A new report from The Norwegian Film, Games and TV Producers’ Association offers new insights into the the current state of the Norwegian games industry
Recently, the Norwegian trade organization representing the game developers of the country, Produsentforeningen, merged with the Enterprise Federation of Norway. Now, this would be of relatively minor interest to outsiders, had it not been for the new extensive report on the Norwegian games industry, that the Enterprise Federation of Norway decided to compile.
For the first time, we now have access to several of the key figures of the Norwegian industry in a format that is clearly inspired by the great yearly reports published by Sweden’s Dataspelsbranchen and Finland’s NeoGames, and, to a lesser extent, the report serving film, tv and games published by Denmark’s Producentforeningen.
Huge growth in no. of developers
The big revelation in the new report is just how many new developers have entered the market in Norway. No less than 60 companies have been formed the last three years, and that is out of a total of just 140 companies in the whole sector. The graph depicting the number of developers is as steep as the ascend to Mount Everest.
However, this can probably be explained by the fact that almost all of the newly established companies are more indie inspired, basing themselves on smaller teams, producing smaller, often more experimental titles for pc and mobile platforms, rather than traditional gaming consoles. This, however, is not just a reflection of what’s in fashion right now. It is also a reflection of the current state of the Norwegian games industry, where there are very few established companies to soak up the new talent entering the business.
“Lots of people are taking an education in game development or similar, but since there are so few jobs, I guess it’s natural that some of them form new studios,” says Bendik Stang, Game Director at Snowcastle games and board member of Produsentforeningen. An effect that has also been sped up by the country’s single major AAA developer moving most of its development overseas.
When Funcom moved much of its production to Montreal, it also left some experienced talent in Norway that then started new companies,
This change is also reflected in the choice of platform. 35 games were released last year by Norwegian developer – 27 of these were available on mobile platforms.
Revenue trailing behind
While things are definitely happening in the Norwegian games industry creatively, there are also other metrics that suggest that the one major problem for the developers in Norway is to monetize their products properly. The Norwegian games industry occupies 565 persons, resulting in each employee generating a turnover of about $ 74K. This places Norway far below its local competition where the number for Finland is a staggering $ 648K/Employee, Denmark $ 170K/employee, and Sweden $ 288K/employee
Another equally interesting number is the one that shows that the total revenue of the Norwegian games industry doesn’t seem to be able to keep up with the growth in the number of developers. According to the report, the Norwegian games industry managed a turnover of 330M NOK ($ 42M) in 2014, compared to 287M NOK ($ 36M) in 2012, according to a report published by the Norwegian JoinGame network. So while the number of developers has grown by 75 % over three years, the turnover has only grown by approximately 15 % (albeit over a slightly shorter period).
However, there is an expectation within the Norwegian industry that the turnover will pick up over time, as the newly established developers find their bearings, especially in the extremely competitive mobile market. Another factor is also the average development time for a Norwegian title, that the report puts at just below two years, meaning that many of the newly established developers, haven’t had time to release a game yet.
“Obviously, we would want the turnover to grow in tandem with the increase in the number of developers, or even faster”, says Kaja Hench Dyrlie, Head of Production at the Norwegian Film Institute. “A lot of developers have had some bad experiences with the mobile market, but hopefully some of the things that are happening now, will give more developers the opportunity to make money.”
It’s the economy, stupid
The report also tries to point out the biggest threats to the continued growth of the Norwegian games industry. And like it is the case in Denmark, the biggest issue is the lack of investors. The report points out how the investors themselves, the financial system, and the public authorities, are all geared towards more traditional investments in oil or real estate.
However, the problem also ties into the current setup of the Norwegian games industry, according to Bendik Stang. “It’s natural that many of the indie startups that are formed by students straight out of school feel like very risky investment cases,” he tells NordicGameBits.
And if that wasn’t enough, the inherit characteristics of the games industry also makes it scary and unpredictable for investors that are used to more traditional business models. “The video game industry is an ever-mutating monster that even developers and publishers have hard time keeping up with. So I think many investors simply don’t understand the market and decide to avoid investing,”, Stang says.
According to Stang, a good start would be an innovation and tech-oriented funding system akin to Finland’s very successful Tekes-program. That would automatically lower the risk for the private investor dramatically. “If the Norwegian government could form something like Tekes in Finland where the government match the private funds, then it might lower the risk enough for some investors to consider indie games.”