Dutch companies earn money through games. The Netherlands has a sizable games industry, but what does it look like?

What is the Dutch games industry? If you ask the average gamer, they’ll probably mention Guerrilla Games, the studio behind first-person shooter franchise Killzone. If you press on, perhaps provide a few hints – Ridiculous Fishing? Awesomenauts? – they might name smaller studios like Vlambeer or Ronimo Games. But if you mention successful studios like WeirdBeard, Abbey Games, Codeglue or Spil Games, chances are most gamers won’t have a clue what you’re talking about.

Is that all? Or are we simply asking the wrong people? Although the abdominal surgeons at UMCG Hospital in Groningen may never have heard of Guerrilla, they’re very familiar with Grendel Games. After all, they train their surgical skills through playing Underground, an applied game developed especially for them. Fire chiefs responsible for operational procedure exercises will know E-Semble, a studio that supplies virtual training simulations. Finally, the dredgers at multinational Van Oord in Rotterdam have come to greatly appreciate V-Step, a company specializing in maritime simulations that help prepare dredgers for hands-on situations.

All in all, it’s safe to say that Dutch game studios aren’t equally well-known across the board. Still, there are about 330 companies currently building, publishing and selling games throughout the Netherlands. That number was taken from the Gamesmonitor 2012, the most recent in-depth study on the industry. However, that number doesn’t include a few dozen companies that don’t consider gaming their core activity, but that still develop games. For example, the Dutch army develops its own revalidation and training exercise games, and there are a number of ad agencies that employ in-house game programmers. And while they significantly add to the success of the industry as a whole, specialized freelancers aren’t included in that list of companies either.

In addition, there are several companies that support the industry, while not developing games themselves: server farms specializing in games (cloud gaming is experiencing significant growth), companies analyzing game marketing data, or academic institutions doing fundamental research on games and gaming.

Those companies that spent more than half their time building games, employed about 3,300 people in 2012. Although there hasn’t been an in-depth study on the industry since, that figure is now obsolete. There are 32 games education programs in the Netherlands, from which several hundreds of new game developers graduate every year. How many of them actually find a job in the industry remains unclear. We also know the annual industry turnover of 2012, which was somewhere between 150 and 225 million euros – again, not counting turnover for game-related parties like the Department of Defense and ad agencies.

It’s safe to say that the creative industry in the Netherlands is thriving, and that there’s money to be made in developing games. In that sense, the Netherlands is no different from other developed Western countries. But what does the Dutch games industry actually look like? There are a number of things that stand out. For such a small country, the industry is quite large; bigger countries like France and Japan have a comparable number of game studios. Perhaps even more striking is the fact that the Netherlands focuses more on so-called ‘serious games’ or ‘applied games’ than other countries do. On estimate, at least half of all Dutch games production consists of games that help people train, learn, and manage change processes. The other half consists of so-called ‘entertainment games’, which ­revolve around the experience of gaming itself. The next few chapters will deal with both of these forms in further detail.

Another thing that stands out is the small scale of most companies. There are about a dozen medium or large game studios in the Netherlands, of which Guerrilla Games is the largest, with 230 employees. However, most Dutch game studios are run by ten people at most. That makes us very different from the industries surrounding us: game studios in Germany, France and Great Britain are generally larger. Size does matter here: you need large teams to develop prominent entertainment titles for game consoles, also known as AAA games. It’s no wonder that Dutch game studios generally specialize in different areas: mobile games, small-scale PC games, browser games, et cetera.

Besides their relatively small size, Dutch studios are often quite young as well. While some companies have been around for over a decade, most studios haven’t reached that anniversary yet. Those newer studios often employ savvy twentysomethings who know that in these times of digital distribution – think Apple’s App Store, or Steam for PC – having one solid idea is all it takes to make it big. There are definite pros and cons to this approach. Like the results of the Gamesmonitor showed, the industry is quick to grow horizontally, if not vertically. In other words, while the number of Dutch studios increases, they don’t show a lot of company growth.

