Paradox Interactive has quietly gone about building up quite a reputation in the videogames industry, growing from a developer of high strategy PC games to a publisher for a range of titles, as well as spilling out into digital distribution platform Gamersgate - now a separate company.
Here, company CEO Fredrik Wester talks about the business in the past year, the forthcoming expansion from PC-only onto downloadable console platforms, and offers his thoughts on how social media might play a part in future games.
Q: So how's business been in the past year or so?
Fredrik Wester: From the perspective of the number of units sold, we've never sold more on the PC than we did in 2009, so you could say that the rumours of the death of the PC are greatly exaggerated. Digital download has really come in as a big commercial thing for us - 2010 will be the first year where we earn more money on digital download then we do in retail revenue, which is huge for us. It was around 40 per cent in 2009, so this year we're going even more towards digital.
Q: So what does that tell you about the PC market? The trend towards online business isn't likely to reverse?
Fredrik Wester: I think the reason for the growth on the PC market, that's happening on traditional PC games, is because a lot of pirates are being converted into paying users. If you take services like Steam and Gamersgate (that I was a part of founding in 2006), there's better accessibility, it's easier to download, there are services connected to the legitimate purchases - and that's led to less piracy.
I don't think there's a revival for PC gaming, or that the number of users are actually increasing - but that's how I see it, at least.
Q: Paradox has built itself up from a specific focus on high strategy - whether it's word of mouth, or more people looking online, but over time more people know exactly where to go to get those kinds of games.
Fredrik Wester: That's right - we've come from a niche. But there are a few games we're publishing this year that are a step away from the types of games we've traditionally published - however, in our niche we're pretty much the only company left, so we're able to dominate the map-based strategy genre. It's kind of small, but we're doing good business on it.
The recent purchase of AGEOD, the French company that basically make the same games we do, was strategically very important for both companies. They didn't want to engage too much in the publishing - and Paradox as an umbrella for niche strategy games is growing as well.
Q: There's a degree of challenge involved with branching out from that initial niche - how do you approach that, in terms of bringing them to market?
Fredrik Wester: It's like taking baby steps - we're not launching big triple-A console titles, where we print Xbox games and ship them to stores. We're starting with download platforms - PlayStation Network and hopefully XBLA as well - and that way we're reducing risk.
'Best in class' is a term that I want to use - so a game has to deliver something great. We can't ever go into the Elder Scrolls territory, because we'd need a budget of about $50 million to try, and we don't have that kind of money. So we're looking for games that have an edge - some sort of attitude - and that can be delivered right to gamers.
Q: And how much do those console download platforms rely on relationships? They're not open platforms, unlike the PC. Has that been relatively straightforward, because there are a lot of people trying to break into that space.
Fredrik Wester: That's right - PlayStation has been very positive and open about the games we're looking to publish. XBLA has been around for longer, and they have a longer queue of titles wanting to get in, so it's been harder to get hold of Microsoft to get everything into place, and get into that line.
We're yet to get approval for our first XBLA game, but we're developing for consoles - you just can't really mention which ones you're on. Microsoft has been cautiously positive.
Q: At the end of the day, Microsoft is keen to protect its platform... Is there much appetite when you have those conversations for exclusives to their platforms?
Fredrik Wester: The exclusives discussion is always there - the first question you always get when you're coming up with a game is: "Can we have this as an exclusive?" Of course we want to sell to as many platforms as possible, that's no secret to any publisher, but with the right contract and the right terms we could do an exclusive - it's just that at the moment we're struggling to get a game out there on consoles, so that's our first focus.
In that discussion, I think PlayStation needs to be more aggressive because XBLA has more content as of today. So PSN is more positive towards new content and new publishers, such as Paradox.
Q: You had your convention earlier this year - can you see an increase in interest with each passing event?
Fredrik Wester: Yes, I think so - it's the third time we've done it, and by far the biggest event we've had, and it was a very positive response. It wasn't just a media thing, but we also had our partners come along as well, including digital distribution partners. Both Steam and Direct2Drive were there, and of course Gamersgate... they're in the same office as us anyway...
Q: Interesting - technically, Stardock, Steam and the rest are all competitors with Gamersgate [a Paradox sister company] so is that generally a more collaborative space?
