lie in the rise of Nokia, an established industrial company which by the late 1990s had become a global leader in mobile phones. Nokia pioneered mobile gaming, and pre-loaded its popular Snake game on to some of its handsets. Prior to launching its ill-fated N-Gage gaming device in 2003, it also funded local developers to ensure there would be games available.

Nokia’s success was short-lived as it failed to match competition from the iPhone and Android and was subsequently acquired by Microsoft. However it left behind a pool of talented programmers and engineers, many of them the industry veterans of today. It also convinced the government that Finland’s future lay in technology.

The Finnish national technology agency TEKES offers support such as interest-free loans to growing businesses and by 2014, had invested over 19 million euro in 56 different companies.

“Virtually all successful Finnish start-ups have benefited immensely from TEKES,” says Professor Mihailova, who has worked with many of these firms. “One extremely positive effect is that having access to this extra ‘risk free’ capital makes Finnish start-ups more attractive to venture capital firms. Overall it has been a very positive force in the Finnish economy as tax revenue from Supercell alone is many times higher than the total investments TEKES has made.”

Aside from the skilled workforce and government support, other factors which have helped the industry’s development include Finland’s world-class education system, superfast broadband and a strong reputation for design. The Finns like gaming and are proud of their industry. Angry Birds branding adorns everything from T-shirts to soft drinks and the Rovio’s former chief marketing officer, ‘Mighty Eagle’ Peter Vesterbacka, is one of the country’s best-known personalities.

Perhaps the hardest factor for outsiders to replicate, however, is the Finns’ culture of openness and collaboration. The willingness to share best practice is at odds with business customs in other countries where knowledge is closely guarded. ‘Team Finland’ – as it has been called – has a strong spirit of community. Finns are always ready to help each other out and celebrate each other’s success.

According to Professor Mihailova, this attitude may have its roots in the country’s history. Although the country was originally part of Sweden and later the Russian empire, the Finns have long been united by their unique language and a strong bond of trust, as well as their sauna culture and love of the outdoors and winter sports.
She adds: “The Finns believe that to have a global success there are no Finnish competitors and they follow three principles in business - create together, think global and embrace challenges. The openness and collaborative spirit represents an essential element for development of successful games, and it engenders a creative and innovative process. It can be regarded as a culturally-embedded advantage that is difficult to create in other markets.”

Finns also tend to have flat hierarchies and low levels of egotism – few aim to be a superstar. SuperCell’s CEO, Illka Paananen, has described himself as ‘the least powerful CEO in the world’ since his teams have almost a complete autonomy.

Thorbjörn Warin, a stalwart of the Helsinki gaming and start-up scene notes that there are few Finnish companies where the CEO has his own room and most have a policy that everyone removes their shoes on entering the building. Mr Warin, a Swede who is now based in Helsinki, says the attitude in reflected in the Finnish saying, ‘Everyone looks the same when you are in a sauna’.

He says: “The individual is almost never in focus – it’s about team effort, it’s about company effort and the kind of things we can do together. So people tend to even underplay their own achievements… ‘I didn’t do so well, it was a team effort, everyone pulled in’.

“That sort of hunger to stand out and grab attention - that, to many Europeans even, is an American trait - that produces more ‘top notch’ individuals but in Finland and Scandinavia in general [the structure] is more flat, there’s more focus on the organisation.”

Mr Warin says that Finnish gaming companies prefer small teams. Rather than 150 people trying to complete a project within a short timescale, they will have 15 working on it over a longer period. He believes this creates ‘a different sense of ownership’ and ‘a different level of quality’.

Finland’s growing reputation attracts investors from around the globe and the annual Slush summit in Helsinki is now Europe’s biggest start-up event, with over 15,000 attendees in 2015. By funding a Finnish games company, venture capitalists can have a ‘fail fast or win big’ company in their portfolios for relatively low investment.

However, Finnish games firms are generally cautious about engaging with investors and like to maintain their independence and control. Throughout the industry an ‘indie’ spirit prevails, with developers driven by their own ambitions and creativity rather than by business practice. To the Finns, making games is more than just a business, it’s an end game in itself. As Mr Warin says: “It’s not a skill, it’s not a business, it’s an art form but then you can apply skills and business on top.”

Innovation is another driving factor. Ilkka Paananen, CEO of Supercell, once explained: “Financial results were not our initial objectives that were driving our motivation. Instead we wanted to create a new type of gaming company and to come up with the new way of making games.”

Professor Mihailova believes that this is the key to the rocketing popularity of Finnish games. “It is the unique story, graphics and the design that creates a game’s value and appeal for the customers. The interplay between design-driven and technology-push innovation is at the heart of the Finnish success.”