16 May Iceland’s gaming companies are well established and ready to grow the industry overall
Hilmar Pétursson, CEO, CCP Games explains how COVID has accelerated society’s appreciation of the power of games to satisfy emotional needs sustainably, prepare us for ‘real life’ and create community.
The COVID-19 pandemic saw remarkable growth in the global gaming industry, with video gaming increasing by up to 39 percent in most regions in the world, and the global market value growing to over $300 billion. What do you see as some of the main drivers of growth over the last two years?
A lot of the growth we have experienced continued throughout 2020 and 2021, and many who had played EVE before came back to connect to the community and to have a social network with which to interact.
At the same time, we saw a record number of new people coming in. In 2021 alone, we had 1.3 million people come and play the game for the first time. Additionally, we launched a mobile version of the game in August 2020, and about 10 million people joined. I have compared notes with other gaming CEOs and there is a clear phenomenon whereby people were looking into games in general throughout the pandemic.
I would also say that parents gained a new perspective of what games could be for their children when they saw their kids playing together online during lockdown, not to mention the exposure to learning online. It truly opened up a lot of people’s minds to the power of the internet, videoconferencing, and doing things virtually.
The effects are not ephemeral. Since last year, we have been seeing a record level of new investment in gaming on both a global and local level here in Iceland. There are many new gaming companies here receiving impressive levels of funding. Essentially, there has been a huge acceleration in the understanding of the power of games and their meaning to people in a social context.
You have been quoted as saying that your game EVE Online has “increased [players’] skillset in a way that is highly applicable to the rest of their lives.” Can you expand on that?
We have done extensive research into players who play EVE Online. It is quite a complex game, and dealing with complexity is a very useful life skill; in any walk of life, you have to deal with a lot of complexity. Any job requires one to process large amounts of information, and you need to synthesize a lot of material. The same goes for EVE; players need to manage a lot of inputs and conflicts with other players as well as information about the game, and distill it into a strategy or action plan.
The game does very little to help you as you go, so you are on your own. Coping with complexity, dealing with crises, having a plan, and sticking to it are skills that people report to us in surveys that help them in their jobs. Another class of skills that people have developed through the game is conflict management. Managing people is a huge part of EVE and, of course, people do not always agree. This is as true in companies as it is in everyday situations, and conflict can be scary for many people. In EVE, you face conflict constantly in a social organization setting, which trains you for real-life experiences.
Can you talk about the status of your business development in China which experienced a 50 percent growth spurt in 2020? Are you focusing on any new markets?
We have been working with our partner NetEase there for almost six years, and that partnership has borne fruits in several ways. Back in 2020, we released a PC version of the game in China because we were one of the few fortunate parties to be granted a license to publish in the country. We followed up with the mobile version globally, together with NetEase in August 2020, and that same mobile game was then released in China in August 2021.
Tens of millions of people have played our game across all of the platforms over the past two years. We are quite pleased with this extremely productive partnership, and also with our expansion into Asia overall which has produced great results. In 2019, we also released a Korean version of our game and re-released a much-improved Japanese localization of the game in 2021.
Are you optimistic about economic growth in the digital space in Iceland, and how would you assess support from the government?
We have always felt a great deal of support from the government and the people of Iceland in general. A major improvement in 2020 was that the government vastly enhanced the operating environment of companies involved in innovation, intellectual property and internet services. It’s most notable through the tax incentive scheme which encourages companies to invest in research and development. Although it was in place previously, it has been made even more robust and internationally competitive. I take that as a clear sign that people are not just saying nice words about our industry, but they are also making a concrete commitment because they believe it will be of great benefit to the country.
We have seen a massive increase in the level of investment that companies are making in R&D. It is particularly noticeable in the gaming industry where we have had a record number of both investment and new employees. CCP Games is now part of an expanding industry; we were the first ones, but we’re no longer the only ones. There are now 20 other well-funded, sizeable gaming companies in Iceland with excellent minds and solid business plans, as well as many other smaller ones that are up and coming.
In the past two years, Iceland has gone from having one major gaming company and several other tiny ones to having a solid base of strong companies that are ready to take on the role of growing the industry overall.
You were the pioneers in Iceland, even establishing the Gaming Industry Association. Is that right?
Indeed, in 2009 we established the Icelandic Gaming Industry Association because we very much believe that if there are more gaming companies in Iceland, it is better for us, better for them, and better for the country as a whole. It is an industry that in many ways suits the Icelandic people well because of our creativity, level of education and storytelling culture which has traditionally been told largely through books, music and movies. This translates phenomenally into computer games.
The association was established in that spirit, and the industry has grown by leaps and bounds. There are many companies involved, to mention a few: Solid Clouds, Mainframe, Parity, Arctic Theory, Aldin Dynamics and 1939 Games.
After 25 years, could you share with us what is it within your company dynamic that keeps you at the forefront of gaming innovation?
The company has been pioneering in every aspect since its inception. We were both the first game developed in Iceland as well as the first single-shard MMO, which means everyone around the world actually plays our game together, rather than being split internationally across different geographical servers. That pioneering spirit really shines through.
We have never been afraid to try new things and to experiment both with EVE Online and other games. To have the slightest staying power in this industry, you constantly have to be pushing the envelope. Our culture does that quite naturally and that has kept us relevant for this long. We live in an extremely dynamic sector, so there are a lot of areas to explore and in which to push the boundaries.
Those qualities have stayed with us ever since our founding. The very fact that you have to innovate to survive in Iceland has most likely seeped into our DNA. The country is quite literally always trying to kill you and present you with challenges to overcome. That, more than likely, has something to do with our success.
How are you adapting and bringing your games to a new generation of gamers?
