Interview: Paradox CEO Wester On Growing Despite Tough Economic Times

While most of the video game industry is tightening its belts, privately-owned Swedish developer and publisher Paradox Interactive has had its best year ever in 2009, even while focusing on the niche of in-depth historical PC strategy games. The company's organic growth has allowed it to take risks in an otherwise generally risk-averse environment. Gamasutra recently spoke to CEO Fredrik Wester about one of those risks, the recent greenlighting of Victoria 2 -- Wester said if the game reached profitability, he'd shave his head. In a more in-depth discussion, Wester discussed the ways Paradox is slowly expanding: acquiring formerly-external properties like the Majesty RTS/RPG hybrid (it released Majesty II this month), working with emerging Russian developers, and dipping its toe into the console waters. He also touched on areas in which the publisher must improve, including reaching out to more gamers, and improving user-friendliness without sacrificing the depth and complexity that makes Paradox games what they are. We had discussed the Victoria 2 situation. How does Paradox decide what projects to take on? Fredrik Wester: Paradox is a privately held company. I personally own 49 percent of it. The rest of the staff owns the rest. So, we basically decide ourselves what to do. We do what we feel is the best thing for the moment and what the fans want to see. This is actually the first test where we've invited people and asked them, "What do you want to see us do as the next game?" It's kind of an experiment. You know, it's always a bit scary and exciting at the same time. We're very close to our fans. We have a big fanbase; we know that. We're trying to do whatever they want to see, so we'll how it turns out. I'm exciting to see that. The other game that the fans most wanted, though, was Hearts of Iron III, and you did announce that and release it. So in some cases, you and your fans are more on the same wavelength. FW: Right, it's just that we can't keep on doing only sequels to what we've done in the past. That's another thing. I know that gamers can at times can be conservative. It's not that they lack imagination or anything; it's more that they know what we've done in the past. They already know they like that specific thing. FW: Exactly. They know what they like, and they want to see improvements on it. But we need to reinvent ourselves at well. We need to go back and say, "Without anything else, what can we create that is really good, a kick-ass game?" Well, a strategy game, obviously, because that's what we do as an internal team. But on the publishing side, we've done a lot of good things too. We bought the Majesty IP, for example, three years ago. We started working on [the sequel] two and a half years ago. And that just came out. I didn't realize you actually owned it, not just published it. FW: Yeah, we bought it. We just had our final payment for the IP. We paid it off in different installments. That was my own pet project. I looked for who owns the IP, and I found this guy. We started talking, and I said, "I want to buy it." He was like, "Are you serious? Why?" That doesn't seem encouraging. What was your answer? FW: It was, "Because it has a lot of followers -- like myself." That was in 2005. I still played the original Majesty five years after release. It's a strong concept. How did you handle development? FW: We did a request from three different studios, asking, "Can you do a pitch about how you see Majesty developing into a sequel?" From the Russian team Ino-Co, there was only one sketch I needed to see, which was an ogre with a big club, and a warrior running away from him. The way the sketch was done, I was like, "These guys got it." Of course I saw other materials as well, but the front page was that. It had the humor, the art, everything in that one picture -- awesome. It's not so often you see only one thing and you'll think, yeah, they got it. I'm happy we found the team. I've been traveling to Russia a lot, and Russia is a tricky market because there are a lot of good studios. But there are a lot of, well, not so good studios, to put it that way. There are all kinds, because there has been a lot of money flowing into Russia in recent years, so everyone was getting funded. But Ino-Co was definitely right for this project. When I played 15 out of 18 stages in the game, I knew it was the right choice. So, that's happiness. There's extremely interesting material from Eastern Europe these days on the PC. S.T.A.L.K.E.R. is a big one of course, but out of Russia itself I've also been playing King's Bounty [by Katauri]. There's a lot of good stuff coming out of that part of the world right now. FW: Absolutely. The Russians are -- well, they're not taking over, but they're coming into the industry with a totally different view of how things should be done: what a budget is, and how to take care of things. They have a great engineering tradition, going back to the whole space race with America. I definitely believe that the Russian gaming industry is growing stronger and stronger. They've had a lot of capital, as I've said before. Now they've had a chance to develop a few titles. They're going to grow on the consoles as well, but PC is very big in Russia. It's by far the biggest gaming platform. You said that Victoria 2, after a couple years or so, picked up over digital distribution despite its weak retail launch. I imagine for a company like Paradox, digital distribution is real boon, because you can home in on very targeted