Growing the Icelandic Games Industry Beyond CCP Games

As a small country with a population of around 350,000 people, Icelanders like to joke that everyone is practically related – but that’s certainly the case in the local game industry thanks to CCP Games.

CCP Games, which celebrates its 25th anniversary in June, has been Iceland’s biggest success story — not just for its ongoing space-based MMO Eve Online, but also for laying the groundwork for other game companies to emerge over the years. . In fact, new studios are still being set up by former alumni; For example, Parity Games is led by CEO and co-founder Maria Gudmundsdottir, who spent 12 years at CCP.

However, there was a long time when CCP was Iceland’s only game developer. CEO Hilmar Pétursson, who has been with the company for more than two decades, points to the 2008 global banking and economic crisis as an opportunity.

Hilmar Petursson, CCP

“There were a lot of gaming companies that started in Iceland because a lot of intellectual capital was released,” he explains. “The banking system has lost engineers and marketing people. As developers, you’re always scouring the earth for engineers — it’s a lot of what goes into making it.”

Shortly afterwards, in 2009, the Icelandic Games Industry (IGI) was founded: a formal association formed to establish a future vision for the growth of the industry operating under the Icelandic Federation of Industries, which at the time of the formation consisted of ten companies. Today, Iceland has 24 active companies with about 500 employees.

These numbers may seem modest at first glance, but when we take into account the country’s small population, a significant proportion of Icelanders per capita work in the gaming industry – compared to its Scandinavian siblings. Iceland is that higher than Norway and about the same level as Denmark .

More importantly, it is a workforce that sees significant investment. Just like during the banking crisis, Icelandic gambling companies received a record $48 million in investment in 2021 despite the pandemic. By comparison, 2020 was only $13 million, albeit still a big increase from the $3 figure. million in 2019 – and the record is expected to be broken again this year.

This new surge in investment may be partly due to the tech and gaming sector’s rush toward the metaverse – an area in which Icelandic companies specialize, including CCP. About half of the Eve studio’s initial employees came from the Icelandic company OZ Interactive, which was responsible for building OZ Virtual, a 3D world viewer that supported the Virtual Reality Modeling Language (VRML) – an early step in the towards building the metaverse.

“In Iceland people are more generalists than specialists, so the respect for specialism is not very high”

Hilmar Petursson, CCP

This is the direction that Thorgeir Odinsson, CEO of Direct Games, has taken his company, which started as a breakthrough of the CCP office in Shanghai by developing a number of XR projects, including the Ready Player One: Oasis.

“We’ve had the ambition to make the metaverse for a long time,” explains Odinsson. “We have proprietary technology that persists from massive multiplayer worlds and the cross-communication of several pathing servers. We jumped on the Web3 train last year and we’re now making a Web3 MMO.”

But while MMOs and metaverses are the big headlines — including Mainframe Industries developing the world’s first cloud-native MMO, while Klang Games developing a player-built online sandbox universe — there’s also breadth to the projects each company pursues. For example, Parity Games’ first Island of Winds is a single-player story-driven adventure PC game set in 17th-century Iceland, attempting to capture the authentic geography and culture of the country.

According to Pétursson, if there is one common thread, it is in world-building. “You can see every Icelandic company building a world, and it manifests itself in different companies doing different things, from single player to Web3 MMO to EVE Online forever. You can trace that line back to the Icelandic sagas written in the 1200s. Especially if you read Snorra Edda – it reads like a game design script. So we’ve been building narrative worlds for a thousand years.”

While the wider gaming industry still struggles with issues and scandals related to inequality, harassment, crunch and other toxic cultures, the Icelandic gaming industry also prides itself on being a pioneer in the field of equality. Last year, all of the country’s game companies, the Iceland Esports Association and grassroots organization Game Makers Iceland even got together to sign an agreement to work to promote a positive culture.