We are investing quite heavily in the new player introduction for EVE Online, which is now vastly better than it was before. There are a good few hours of a highly engaging story presented to you at the start. Essentially, it is like taking part in an interactive movie. Then, of course, we made the mobile version of the game, which is where young people are more engaged. I would say those are the two primary areas we have been engaged in to attract the younger generation.
Would you explain your experience with virtual reality features?
We did a few video games that used VR from 2013 to 2017, including EVE: Valkyrie, Gunjack, and Sparc. These continue to be active with lively and highly engaged communities that people continue to join. At the moment, we are not actively investing in new VR games. We are mainly just maintaining the ones we have, but we are eagerly monitoring the market to see how it develops.
What challenges must still be overcome in the virtual reality space?
I would say it is largely the install base of devices. In other words, ours is more of a hardware problem right now, although it has been improving. Oculus Quest, in particular, has been selling quite a bit and PlayStation has announced its new VR device–PlayStation VR2–which should be coming out in the near future, if I am not mistaken.
These are major movements in the industry and they should increase the install base of VR hardware, which will then provide an investment basis for companies to get on board. Sparc is by far our best VR game as it appeals to a vast audience. The mixture of fitness and gaming is a tremendously exciting area, and it is something we hope to revisit at some point in order to do something new there.
Do you see a responsibility on the part of gaming companies such as yourselves to find ways in which the industry can be made more sustainable?
There is one aspect of games that is close to the concept of sustainability because a lot of the issues around sustainability come from emotion-driven consumption, or consumption that is not directly related to food, shelter, sleep or procreation.
We do a lot of spending of our hard-earned money on things that are there just to satisfy our emotional needs. In the realm of fashion, a lot of us are throwing away clothes that are perfectly fine, but just out of fashion. The same goes for cars; people spend exorbitant amounts of money on cars beyond their utility of getting from one place to another. A lot of money is spent on things that serve to make us feel good. Games satisfy this need in a way that is not harmful to the environment.
If you want to buy a spaceship on EVE Online, no one needs to chop down a tree to make it. They are free. Of course, there are some fixed costs through the computer and the screen, but that is just that: a fixed cost per person. Everything else that goes beyond that does not hurt the planet. Using games, the metaverse and virtual reality to satisfy our emotional needs, in a way that is an alternative to the often material and non-sustainable routes taken, is where we can most contribute. Of course, it goes without saying that we can also help make sure the electricity we use is sourced from sustainable sources, which is easy to do in Iceland because it is all sustainable. However, where we most contribute is satisfying the emotional needs of humans so that they can be met in way that does not harm the environment beyond the fixed cost.
In sci-fi scenarios like that of Spielberg’s Ready Player One, the online world begins to almost surpass the importance of reality. What kind of future do you see?
The core purpose of CCP is to make virtual worlds more meaningful than real life. That might sound a bit audacious and provocative, but what we have seen from our game, both in the pandemic and also before, is that we build a sense of community and purpose around our game. People are often looking for a sense of community and purpose in reality but are not finding it. Loneliness is an epidemic in our physical reality: people have fewer friends and are increasingly lonely.
In fact, the biggest health crisis is loneliness. We have seen that people who play games like EVE Online have more real friendships than people who don’t. Our game has become a way for people to find and connect with others. We know from other studies that the number of meaningful relationships you have protects your health, happiness and longevity. We are very humbled by the fact that while we merely set out to make a space game, it is now contributing to addressing the big problem of loneliness. So that’s a concrete example in which a virtual world has become more meaningful than real life. If you can find more friends in a game than you can on the streets of your city, then maybe we are slowly surpassing reality. Bringing people together and building friendships and community is certainly something we will be fostering a lot more as we move forward.
In our game, which has been running for almost 20 years, people build amazing things and sell them to each otherinside the game for monetary tokens that are inside the game. Now we are seeing different types of games that allow you to sell the items in the game to others for real money. This has already been happening in a gray area, but it is not allowed in our terms of service to do so. However, there is a tech, legal and taxation framework emerging whereby people can do this and I would say it’s a good thing. I want to envision a world where you can play a game, feed your family, and build your retirement all at the same time.
How do you see your role as a talent enabler for the next generation of Icelandic tech innovators, creativesand gamers?
The primary ingredient in making games is smart and talented people. That is the main resource we use, and we do not take up much space, electricity or resources. All we need are intelligent, highly specialized and skilled people. Schools and universities are the factories that make people smarter and more talented, so it is natural that we work with them.
That ingredient is more important to us than to other businesses that may be in manufacturing, say, and depend on other external resources. Our natural resource is the human brain and its development. We have long been advocating and helping universities educate people on games, math, science, physics and similar studies, sponsoring professors, and contributing to course material.
In fact, we have moved physically closer to both of our universities in a new building on the university campus to be even closer to the source; it is critically important. With the overall innovation environment having been vastly improved in 2020 thanks to concrete action from the government (who we applaud for their efforts), now is the time to stabilize that ground we have gained.
The next thing to tackle is the education system. Students and parents are increasingly seeing computer-game companies as future workplaces. Hopefully, we have helped on that front by showing that we can build a strong business through creating computer games. The overall revenue for all our EVE games is over $1 billion, which is no small thing.
Do you have any final comments for the readers of Newsweek?
Thanks to the people and government of Iceland, we have made a great deal of progress in just the last five years in terms of support, understanding, and the critical frameworks that have been built up. This is emerging like a submarine out of the water: first the periscope, then the control tower, and then the whole thing.
We are almost at the point where we are able to see innovation and technology emerge as a genuinely strong pillar on which to build our country’s economy. But we will need to maintain the great steps taken and make these programs permanent. The short-term measures that were installed have certainly proven themselves. Next up will be the education framework. That is where we will ensure that Iceland’s future generations can be capable contributors to these very exciting industries.