Fredrik Wester: Well, I'm not operationally involved in Gamersgate now - we're really only sharing offices. But I do think the PC gaming market is really friendly overall. You have coffee or drink beer together, shake hands and have a good time.
What I really liked was that the guys from Steam that came over were very relaxed - they're by far the dominating player in the download business, and everyone knows it. So we don't need to compare ourselves, or try to pretend we're bigger.
Q: One of the titles you announced at the convention was Magna Mundi - a new title that started life as a popular mod for one your key games, Europa Universalis III. How did that deal come about?
Fredrik Wester: I look a lot at what others are doing in this business, and I'm impressed by a couple of other development and publishing companies. Among them is Steam - Valve is a great company, and they've done business for a long time. When you see how their product portfolio evolved and they got a dominating niche in their space - which is far bigger than ours - they got help from mod teams as well.
Look at Left4Dead, Counter-Strike - all the big games that originally come from Half-Life - so we started asking what we could do along those lines with the Europa Universalis franchise. We looked at the different mods, contacted some teams - Magna Mundi is by far the most popular mod, and from our perspective it's quite a different game from EUIII.
A lot of the mods are just extra stuff, or graphical improvements or whatever, but MM has something to offer to the gamers that EUIII can't do. So we asked Carlos, who's the brain behind MM if he could actually make a game that was good enough to put in a box and ship to stores. Of course, he said yes...
Then we asked him for a game design - if we gave him a budget that was x hundred thousand Euros, what would he do with it? That's how it started, and we discussed it for 3-4 months - then development started in October last year. We hope to have it some time next year - we'll see, it's a new team, a new thing for us, but a very interesting opportunity, because our engine is just as moddable as, for example, the Valve Source engine.
Q: What sort of message does that send to the community?
Fredrik Wester: I hope it sends positive signals - if you do some good things you could have your game published by Paradox. We're looking to dominate the niche even further, and have quite a range of games within that genre, to fulfil the needs of all the military history nerds! [smiles]
Q: Any thoughts on Europa Universalis IV?
Fredrik Wester: People always ask that - I give the same fuzzy replies. First we need to think about how much we can really add to EUIII and it's three add-ons. If you ask me, I don't think we're finished with EUIII yet - I want to make another add-on, and there's lots of discussion we're having constantly, like what kind of DLC we can do, where we can put our time, and so on.
Look at Heir to the Throne [the latest add-on] - the original game was released over three years ago, and Heir just gave it a big boost, and we're selling loads of it online. So the game is still very much alive.
Q: So with add-ons and mods, and mods becoming full games - is that a more suitable direction for the franchise in your mind?
Fredrik Wester: I think there will be an EU4 eventually - we just need to know how revolutionary that game can be, compared to EU3. What will it add that the game doesn't already have? I look at Civilization V, and one of the selling points is that it's hex-based... which I think is a bit weak. The intro movie was great, but I couldn't really see why I should play that instead of Civilization IV - and for EU4 I want that to be obvious to the players.
Q: So while we're on the subject of Civilization - what about EU on Facebook, then?
Fredrik Wester: Well... we were having some discussions about Hearts of Iron on Facebook, where your nationality actually adds to the gameplay - so if you're German, you'll play as Germany... but Facebook is a new animal to us. It's a new gold rush for gaming companies - two years ago it was the Nintendo DS that was going to save the world; then it was the iPhone; now it's Facebook.
It has the same rules as everything else for whether a brand will sell. So if we launch Europa or Hearts of Iron on Facebook, it just needs to be a good game - because if it is, we'll make money. If you look like a game like Mafia Wars, it's not a good game, it's not co-operative... although it fakes that co-operation between players. I played it myself for a few days, and realised I wasn't playing with anyone - it looks like it, but it's a marketing method.
I think as the quality increases and the consciousness of the users also increases - when you see who's playing the games, it's people who don't normally play games. They have 50 million users, but as they grow more quality-conscious the games will get better - and the brands will sell, because people know titles like Civilization, for example.
But Facebook is very interesting - I think what we're going to do is tie our current games more into Facebook. So if you play Hearts of Iron III and invade Poland, you'll get a pop-up asking you if you want to tell your friends about that. You can have automatic Facebook or Twitter connections to your games - that's more how we see social media, rather than anything else. But it's certainly changed the landscape of games, that's for sure.
Fredrik Wester is CEO of Paradox Interactive. Interview by Phil Elliott.