The “Paradox” of Strategy computer games in 2016 and beyond
I’m a big fan of computer strategy games — I have literally spent thousands of hours playing them over the course of my life (Pirates!, Railroad Tycoon, Master of Magic, Master of Orion II, the Civ series, etc).
Today I want to focus on Paradox Interactive, a Swedish gaming company that builds perhaps the finest “grand strategy” PC games, such as Europa Universalis and Heart of Iron, or the upcoming Stellaris.
A big IPO is coming
Their CEO, Fredrik Wester, who owns more than 50% of the company, has announced plans to file for an IPO by the end of 2016. The company has about 4 million customers, most of them very “loyal” to every iteration of their games, and had revenues of 73 Million USD in 2015, up 241% from the previous year.
If we assume a more modest growth to a ballpark of 100 Million USD, we are certainly talking about an IPO that can put the company above one Billion USD in value.
What a (strategic) gaming company can do to expand its business
As I said, Paradox builds specific type of games, well known for a high level of historical accuracy. Most of Paradox’s employees are actually history “geeks”, as you can clearly see from their footage video when playing games.
As an example, in the upcoming Hearts of Iron IV, which covers the years around World War II, you can select “historical accuracy” to have the various factions controlled by the computer to play as close as possible to what actually happened.
Going IPO means being able to raise a lot of money to… Expand. What will a company like Paradox do with that money?
I see a few different opportunities, and I’m going to briefly describe them below:
- Education
- Artificial Intelligence
- Technical training
1. Education
It is very clear to me that, besides the typical “gamer” that is interested in “difficult to master” strategy games, there’s an opportunity to attract someone else: a student, and not just a student of history.
Paradox has, in fact, the opportunity to create a platform that schools and universities can use to both teach students about history, technology, engineering, while having fun playing games.
Imagine the game above, Hearts of Iron IV, and how many opportunities there are to learn things: an Engineering student can learn how radio technology works and then see its effects when you discover how to apply that technology to your troops; or an Economics student could learn how commerce, resources and logistics are the main forces behind who wins or loses a war.
The right platform would allow students (and in turn, professors) to build “content” that infiltrates the game without ruining it, but also a way to “score” your learning within the game itself — and possibly, get “bonuses” in the game if you learn things properly.
We have been hearing about the “gamification” of education for a while, but I haven’t seen any clearer opportunity than this one.
I have been involved with education startups in the past (such as CloudAcademy.com, which offers training and tests for cloud computing skills — mostly on Amazon Web Services at the moment) and I can assure you that whoever finds a more engaging way to retain the student’s attention, wins BIG.
2. Artificial Intelligence
There are thousands of games published every year, and each one of them needs some sort of Artificial Intelligence (even though the term is sometimes improperly used), or AI, to play the computer “adversaries” or characters in the game.
In most cases, the AI is worse than a good human player, and this is a pity because these games would be much more fun and engaging (and challenging) if game studios had the time and budget to build better AIs.
However, there is an opportunity for a well-funded game studio, such as a post-IPO Paradox, to build a “general” AI that can be adapted to any game.
Paradox could keep the “GAI” (Gaming Artificial Intelligence) proprietary, and sell licenses to use it to other game studios, or could use a hybrid model, offering an open source GAI and then building specialized modules for their own games, to make the AI more challenging or simply more engaged, and potentially charge users for it.
(see also: DeepMind plays Atari, and DeepMind challenges for StarCraft)
3D engines already use this model — there are only a few, some proprietary, some open source, that are used in most 3D games.
If you are building a new 3D game today, you would be crazy to implement your own 3D engine.
Same thing will happen for AI, and I see this as an opportunity for Paradox because of 1) Cash in the bank, and 2) their target audience cares about a strong computer AI a lot.
3. Technical training
Last but not least, Paradox’ games are “modded” extensively. A “mod”, or modification, is a piece of software (or sometimes, just a simple text file with different parameters) written by the community of gamers, that other gamers can “install” to change some aspect of the game.
Some mods modify the aesthetic, some others the game engine, or the various parameters related to the “mathematics” or battles and such.
Modding is the embryo of something potentially much more interesting: a platform where people can spend time to learn how to program better. This might mean open sourcing part of the game code, but it can be done in a way that makes the game more interesting without sacrificing revenues.
It can also be part of the “Education” efforts that I covered above, or it could be aimed at people that want to learn how to code, possibly to be able to find better jobs because of it.
Conclusions
I’m a fan of Paradox, and I think that they have an opportunity to do something good for the gaming industry.
As a gamer, I want to leave with one humble item on my personal wishlist: Paradox, please buy the game rights for Master of Magic, and make a new version of it. My personal life and my work would hate you for it :)
