At KTH Executive School we have several times seen the strength when companies from different sectors, but with similar problems, meet and learn from each other. Inspiration on new ways to define and work with a problem can lead to wonderful results – and you don’t have to be afraid to discuss openly about your challenges since you don’t compete with each other.
A growing (and very successful) industri in Sweden is the gaming industry. This text is the first in a series about success factors and learnings from that industry. The insights are based on a report produced by researchers from KTH.
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How to Build a Professional Team
Sustained success takes more than one really good game. With professional teams studios have good chances for repeated success by launching a series of profitable games over time to sustain and grow the business. This research project has yet to uncover the details of how team development is achieved, but some patterns have been observed.
First let’s look at how new firms are started. Typically this occurs in one of two ways. The first is that experienced developers exit their current studio to start their own, bringing knowledge and some starting cash with them. This is how Machine Games got started by people from Starbreeze and Mojang got founded by people leaving King. These founding teams are often small, typically 2-6 individuals, with an early stage product and a strong motivation to build their own game studio. Another common pattern is that younger people start a project while still being students in a game education program. These teams are tend to be bigger, often 8-12 people. Sweden’s well developed systems for social security has been known to help nudging people to take the step of joining. Respondents at such small indie firms sometimes joke that initially they were primarily funded by CSN (the Swedish Government authority for financial aid for studies). In addition, many new companies try to win business or game competitions, to get some credibility and prize money.
The trick is to make the revenues from one game cover the development of the next. In this respect, team size is an issue. Unfortunately many of the indie developers are rather large groups, so they need the first game to be quite a big hit if they aim at staying independent and be able to produce the second and third game. Often small game producers who have less successful early products can survive by doing contract development or consulting for publishers or bigger firms. But the difficulty is to break out of contract development as the revenues depend on worked hours or delivered results to a fixed price, in contrast to being scalable with a successful game’s revenues. Maybe there is a ”contracting trap” in which small developers can get stuck for years as margins are large enough for survival but too small to allow for ambitious own projects?
A alternative approach, used by for instance Coffee Stain when choosing what to do after just barely being able to launch their second game Sanctum 2, is to apply affordable loss reasoning. In short, affordable loss is when entrepreneurs take decisions based on acceptable downside risk, rather than seeking a large all-or-nothing opportunity. Preferably goals and actions that have an upside, even if the downside ends up happening. Rather than investing everything in a third game hoping to make it big, Coffee Stain opted for a project that could be launched with limited resources in a short time so they would still have money left if it failed. And they made it big, with Goat Simulator.
When building the team, one of the first concerns is to have people sufficiently skilled in IT. Sweden has a reputation for IT competence and early IT maturity, consistently ranking in the top of World Economic Fourm’s measures of ability to take advantage of ICT. Then, when it comes to specific video game development skills, there is a number of post-secondary level YH educations committed to teaching this. The most well-known appear to be: Future Games (Stockholm), The Game Assembly (Malmö), Playground Squad (Falun). Moreover, Gotland University College, Södertörn University, Blekinge Institute of Technology, and University of Skövde offer higher education programs focusing on, or related to, game development. Among the major universities, there are a number that offer courses, but not programs, in game development. Talented students from the programs (who don’t start their own studio) are hired, primarily by the bigger firms, in Sweden and abroad. In most respects, these programs have replaced hobby programmers and the former demo groups as a major recruitment source. In addition, social security, relatively well-functioning democracy, and a high standard of living has given Sweden a reputation of being a nice place to live. It is not difficult for the well-known studios to get foreign talent interested in joining their teams.
While IT and game development competence appears to be top of mind in the industry, business competences is rather under-emphasized in general. The larger firms and those owned by foreign publishers are exceptions. In fact, many people in the industry claim that at their firm they want to make games they like themselves and they are not very interested in making money. (And as it happens, many of those who say this in fact don’t make much money.) Conversely, firms that have people with business education and relevant business experience in the founding team tend to do well. They may have started by discovering an interesting target group or by searching for a gap in the market with scalable potential. Examples include King and Stardoll.
Swedish video game production benefits from a corporate culture that emphasizes the achievement of teams rather than star individuals. Many studios focus on developing good teams and pay attention to its long term performance, far beyond the next launch. Teams with competent individuals that work well together can handle very challenging projects.
The team-oriented culture appears to be a component contributing to the industry’s low employee turnover. People rarely move between developers, and the few who quit tend to do so to start their own company. The disadvantage of this is that it can be difficult to recruit experienced developers. The industry can attract competence from abroad, but argues that when it comes to Stockholm, it is nearly impossible to find anywhere for them to live. Other companies in the IT sector have similar experience, for instance Spotify.
One of the most frequently mentioned differentiators, compared to other strong video game regions such as North America and Northeast Asia, is the Swedish business culture. Sweden in general, and Swedish IT-companies in particular, enjoy flat organizational structures and informal corporate cultures. This is proposed to be conductive to creativity and suitable for the cross-functional work of developing games. Business culture in Sweden tends to be inclusive, open and informal. Such environments is believed to be favorable for the discussion of creative ideas, facilitating the invention of innovative game attributes (for delight, see KSF1). Making games requires creative artists to collaborate well with specialist programmers and game designers, who may have very different personalities and values. It has been suggested that such collaboration benefits from Swedish consensus driven management style and culture with high inter-personal respect.
Being a relatively young industry, with many firms driven by founding entrepreneurs, formal management can often be less than fully developed. Unsurprisingly the largest firms, especially those owned by international corporations, appears to have the most mature management and strategy practices.
This text was originally published at playinginthegameindustry.com.