It is a reflection of the fact that Iceland has historically been one of the most equal countries in the world, particularly in terms of gender, as the first country in the world to elect a female president, while also being voted the most gender equal country in the World Economic Forum’s Global Gender Gap Report 2022 for the 12th consecutive year. Studios similarly adopt a Scandinavian-style flat hierarchical structure, which essentially means, as Parity Games’ Gudmundsdottir puts it, “Everyone is a game designer.”

“In Iceland, people are more generalists than specialists, so the respect for specialism is not very high,” adds Pétursson. “Even if some people are assigned as game designers, we can think, ‘Oh, it can’t be that hard.’ Obviously that’s an attitude that has good and bad, but here we are, with the highest investment per capita and number of employees.”

“There’s a concern when you’re trying to do something niche, but after working in CCP and the role models there, you just don’t give up”

María Guðmundsdóttir, Parity Games

If there’s one problem with the Icelandic games industry, it’s that – regardless of the highly educated and ICT literate workforce – there just aren’t many people in Iceland. This means relying on importing experts from around the world or investing in technology such as procedural generation or machine learning to get big results for teams that typically don’t have more than 10 people (with the exception of CCP, which is still about the half of the employees). game developers in the country).

It’s also about boosting interest from abroad – hence the London event that GamesIndustry.biz attended in September to meet the Icelandic games industry, organized in conjunction with Iceland’s ambassador Sturla Sigurjónsson, as well as Business Iceland and CCP. And the hope is that the event was the first of many.

Odinsson added: “The new frontier we now face is talent acquisition. We are lobbying for changes in both the incentive for talent to move to Iceland and to streamline the application process. Due to Iceland’s small size, we are two phone calls away from the president or any other ministry, so when you have a good cause it’s very easy to lobby for positive change.”

But if we want to bring more people to Iceland, does that mean we’ll see incentives for international companies settling in the country? Anecdotally, this has mostly been the case for Icelanders who have worked for a company abroad and decide to return.

“There’s a technology company called Desana, which has a large office in Iceland run by someone who used to work at CCP,” says Pétursson. “He worked for them in San Francisco, but he moved back home and they said, ‘Don’t go, we’ll just open an office for you!'”

Thorgeir Odinsson, Directive Games

Odinsson adds that limited red tape, fair labor laws that benefit both parties, not to mention Iceland’s reputation as a safe and stable nation, make it an attractive place for someone to set up a studio. Nevertheless, the bigger trend is for companies like Tencent to invest in Icelandic companies, which can also come down to acquisitions.

Given the rapid pace of acquisitions in recent years, it is a trend that Icelandic developers are little concerned about, although the broader industry and consumers may consider the consolidation of the game industry in general tired. This isn’t too surprising given that CCP itself was acquired in 2018 by South Korean studio Pearl Abyss, which Pétursson believes has set a precedent for an investor exit story.

“Startups have a much clearer path to an outcome,” he explains. “Whether they want to sell or not doesn’t really matter, but mentally investors want to leave at some point, and the more exit stories you have, the more it helps everyone build the train tracks further.”

María Guðmundsdóttir, Parity Games

He continues, “Companies are also much more sophisticated both in their investments and in their acquisitions. Especially the Asian strategic and investors, they’ve been pretty smart in how they’ve organized these things, where the style is very practical and preserved. what you’re buying rather than a US-focused approach to integration and strategic synergies. I think you can talk to all the companies that have been acquired in recent times that have been generally positive.”

Having weathered the previous recession and so it looks like it will continue to grow this year and the next, the outlook looks optimistic for the Icelandic gaming industry. Even Gudmundsdottir, whose studio hasn’t published a game since its founding in 2017 and is arguably pursuing an outlier with its single-player adventure game, is unflappable.

“We’re not worried about it because the talent is still there. It’s not going away,” she says. “You worry when you try to do something niche, but it’s in our culture not to give up. After you’ve worked with the CCP and the role models there, you just don’t give up. Maybe you do it in a smaller scope or some other way, but you follow your idea through.”

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