The Paradox of Value

This year I hope that at least 30 per cent of our revenue will come from digital distribution, it might be as much as 40 per cent. When we separated the management of the two companies we agreed that we were going to sell Paradox titles on all digital distribution platforms, as long as we get a good split for it, so that opens the door to a lot of new revenues that we haven't seen before.

We have an online strategy where we're trying to get people to buy our games online for a lot of different reasons - one of them being better revenue, of course, another being better cashflow because we get the money quicker, and thirdly it's easier for us to reach gamers if they're all heading online.

Exactly.

I think that you'll not see retail disappear in quite a long time, actually, because what we're seeing now is that they're the early-adopters in terms of gamer behaviour. It might take at least ten years before we're actually moving out of retail in terms of main games, but we might still release things like collector's editions and things like that - if you want to include a dancing Stalin figure with your game, you can't really do it online, you have to have a box for it.

So I think retailers will move towards more collector's boxes, and of course more hardware-related items too.

I think there should be more interest - I don't think we're very good at merchandising in our industry, we should work better. I'm not sure if it's driven by publishers or retailers, but the only ones that have really succeeded is Blizzard, who have done a great job - we're looking at companies like that when we talk about trying to transfer the success we have with our games into merchandising. Maybe big maps for Hearts of Iron III, where you can come up with new strategies... I don't know, there are tons of ideas that we have, but we can't really do that ourselves, we need a partner to team up with.

But merchandising? Definitely, I love it.

Well, we've seen three of our partners go bankrupt in the past four months, and that's obviously a big change. We lost quite a bit of money with one, so we've had an impact - but to be fair it's not a big deal. Losing money is always annoying, but it's not like it's threatening our existence - it's more like a bump in the road.

I think the difference between Paradox and a lot of companies is that we haven't relied on investors, we haven't relied on huge credit lines from the bank. We have a small credit line which we use every now and then, but we've only relied on our own cash flow.

I think the way that we work means that we have lower risk overall, which means we can handle harder times a lot better than other companies.

Well, you'll know Pinnacle already, so we've zero cash coming in from them which was quite annoying because we'd calculated quite a lot of money coming in from that. But they were different types - publishers and distributors mostly.

I think people need to think more about what kinds of games we're creating, and why are we creating them? I think a lot of people just need to fill their cash flow schedules with a new release... that's why they release titles.

Gamers are getting smarter and smarter at picking the games that are really good, the market is getting more polarised, but I don't think creativity will suffer.

Something I think is overrated in our industry is being revolutionary about games - I'll take Blizzard as an example, they've never been very revolutionising with anything they've ever released, but people love the company and they're doing great business. It's because they just create good products.

I think a lot of lay-offs from the big companies will result in smaller, independent companies, where innovation really comes from. I think it's good for the industry that there's a shake-up.

Yes, maybe - gamers might suffer in the coming five to six months before things shape up again and we're over the worst, but it will get better for gamers and for the industry.