Is that a bad thing? That really depends on your point of view. A pessimist would look at the risks of all these young and eager companies: inexperienced startups entering a dynamic and extremely competitive market. An optimist would see small-scale, unorthodox companies with a creative and innovative approach to games and new media in general, exploring them in ways nobody thought of before. Take an innovative project like Story Wall by Groningen-based Studio Bleep, an app that helps kids in hospitals overcome their fear. Simply use your smartphone to scan a cow printed on the wallpaper, and it will start talking to you on-screen to set you at ease. Another example is entertainment game Bounden, developed by a game studio from Utrecht called GameOven. Two people dance while holding a single smart phone between them, and the game shows them exactly how to move. You won’t get away with simply swaying back and forth, either; the in-game choreographies were created by the Dutch National Ballet.

The Dutch games industry is very innovative, and that innovation extends beyond the games themselves. For example, as a Sony studio, Guerrilla helped develop high-tech hardware for Sony’s Playstation4 console. Software package Game­Maker, popular among game developers, was also developed by a Dutch studio. So was ( )distribute (programming language for do distribute), which helps companies safely share their games with journalists and gamers. Haarlem-based iQU builds analysis software that allows game companies to follow gamers digitally, often throughout several games. It’s a very specialist area, and they’re one of the international market leaders. And then there’s the more fundamental research on IT, artificial intelligence, and other game-related software issues that’s being done at several Dutch universities.

All in all, the Netherlands can boast a great knowledge structure when it comes to computers and IT, and the games industry both adds to that expertise and uses it. You’ll find more on that in the final chapter. A broad IT culture is another vital part. Dutch people are generally highly educated, and the Netherlands offers solid opportunities for technical education. In addition, most of the population owns smartphones, PCs and tablets, and we reap the benefits of a modern glass fiber network and multitude of radio masts for mobile traffic. The Netherlands is one of the most well-developed countries in terms of Internet penetration and use. Of course, this is largely due to AMS-IX, a large Internet hub connecting European and transatlantic cables. That hub is the reason why an American cloud hosting company like Softlayer came to the Netherlands in the first place.

In order to understand the Dutch industry, there are two other important areas besides technology that need to be addressed. First of all, the games industry is part of the creative industry, and as such meets the requirements for financial support under the so-called ‘top sector policy’: government policy meant to stimulate the knowledge economy. That funding is used to improve the creative infrastructure – stimulating a startup culture, partnering the games industry with the business world and academic institutions, or encouraging Research & Development for games.

Secondly, the culture within the industry itself shapes the form the industry takes on. With only 3,300 people, the industry is still very manageable, and its transparent culture means sharing knowledge and insights is no problem at all. Even the smaller studios are part of a well-formed industry network. New companies connect through startup structures like the Dutch Game Garden, an ‘incubator’ for smaller game companies that currently has three locations throughout the country. With its own industry magazine (Control Magazine), annual game awards, trade fairs and consumer events, the dialog between stakeholders remains dynamic as ever. In the end, that’s what makes the Dutch games industry so quintessentially Dutch: it’s a small country, and we need to help each other out wherever we can.

“The diversity in gamers, games and gaming platforms is mirrored in Dutch game production.”

As mentioned in a closer look at the Dutch games industry, the games industry consists of entertainment games and applied games. Although this clear distinction seemingly separates the industry into strongly contrasting parts, that isn’t quite true: applied games only catch on if they’re fun to play, and research shows that entertainment games can be especially useful for developing fine motor skills and problem-solving abilities. It also helps foreign-language speakers learn English.

Dozens of entertainment games are produced in the Netherlands every year. Although nobody knows the exact number, that information isn’t really relevant; in the end, it’s not about how many games you offer, but how many you sell. Games in different genres, for different platforms, games that appeal to different types of gamers and different markets. That distinction is also very relevant: after all, ‘entertainment games’ is an umbrella term that covers a multitude of games. It makes a lot of difference whether a studio builds console games, browser games, or games suitable for mobile devices. Those all call for different distribution channels, different ways of presenting the game, different stakeholders… not to mention a different audience. Or, better yet: audiences, plural.

All of these are subject to quick changes, and the gamer audience most of all. Gaming has long been the domain of young men, the group that had been playing video games in arcade halls since the 1970s. In the 1980s, the rise of home computer systems added children as a target audience. Teenage boys remained the dominant group, mostly because the fledgling industry consisted of twentysomethings building games they enjoyed themselves. Games weren’t targeted at adults, nor were women and girls seen as a serious audience.

