16 May Playing for keeps
Thorgeir Odinsson, Chairman of IGI and General Manager, Directive Games, who has seen a games industry grow to maturity in his time, sees a bright future ahead.
With over 20 years of experience in company leadership in the creative industries, you’ve been a part of Iceland’s growth as an increasingly prominent player in the global gaming industry. What has been your path as Chairman of IGI since 2021 and throughout the Covid pandemic?
IGI is a body that exists within the Organization of Industry, SI, which encompasses 60 percent of the Icelandic workforce and is a much broader industry coalition. I’m on the board of the IP Council, which includes data centers, bio engineering, film, gaming and a few other industries. Together we were responsible for almost 20 percent of exports last year, which was fantastic news because a lot of our other core sectors were at a deficit. But we had a positive balance in international trade, to everyone’s surprise, during the worst period of Covid. People say this is because the IP sector came in like a knight on a white horse.
You are also a member of the Nordic Game Institute. What are the main objectives for this role?
The Nordic collaboration aims to facilitate and foster the Nordic spirit. It is a way for us to share learnings and strengthen what we consider to be Nordic culture, and with it, a kind of brotherhood among neighboring nations. We do not have economic goals for the growth of this area. We celebrate it, but it is more of a cross-border collaboration, where we try to facilitate and help each other and learn from each other, sharing know-how and expertise.
What are Iceland’s competitive advantages as a location for gaming companies?
With the decentralization of companies and global conglomerates, we see that the biggest companies, and not just in gaming, but in tech in general, are co-locating all over the world. In Iceland, we don’t need to have the biggest slice of the cake; having a small slice of the global cake is huge for us. We’ve been focusing on the operational environment. During Covid, the government had these special incentives where they increased the rebate for research and development. That goes a good distance toward making operational costs in Iceland competitive. It is still cheaper to run an office in many places in the world than in Iceland. What we do however have here is one of the safest environments in the world.
Directive Games has offices in Shanghai, Iceland and California, and you also say you welcome CVs from all over the world. How do you manage such a diverse and international team? Has working remotely affected your hiring approach?
Directive Games is a bit of a special case. It is founded mostly by Scandinavians in Shanghai and an Italian. The company is registered in Hong Kong, but there were a group of people already working together in Shanghai at that time. These are people, like Andreas Axelsson, who made Pinball Dreams for the Amiga, founded Dice which bought the Frostbite engine, all of which was later sold to Electronic Arts. These are very skilled veterans, people who were part of building Eve from the ground up in its heyday. Our people have always been working together in different parts of the world. We span the global time zone perfectly in segments. Obviously, I’m up early and sometimes stay a little bit late and we’re all working together to facilitate communication. It’s about trust, empowering people and focusing more on the objectives and the results than on trying to micromanage minutes and hours. It just comes down to having a good human resource management foundation and policies.
Can we talk a little bit about the development, the creative strategy of Directive Games? At what stages of development are your latest projects?
We are working on a couple of projects now in contrasting stages of development, one is a 4v4 competitive game we have been developing for the last two years. The game has been built in collaboration with e-sports and youth organizations called The Machines Arena. The other project that we started developing roughly half a year ago is called Civitas and is a 4x strategy MMO built on the block chain and web 3 technology.
The Machines Arena is in beta. We understand that we will have some learning from beta, and we most likely will have to go back to the drawing board. The market is just continuously changing. There are so many pitfalls in game design. You can figure out a monetization model that works, and then you just don’t have a game that’s good enough. You can also focus on the moment to moment of the gameplay and make that really good and fun. But then you’re faced with how to monetize it. It’s such a living market, because people’s wants, and consumer behaviors are constantly changing.
If you look at the lifecycle of products like Eve, a 19-year old product, it had good success, it was a subscription model then it went free to play and it just simply has to evolve with the customers and the changes in purchase behavior. The world just keeps changing, and we’re on the bleeding edge of that. We have to be very agile and open to understanding what people want.
Going back to the industry, we’ve seen important investments from major local international entities, including Tencent and Sequoia. Icelandic businesses are part of this ongoing global venture capital boom. Have you seen a developing appetite from venture capitalists for investment in the gaming industry?
