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Playfish's Kristian Segerstrale

The company's CEO talks entrepreneurship and how social games will lead the industry

Having co-founded two massively successful companies – mobile firm Macrospace and social gaming company Playfish, the latter of which was acquired by EA last year for an estimated $300 million – few are better placed to speak about entrepreneurship than Kristian Segerstrale, who will be doing just that in a Nordic Game keynote this week.

Before he left for the conference, ash cloud permitting, Segerstrale spoke to GamesIndustry.biz about the setting up of Playfish and his thoughts on where social gaming is heading from here.

GamesIndustry.biz Can you start off by telling us what you're going to be talking about at this year's Nordic Game?
Kristian Segerstrale

Now is a fantastic time to be a games entrepreneur. There's tons of fundamental changes happening to the games industry which are creating a ton of opportunities to pursue as an entrepreneur. Including moving away from being a physical product-based service to being a digital service. We're moving from business models and distribution models that have been very established, to ones that are new to pretty much everybody. Peer-to-peer distribution, social distribution... and business models that are predominantly post purchase if you like – business models that predominantly happen after you purchase the game.

And no one's really an expert yet. There's a ton of expertise being built right now but in lots of ways it resets many things in the industry, which creates opportunities for new players. So my talk will really be based on my honest experience of being an entrepreneur over the past 8-9 years or so and I guess what I've learned. I will keep it to very practical tips and five things that I've learned the hard way which are, at least, worth thinking about. That's going to be the upshot of the talk.

GamesIndustry.biz What was your experience setting up Playfish – what was it like at the beginning?
Kristian Segerstrale

I was fortunate that Playfish was my second games venture. When I started Macrospace, a mobile gaming company back in 2001, I hadn't done anything in games previously. Setting up Playfish was quite a bit easier – I already knew a lot of people in the industry and I was able to work with a team from the start that was super talented and experienced and having done it once before it makes it easier to raise money and your profile, it happens quicker, and also just having six years of experience of building one company. You always make tons of mistakes in everything that you do and this time around we just tried to learn from some of those.

GamesIndustry.biz What elements were key to Playfish's success? Was it the idea, the experience, the timing..?
Kristian Segerstrale

I think maybe the three biggest things would have been – most important – the team. We had a fantastically talented, not just co-founding team, but the initial team, the core of our global studios, is enormously talented and without that no business can survive the first week of actually doing it. Business plans change over time but the team doesn't so our core team has been the single biggest support of our success today.

Secondly I think that we were fortunate having seen or betting pretty big on social gaming as a trend, which we believed in heavily. Our business model was very mainstream, enabling us to be one of the first companies to be published on it, that's been very helpful.

Thirdly I think we have a passion as a company for our players and for changing the way that the world plays games. And that culture we've built of social commitment and user experience and building inspirational games we're hoping will bring more people into games and will get people to really see games as a social activity in terms of family. That social commitment is very important.

GamesIndustry.biz You said that you think it's still a good time for entrepreneurs in the gaming space. Do you not think they'll just be chasing companies such as Playfish, Zynga, ngmoco etc that entered social gaming 5-6 years ago and have now built up a massive lead?
Kristian Segerstrale

I actually think that the social gaming space, as it's defined today, is becoming increasingly difficult. Because in many ways, like you say, it is already a relatively established market, there are defined brands. I think that this year you'll see more consolidation.

I wouldn't set up a company to create another farm game on Facebook. But, by definition, if you're an entrepreneur you're setting up to win in the next 3-5 years, you don't try to set up a company to win in an established category today, you try to create the category of tomorrow.

And I think that, given the amount of change that's happening in the games industry right now, there are tons of categories of tomorrow which we don't yet know, which aren't big yet but which will be big tomorrow. Given the enormous pace at which the industry is changing and going multi-platform and the way that everything is becoming more internet-driven I think there are tons of opportunities out there in the future. As a European entrepreneur I would love to see more European ventures in the gaming space that go out and then succeed.

GamesIndustry.biz Looking at the games that are being released into the social space and the companies that are being set up around them, do you think too many are looking to quickly cash in at the moment, rather than genuinely trying to innovate?
Kristian Segerstrale

I actually think that, if you look at it, the social games market has matured incredibly quickly – it's grown very quickly but it's also matured. If you look at the top applications you know they really are dominated by ourselves and Zynga right now and that's for a reason. Like any market once it grows to be a certain size then usually it becomes more difficult to succeed because you have to compete with the existing incumbents that are aggressive in size. Your scale tends to matter, over time you've got to be a certain scale in order to have the kind of marketing muscle and cross promotion muscle. Also I think that this year was going to become very important is brands and franchises on social networks. You know, that market becomes difficult quickly.

If you think about it, if you remember how much the iPhone games market played out early on it was possible and there were tons of anecdotes of garage teams creating a game that would sell a million dollar's worth... and that was only, what, a year and a half ago? Since then that market has developed quickly and it's now dominated by game franchises and I think you're going to see something similar on social networks too.

But I think there are other areas in the industry which fulfill much more niches where there is room for new companies and that's good. I do think that it's still possible and that there are other core categories of social networks and I think some of the things the social network gaming focused companies have innovated around will become more relevant on other platforms also. So I think there is lots of opportunity, lots of different places, I just think it's trying to be a copy cat on social networks right now that is a difficult strategy because you have no funding and you will have to do an awful lot to catch up with other companies.

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Kath Brice