Via VentureBeat.com, a column by Dean Takahashi: The DeanBeat: It's time for the U.S. to wake up and support game startups. Once again, Finland is the trailblazer. Excerpt:
Borders have melted with the arrival of app stores that allow indie developers to reach the entire globe and a billion people with their games, said Ilkka Paananen, chief executive of Supercell in Helsinki, in a presentation to journalists in November. “All that matters now is the quality of the game and its innovation,” he said.
“All of a sudden, companies could access a billion consumers from a very distant location, like Helsinki.
Helsinki is doing it right. But I don’t see the U.S. doing what is necessary to help game companies. I’m not the only one who’s feeling eager to boost the fortunes of game entrepreneurs in the U.S. Sana Choudary, chief executive of San Francisco’s YetiZen, a game startup accelerator, told me that she would welcome more government and corporate support of game startups. It’s not enough for some states to offer tax breaks, which are really targeted at attracting bigger companies and stealing jobs from other regions. She said that the government can step in and take a lot of the riskiest investments in the tiniest startups.
“I agree completely,” said Tim Sweeney, chief executive of Epic Games, the North Carolina company that set up its own $5 million fund for developers this week. “These projects are driven by talent, genius, and ability of individual developers. But there’s a point where you have to buy some stuff. You have to spend money to make it. The return on investment can be huge. At every stage of growth, the investment you make is doing a lot of good.”
Sweeney built his first game in 1991 after earning money mowing lawns for two summers. Today, it takes more people and money to make games, even among the indies who are creating mobile games. The government, or a big company like Intel, could create nonprofit incubators that foster the tiniest game studios. Those incubators could take people with ideas for games and train them to be real business people who create jobs and pay a large amount of taxes back into the system over time.
The tiny country of Finland, with 5 million people, is making us all look bad by comparison. It has hit the jackpot with government funding for startups, and the result is games like Angry Birds and Clash of Clans, which are known the world over.
The Finnish government’s investment arm, Tekes, puts more than $150 million directly into startups each year. Supercell, the maker of mobile games like Hay Day and Clash of Clans, received more than $450,000 in loans from the Finnish government. If it had failed, it wouldn’t have had to pay that money back. Supercell hit a home run with all three of its games (Boom Beach included), and it generated more than $300 million in taxes for Finland.
Supercell hasn’t reported its 2014 revenues yet, but I would bet that it made more revenue in mobile games than any U.S. mobile game company. It has no more than 150 people, but you can play its flagship game in more than 150 countries, said Koopee Hiltunen, director at Finland’s NeoGames nonprofit group.
Finland has 17 schools that offer different levels of game education in Finland, and college-level education is offered for free to all Finnish citizens.
Finland has fundamentally changed the mindset of young people. Rather than work for big companies like Nokia, they now want to work for startups, said Artturi Tarjanne, a founder of venture capital fund Nexit Ventures. And the VCs in Finland are happy because they can move to later stage investments and put money into startups that have already had funding and worked out a lot of their early-stage challenges.
Any country can jumpstart a mobile game business. Finland’s game industry generated $1 billion in revenues in 2013, according to NeoGames. That’s up from just $45 million a decade ago. It had the patience and foresight to invest early.
Other countries have taken notice. Lithuania, the United Kingdom, France, Sweden, Canada, Singapore, India, the Netherlands, Estonia, Germany, Thailand, and other countries have created game incubators, or they help game companies through tech incubators. In London, the Playhubs game incubator has some sweet space in central London, thanks to the government. London’s game industry is strong, but it still needs acceleration.
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