The interesting thing is that, on a global scale, the gaming industry has been growing compound 9.6 percent annually now, for a good time. That’s the growth of the industry as a whole. The e-sports market grew last year and doubled in size, but that is just about one percent of the total gaming industry.
Investors and publishers have different opinions. There are mainly two ways for gaming companies to get funded. One is VC investment, another is a publishing deal. Some believe in free to play, others believe in the single player storytelling experience. It is just so diverse. The main thing for capital is to find the developers that have your same beliefs and dreams and vice versa. Often it just takes a short conversation to figure out we are not the right partners, but even in that scenario we’ve been introduced by people who possibly wanted to collaborate with us, have introduced us to others in their same field and said these guys actually are probably looking for what you have. It is hard to pinpoint that one signifier. Obviously today the elephant in the room is the new proposed monetization model, the Play to Earn model.
You highlighted a boom in investments in 2021, and this was shared amongst many players, moving away from a past where most investments went to flagship gaming company CCP Games. What other players are standing out? Investments tripled from 2020, how did this boom happen?
If you look at the historical data for our gaming industry sector, 2015 and 2021 investment numbers are highlighted. 2015 was a record year in investments, and this was mostly due to a singular investment into CCP Games, the creators of EVE. The final data for 2021 shows a total investment of $48 million, and the interesting factor is that none of it is due to CCP Games, so this marks a paradigm shift away from a singular successful company toward a real functioning cluster. Many companies are now showing very real indications of becoming viable long-term operations. Outside of CCP, five companies now have employee numbers over 20, most with ambitious hiring plans for the coming year and three of those now have offices and operations outside of Iceland, as well.
It may be partially due to the epidemic, but it’s also been a long time coming. We have the third generation of gaming companies here in Iceland right now. There were a lot of people putting in hard work before the pandemic hit, so the resilience of the gaming sector maybe influenced a little bit the new wave of VC investment. The largest investment is toward the gaming company Mainframe, led by Andreessen Horowitz. They are veterans from CCP, like some of us here.
Another excellent company is 1939 who have this game called KARDS. They 16-folded their revenue last year, earning them an Icelandic record, and they won an award for the biggest growth.
Then there’s another company called Myrkur Games which is very interesting, as the founders are young and their first job after school was founding this start-up. It’s been a joy watching them grow. They finished investment last year and made a publishing deal. They’re trying to duplicate in size now and have a runway for years.
Another great company called Solid Clouds, is the first Icelandic gaming company to be listed on the nation’s stock exchange, which was a very original and unexpected move.
There is also a gamified education company in Iceland called Mussila. They originally gamified music theory and learning how to play instruments, and last year they gamified math. Gamifying education is a very heartfelt topic for me. Education shouldn’t be straining or stressful, we should put kids into a simulation where we spark their interest so that they want the knowledge. Humans learn from experience and remember stories. Learning should be part of our happy memories.
As a final message to our readers, could you share your views on what values you would like to see associated to Iceland’s image on the international stage?
I would like Iceland, as a whole, to be perceived as honest, fair and friendly. Obviously, when it comes to the gaming sector, there are so many different types of markets and people. Each company and each product has to make its own image. But what I very much appreciate is that most of the Icelandic companies are focusing on being a force for good. Where we can, we try to make games a place where you make long-lasting relationships, where you make friends. We are trying to do our best to make not only non-toxic but positive cultures.
In the gaming industry last year, we made ourselves a charter toward a common code of conduct. You can see that on igi.is. It’s on the top banner. This was signed by all the gaming companies in Iceland, by the Icelandic e-sports association and by the Game Makers Iceland, which is the grassroots for developers. It’s about outlawing bullying, undesirable or inappropriate behavior, discrimination of any kind, toxic culture. When I pushed this initiative, I got full support from everyone in the industry.
Regarding what gives Iceland a competitive advantage, I don’t think any geolocation in the world has a particular competitive advantage in this sector. It’s not based on any resources, except human resource. But there is so much ambition in the sector here in Iceland. And now we have a new Minister of Higher Education, Science and Innovation, Áslaug Arna Sigurbjörnsdóttir, who is fostering the sector further. We have a cross political and cross ministry buy-in toward growing, not only the gaming industry, but the IP industry. If you were ever going to invest in the Icelandic gaming industry, now would be the time!