Over the past years, that has changed significantly, with women discovering games en masse. In 2013, the American Entertainment Software Association calculated that the “average gamer” was a 34-year-old woman, and that female gamers outnumbered their male counterparts. This shift is largely thanks to the rise of home computers, smartphones and tablets; game consoles and PCs are no longer the only gaming platforms out there. Another reason is that most games include a social component, providing new reasons to play; think of the chat function in WordFeud that grandma uses to catch up with her granddaughter. Conclusion: in 2015, gaming appeals to all generations and both genders.

This diversity in terms of gamers and gaming platforms is mirrored in Dutch games productions. The aforementioned Killzone franchise is developed for core gamers who own a Playstation4 console. Vanguard Games targets the same audience, but mostly focuses on games for smartphone and tablet. Since tweens prefer PC gaming, Spil Games developed their popular girls’ game Sarah’s Cooking Class as a browser game. Their older brothers play PC games as well, but prefer downloading a fantasy war game like Age of Wonders III by Triumph Studios. In the meantime, people of all ages enjoy the Tetris-like puzzle/building game 99 Bricks Wizard Academy, developed by studio WeirdBeard. Et cetera, et cetera.

Platform and target audience shape the games, and with it, the identity of the game studio responsible. Studios usually specialize in building for either a single or several platforms, because of the specialist knowledge it takes to fully understand that platform, both technically and economically. At the same time, some companies specialize in technically transforming a game so it can switch to a different platform. A company like Nixxes makes a comfortable living by porting other people’s games to new platforms, so they can reach new groups of gamers.

So, does that cover all entertainment games, then? Not really. Besides games sold directly to consumers, there is another important category: promotional games. Ad agencies often order advertising games themed around new products; free games focused on increasing consumers’ brand awareness. Think of Facebook games, or games on company campaign websites and the like. Although the market is currently declining, it’s still bread-and-butter business for many studios.

Many of these game productions don’t show up on people’s general radar. They’re often temporarily available, not particularly creative, and generally have short playthroughs. But as with any rule, there are notable exceptions. Utrecht-based studio Sticky is building promotional games for Hollywood blockbusters (think The Hobbit, Godzilla, The Maze Runner) one after another, all with high production value and significant playthrough. While a game like The Hobbit: Barrel Escape is available at a campaign website, its production value measures up to any other full game.

In short, the world of entertainment games is quite diverse. But just how successful is it, really? That’s a difficult question to answer. For every successful studio out there, there are several others with less positive results. Studios that scored a massive hit with a certain group of gamers might well miss the mark entirely with their next game – or the other way around. Large studios have gone bankrupt, while small-scale businesses have flourished. We’ve seen major layoffs, while other companies have refocused and started anew. In that sense, the Dutch games industry is just like any other, although it’s subject to a very volatile market.

Dutch studios are keeping their head above water for the moment, but there are definite concerns. The games industry is international, and by those standards, the Dutch industry is a mere dwarf. The 150-225 million euros that the Dutch industry generates annually is a mere drop in the ocean when compared to the estimated 79 billion dollars generated worldwide. Dutch studios follow important trends like the breakthrough of digital distribution and the rise of mobile gaming, but these trends are generally set in other countries. Although that’s not a bad thing per se, it does require a sharp eye for market developments, a great feel for marketing and ample entrepreneurial spirit. It would be an understatement to say that this isn’t equally well-developed in all companies; most independent or ‘indie’ studios still hold on to the romantic ideal that everything will be all right as long as you’re creative and a hard worker. That might be true for an expanding market like we’re seeing at the moment, but what happens when decline sets in?

Despite this important observation, it should be noted that many of those small-scale studios are performing admirably. Vlambeer has even risen to gamer fame. With a number of highly popular games to their name and an active community of loyal fans, they’re guaranteed a golden future in the world of gaming. And then there’s Abbey Games, which put the nearly forgotten genre of God games – in which a player controls an entire people – back on the map, and is very successful in that specific niche market. These two studios prove that creativity and an entrepreneurial spirit go hand-in-hand.

