Swedish gaming sector in hunt for next Candy Crush
Swedish game development start-ups are popping up like mushrooms after summer rains, with growth that suggests the next global hit from the country that gave the world Minecraft and Candy Crush may be out there for investors to discover.
The industry added 40 companies in 2015: explosive expansion that shows no sign of abating, according to an association that represents Swedish game developers. The next figures are due in September.
"We see no indications of anything but that the development will continue," said Per Stromback, a spokesman for the Swedish Games Industry. "One sign of that is the employment needs.
"Most of our members report vacancies, and a small survey shows that some plan to hire at least 500 people in the next 12 months."
Swedish gaming has gained a global reputation through some attention-grabbing mergers and acquisitions - most notably Activision Blizzard's $5.9bn (€5.2bn) acquisition of Swedish-founded Candy Crush developer King Digital Entertainment.
That 2016 deal followed Microsoft's $2.5bn (€2.2bn) purchase of Minecraft creator Mojang in 2014. The transactions underscore the rewards that could be reaped from savvy investment in Swedish gaming companies, said Mr Stromback.
"The well-known acquisitions of Mojang and King have led to something that we've pointed out for a long time: that Swedish investors and pension savers are missing out on a lot of value, as they're not participating in these journeys, entering early and exiting to high values," he said.
Turnover among Swedish game companies almost doubled between 2013 and 2015, increasing by 39pc to about €1.3bn in 2015 alone, according to the Swedish Game Developer Index 2016.
Globally, 2016 was the first time in which revenue from computer games exceeded $100bn in a single year, a report published by London-based venture capital firm Atomico showed.
Last year also saw China overtaking the US as the "gamer capital of the world" in terms of market size. In addition to developing original titles, 'Star Wars', 'Mad Max', 'Walking Dead', 'Vampire: The Masquerade' and 'Tom Clancy' are among entertainment brands that Swedish companies have reinvented as games.
The country's prosperity and early widespread internet penetration probably played a role in the development of a strong gaming industry, said Lars-Ola Hellstrom, an analyst at Pareto Securities in Oslo.
"Many of the game developers do what they do because it's a passion, not to earn money," said Mr Hellstrom. "That, I believe, makes a huge difference. The game developers are artists, and in that way it's very similar to the music industry, where Sweden has been very successful."
Sweden's relatively small domestic market has pushed gaming companies to make their products good enough to win over enthusiasts abroad, Mr Stromback said.
And possibly even an industriousness driven by the Protestant work ethic has contributed to the gaming sector's success.