How Helsinki evolved into a global video game hit factory

October 6, 2014, 6:12 PM UTC
Finland, Helsinki Harbour in winter
BOISVIEUX Christophe /—Getty Images

Over the past decade, Helsinki has delivered a string of hit video game franchises from different development studios, from Remedy Entertainment’s Max Payne and Alan Wake to Rovio Entertainment’s Angry Birds to Supercell’s Clash of Clans. Although console games from companies like Remedy and Housemarque, makers of Super Stardust Delta, Dead Nation and Resogun have been hits with gamers, the majority of game studios have had success in the mobile space. Finnish mobile company Nokia, which is now all but gone after Microsoft (MSFT) purchased the Nokia Devices and Services business, helped plant the interactive seeds for many of the mobile game studio successes.

“We have to credit Nokia for the fact that Helsinki studios are really good at building mobile games,” said Petri Jarvilehto, Chief Creative Officer of mobile game start-up Seriously. “Nokia’s massive growth in the early 2000s was incredibly important for the local gaming scene. Once Nokia started growing, they started outsourcing a huge amount of development locally.” In 2003, Rovio was founded, and Jarvilehto credits Nokia’s growth as a contributing factor, along with that of other mobile-related companies. “Then Apple hit with the iPhone and Nokia started going downhill,” he said. “Suddenly, we had this vast amount of expertise of people who had been creating mobile games for mobile applications and Apple provided the perfect platform to ship and develop on, so people started shifting over to Apple. Many of the successes that we’re seeing now are things that have actually taken ten years to build.”

Jarvilehto is also an example of how gaming start-ups have succeeded. The Finnish development community is very tight-knit, with multiple developers comparing the growing number of studios to a family. That has made it easy for executives and developers to migrate from one established studio to another, or start one from the ground up. Jarvilehto was the lead game designer on Max Payne 1 and 2 at Remedy before joining up with Rovio immediately after the launch of Angry Birds to head up its games division. He’s now taking the lessons learned from both of those companies and applying them to Seriously, which is comprised of key executives from Rovio and Fox Interactive. Seriously is releasing its first IP, Best Fiends, this month. While Angry Birds was designed as a game first and then branched out to animation and merchandising, Best Fiends has been built from the ground up to deliver a multimedia experience for players across animation, games, books, music and stickers.

Veteran game developers are further incentivized to start up new companies by the Finnish government. The government agency Tekes is the Finnish government funding agency for innovation, which has many programs in it including Skene – Games Refueled to fund the game industry. This allows game makers, even those with little capital to apply for grants or loans. Saara Bergstrom, head of marketing at Next Games, believes that 100% of the game companies in Finland have received some type of government assistance that they didn’t have to pay back.

Deals are often orchestrated with an initial free money grant followed by a loan, or loans. That type of funding from Tekes and other sources helped Supercell grow into one of the most successful game studios in the world with its Clash of Clans free-to-play mobile game. Once they were acquired by Japanese telecom giant SoftBank, the government was paid back.

Mikael Haveri, head of self publishing at Housemarque, likes to say the government gives developers a second chance. The studio, which is working on the new PlayStation 4 action game Alienation with Sony (SNE), has seen many developers succeed where studios in other countries may have failed. Even if a studio has released some games and is running low, or out of, capital, they can always turn to Tekes for funding.

It’s worth noting that Rovio released 52 mobile games before creating the global hit, Angry Birds. Back then, the studio was just a handful of people in a country of 5 million. But today the brand almost has the same recognition as a Disney (DIS) property or Hello Kitty, according to Blanca Juti, Chief Marketing Officer at Rovio. How did Rovio get its brand known globally with almost no marketing budget?

“We’ve always used very disruptive marketing through animation that’s a little bit edgy, a little bit crazy and then our fans posted on forward and so it goes,” said Juti. “We are engaging with our fans, who are doing the marketing for us. Merchandising is really part of that too, and it’s this very tactile experience of knowing your character, and maybe going to bed with your plush character, and so on. We’ve hardly done any advertising at all.”

PlayRaven, another Finnish studio that sprung from ex-Remedy developers, just released a World War II mobile strategy game called Spymaster that’s currently a top three strategy game in both the U.S. and the UK. Lasse Seppanen at PlayRaven, said his company just secured $800,000 through Tekes to fund research and development for future games. The goal is to one day pay that money back either through taxes or by employing people and then paying taxes to the government.

About a year and a half ago, the Helsinki City government launched NewCoFactory, a new service under Enterprise Helsinki to help game developers and other industries succeed on a global scale. Mika Valtasaari at Enterprise Helsinki NewCoFactory, said the initiative was a reaction to Nokia running into significant trouble and laying off people. NewCoFactory helps people that were moving out from those companies find new jobs, while helping gaming companies that were already developing projects find new talent.

The government has been active in providing multiple programs for game developers to benefit from. Indrek Vainu, a business advisor at Helsinki Business Hub, said there’s been great success with the bi-annual Pitch Helsinki event. Game studios have been able to receive direct funding through this event, including over $194,000 for Tunnel Ground, over $776,000 for Small Giant Games and over $2.5 million for PlayRaven.

“This is venture capital money coming in on top of the money you get from local government organizations like Tekes or the local industrial support organizations,” said Vainu. “It’s a very good environment to be in as an investor because the companies can use the money that they’re getting from investors and match that up with public funding, which decreases the risk associated to the initial investment on their investors’ side.”

Angel investor Jari Ovaskainen hopes to replicate the success he had with Supercell with his latest game start-up, Next Games. Former Supercell, Rovio and Disney creatives are working on The Walking Dead: No Man’s Land mobile game with AMC, which will launch early next year. Next Games received over $8.5 million in funding, including an investment from Lionsgate. The game maker has a first look deal to turn any of the Hollywood studio’s properties into games, while Lionsgate can develop any of the Helsinki studio’s original games into linear entertainment.

“The success of Rovio and Angry Birds and lately Supercell and Clash of Clans has helped the other Finnish game developers because everyone now knows that you can be from a small country in Northern Europe and you can still conquer the world,” said Jami Laes, executive vice president of Rovio Games. “If you have the right idea, the right kind of game, the right execution and the right timing, you’re able to really have a hit with something that people are engaged with. You don’t always need to be from the West Coast of the United States to be really successful and become the number one mobile gaming business in the world.”

These days, a games start-up may have better luck getting off the ground in Helsinki.