Companies like these have an extensive network and are characterized by a very open company culture: there’s no harm in asking, and the Dutch indie world is small enough to know someone who might have the answer. These are companies that reap the benefits of formal start-up constructions like the Dutch Game Garden, an incubator with locations in Utrecht, Hilversum and Amsterdam, or Indietopia in Groningen.

Another thing these small-scale companies have in common is that their games are sold as a purely digital product. For a long time, games were sold on CD-ROMs or other carriers. That meant high distribution and store promotion costs; something not all studios could afford. For that reason, smaller studios found themselves at the mercy of game publishers. With the rise of the Internet, these studios are now able to digitally distribute their games through dozens of channels. Smartphone games can be provided in the digital App Stores of Apple, Microsoft or Samsung, and it’s no longer required to go through a publisher. The same goes for PC and console games: large companies like Sony, Nintendo and Microsoft increasingly notice the value of smaller, often downloadable games users can play on their Xbox, PlayStation, or WiiU. And that has a noticeable effect on Dutch game companies.

So, is small really beautiful when it comes to the Dutch entertainment games industry? In part, yes – but there are still risks involved. As mentioned earlier, these small-scale companies struggle to grow, and marketing remains a weakness. That growth problem isn’t just the companies’ own fault, though. For one thing, the Dutch games industry has trouble securing venture capital. Another problem lies in the nature of the games industry itself: if the game is successful, it generates funding for the next production. If it doesn’t, the studio immediately ends up in financial troubles. While remaining small is the smart choice, it often directly interferes with developers’ larger ambitions.

May 13th during a special Dutch Games Association (DGA) Day, organized in collaboration with CLICKNL|Games and Dutch Game Garden, a new online platform for the games industry was launched. Together with the launch of the book gamesNL and the premier of gamesNL the movie, this day marked the beginning of a new strategy for the DGA. The aim is to develop te Dutch games industry to a European top 3 position in the following years.

During three workshops and a lively panel-discussion with members from the games industry and the Dutch government, the main question of the day: ‘How to get to a European top 3 position?’, was discussed. The Dutch games industry is a vibrant industry that consists of people with a great passion for games and gaming and belongs to the European top already on a creative level. Entrepreneurship and business knowledge are getting more and more attention and The Netherlands, as a small country, is performing well in this respect. But the ambition of the DGA is clear: we want to rise above the size of our country and be part of the European top 3. DGA Chairman Horst Streck concludes the panel with a note on collaboration: “It is only through intensive collaboration and sharing knowledge, both inside the industry and from the industry to the outside world, the governement and other sectors, that this industry can grow. The online platform support a knowledge network, collaboration and knowledge exchange. The book and the documentary are there to inform people outside the industry in Holland and abroad.”

Investments: money, knowledge and experience

Simon Usiskin (co-founder iQU): ”The Netherlands have not had a big exit within the games industry which means that private investors don’t have an interest in the sector. On the other hand, because of the success of companies like Rovio and Supercell, the Finnish games industry is seen as an exciting sector for private venture capital. Successful entrepreneurs tend to help each other and invest in each other’s start-ups and reinvest in the next generation of games start-ups and the government agency supports the private investor throughout the process. But I also have to say: the Dutch must be more ambitious and have to develop a more risk-taking culture if we are going to be one of top 3 games countries in Europe; let alone the number one!”

Lennart Sas (Co-Owner Triumph Studios): “Because of Dutch labour laws it is not an attractive option to hire a lot of people. On top of that, our passion is to make great games, not to manage a large team.”

Michiel Sala (CEO Little Chicken): “I don’t see many people with an economical background like me coming to work in the games industry. It’s time for a special games MBA.”

How research can contribute to the support of growth for the industry

The importance of research in the process of supporting growth for the industry was addressed by Berni Good, founder of Cyberpsychologist Limited, in an inspiring keynote. She pointed out the importance of psychological knowledge about the behavior of the gamer in the development of both entertainment and applied games. Michiel Sala (CEO Little Chicken): “Scientific research is important for the development of our sector. I would like to see that researchers would conduct research on questions that are posed by companies, in stead of researchers deciding for themselves what to research.”

After de keynote and the panel-discussion, the book gamesNL was handed to Marjan Hammersma, Director General Legacy & Arts at the Ministry of Education, Culture and Science. After the book was officially handed to her, she also started gamesNL The Movie to conclude the day.