communities and groups rather than the broader brush of retail. FW: Yeah, that's right. When we took the tagline, "Strategy is our game," that was to tell people that we want to be kings in our own area. We want to be best in class at what we do. With Hearts of Iron III, for example, it's not the perfect game upon release. We're fixing a few issues, and we've figured out what's in the game. But on the other hand, if you want to play a game with that complexity, with that magnitude and scope, there are no competitors at all. But it should have been more polished on release, I can agree with that. What about Victoria? That seems like even more of a dense thing, even more niche. FW: It's a very complex game. I think that what we need to work on are a few things. I, myself, went to business school, so I want to work with the trading and creating of goods model and the economic system as a whole, because I think that was just a black box in Victoria 1. I want to see it more transparent. How does the world market actually work? But I don't know if I can get my will through on that. I didn't get my will on what game to create, so I don't know about the game design. [laughs] I can always try, at least. Even being able to discuss that is unique, though. I love that about these PC genres. You don't really see that elsewhere, the idea of trying to model an entire economic system, or trying to figure out what factors go into the ebb and flow of history. FW: Absolutely. And one of the problems with economy is that it's not an absolute science. Whatever you put in there is going to be wrong, and people are going to have opinions about it, right? I spoke to my father in law -- he's a scientist, a physician. He asked me, "Is economics a science?" I said, "Well, it's not. It's a number of different theories." Economics analysis is often closer to opinion than empiricism. FW: Exactly, yeah. I read a book called The Origin of Financial Crisis [by George Cooper]. [Free-market economist Milton] Friedman argues there should be no central banks because they're destabilizing the economy. While the school of [John Maynard] Keynes is arguing that central banks are needed to stabilize the economy, so obviously it's not a science. The science is more in the appraisal of what came before, but laws are harder to agree upon. FW: Exactly. That's what economists do best of all. "This is what happened. This was the cause of the financial crisis. And now we're going to do this." What's in the near future for Paradox? FW: We're looking to grow in a variety of ways, but mostly within strategy games. Majesty is a big step for RTS gameplay. We're looking into consoles in small ways like XBLA, for example. We're probably doing our first Nintendo DS game. That's just a test, to see if this type of [strategy] gameplay can actually work on the DS. We're experimenting a lot with DS. That's going to be great. 2009 has actually been the best year in the history of Paradox Interactive. We're growing around 40 to 50 percent this year. We're making good profits. In 2010, we're growing another 30 to 40 percent, I think. This crisis has been very good to us because we've been self-funded, privately held. Two to three years ago, people with a lot of money could outbid us for any developer out in the market. They just came in with a lot of cash, and didn't care whether there was a profit to be found in a project or anything. I think in the coming two years, we're going to grow organically. We're going to ask, "How are we going to be stronger in our field? How are we going to be delivering even better games within this niche to our gamers, even grow the niche as well?" I think there are a lot of people out there who didn't realize they wanted to play World War II on a huge map. These are hundreds of thousands of people who gradually found that out. We need to reach them. That's our question in the coming two years. How do you do that? I've been a PC gamer most of my life, but the most complex I would get for most of that time was Civilization. I played a lot of genres, but I wasn't even really aware of some of the most in-depth stuff. FW: Civilization is still pretty complex. That's true, but it's only actually been in the last couple of years that services like Steam have made me more constantly aware of this whole other side of PC games, including what Paradox publishes. How do you reach out to people like me, who like playing games on PC, but don't know about some of these more niche areas? FW: First of all, when it comes to Paradox internal titles, we need to work on how to get into the game more easily. Many of our games are punishingly difficult to get into. The learning curve kills you. It took me eight hours to really learn Hearts of Iron III, and I was already a Hearts of Iron II player. We have to get away from that without removing the complexity, and that's a very tough task. We cannot remove the complexity, because that's what makes our games our games. The other thing I think has gone missing from the industry is the good old [principle of] being close to the customer, listening to the customer base, and providing good service and support. That's what makes people say to each other, "This is a good game. You should buy it." We don't have the budget that Take-Two or EA or Blizzard has. We just need to deliver a lot of good things. We can't deliver crap, because people won't buy it. Of course, I'm not saying that EA or Take two is doing that either, but being a niche player, you always have to deliver. There's a big pressure to deliver good stuff.