The Dutch want gaming startups to sprout like tulips (interview)

The Dutch government paid my way to the Casual Connect Europe event in Amsterdam. Our coverage remains objective.

The United States gave gamers Call of Duty. Japan gave us Mario. Finland gave us Angry Birds. What will the Dutch game developers give us?

Following in the footsteps of other countries, the economic developers want to embrace game developers to get a real gaming economy going in the Netherlands. So far, the country has produced Spil Games, a maker of games for girls, and Vlambeer, the creator of the indie game hit Ridiculous Fishing. But the country wants to play a greater role in the game industry, which can jump-start startups, jobs, and a modern technological economy. It raises the question: What are the seeds for growing games?

The Dutch Prime Minister, Mark Rutte, threw his support behind GameOn, a €10 million game investment fund with the support of the Dutch Ministry of Economic Affairs. Reinout te Brake, a serial entrepreneur and the founder of iQU, a game marketing company, wants the fund to find promising entrepreneurs and push them toward commercial success in games. His job is to discover and support the next Supercell, the Finnish startup that created the monster hit Clash of Clans.

At the recent Casual Connect Europe event in Amsterdam, I caught up with te Brake; Bertholt Leeftink, the director general related to innovation for the Dutch Ministry of Economic Affairs; and Jan Dexel, the senior policy advisor at the Dutch Ministry of Economic Affairs. Here’s an edited transcript of our interview.

GamesBeat: What are the beginnings of what got you interested in games?

Bertholt Leeftink: We see a lot of opportunities in the Netherlands with respect to the IT industry in general and the gaming industry more specifically. What we see is a huge potential, if you look at the benefits and the business environment in the Netherlands. We have a lot of creative people. We have a lot of places with a very open society, like Amsterdam, Rotterdam, Utrecht. These are good places to be for young entrepreneurs. But what we also see is that we don’t have a big gaming industry yet.

We’re looking, with various stakeholders in the industry and some of these important departments, to see what exactly is missing in our business environment and how we can work together with entrepreneurs, business, and government and cooperate to attract foreign investors, foreign entrepreneurs, to use the opportunities we have here in the Netherlands. We think that the Netherlands and Holland is really a very attractive place for this industry. Both the applied gaming industry, which is relatively large in the Netherlands, and the entertainment gaming industry.

Jan Dexel: We see a good combination of serious gaming, which we have in the Netherlands, and a developing market for entertainment gaming. We also have specific policies on certain sectors, like creative industries – priorities, we call those — which is one of the main areas where we have a competitive advantage compared to others. Dutch design is well-known around the world, and that has a lot to do with gaming. Design is a crucial part of gaming.

GamesBeat: What have you studied from other places about how you can kickstart a game industry?

Leeftink: What we do is not study that ourselves, but use our network and our partners to inform us about how they look at the Netherlands – what kind of opportunities they see and what kind of things are lacking in the Netherlands – and then come up with concrete proposals and ideas about how to fix that.

One area in the Netherlands where we’re improving is the availability of venture capital, seed capital, which is a general issue. Two weeks ago I was in Boston at MIT and at the Cambridge Innovation Center, all these places, seeing a lot of entrepreneurs and also a lot of venture capitalists. We are improving. We have facilities available through the government to stimulate venture capital and seed capital to invest in the Netherlands.

The basic thing is that if there are promising proposals, and if private capital is ready to invest at least 50 percent, under certain circumstances we’re ready to invest the other 50 percent. We want to increase the amount of capital and, as you say, kickstart entrepreneurs and venture capitalists with the funds that are available.

This industry also has a lot of young entrepreneurs, who are creative and talented, but who aren’t necessarily entrepreneurs in the broader sense of the word. We’re helping them with our networks, to support them in making their ideas into blockbusters. That’s what we want in the end. We need more than just talent. We need all these entrepreneurial skills. That’s something we stimulate and develop by bringing people together, building networks and holding matchmaking events. We have all these activities to show people that we have a lot of possibilities here in the Netherlands, and that we’re very open to helping and supporting people.

Reinout te Brake: To add to that, we’ve done quite a lot of research talking to different cities. So far, it’s been more of an export product — from Utrecht, Rotterdam, and Amsterdam separately – and so there are all kinds of pieces in place, but they need to be connected. Connecting those dots is part of the model. Because we have all these little islands, communication between developers could have been more optimized.

We could have anticipated better on things like when free-to-play kicked in full force. Developers were trained in schools – we have very good schooling, very good incubators – but they were all trained to become number one in pay-to-play games (such as with Valve’s Steam digital distribution service). That’s a completely different model. It’s less scalable, because if you do free-to-play well, you have companies that may fail on their first or second game, but if they’re agile enough, with the right mentors, they can grow. You can see all these success stories on your radar, whether it’s Kabam or Supercell or Rovio.

If you have that climate in place, then before even launching a game, it’s about entrepreneurs that investors believe in and give them a runway. They expect to have success down the line, instead of looking at the first game and saying, “We believe in that,” or “We don’t believe in that.”

GamesBeat: A lot of the game regions of the world seem like they got started in an accidental way. Game companies ended up in Seattle because of Microsoft, in Dallas because the guys who opened id Software relocated there, or in the Bay Area because of Electronic Arts. How do you marry that luck of having these people around with intentional policy to make it happen?

Leeftink: It’s not only what we see in the Netherlands. If you look at the Dutch situation, a lot of ingredients are available. It may be luck, but it may be that I’m a football fan and I love Ajax. Ajax, many people call them “lucky Ajax,” because they always score in the last 10 minutes. That’s not by accident. That’s also a quality – they have the right plays and all the ingredients are available.

That also holds for the gaming industry. We have the human talent. Dutch design is famous around the world. We have a lot of knowledge institutions. We have good entrepreneurs. We think that all the ingredients are available. All we need to do now is make a delicious meal. I’m sure you’ve been around here a couple of days and seen the city. We also have other cities like Utrecht and Rotterdam that have a good climate to bring this further.

Dexel: All the ingredients are nearby. You went to Arnhem there, and you were almost already in Germany. That’s how small the Netherlands are. All the hot spots here are, in effect, a delta. We have schooling. We have VC.

te Brake: In Rotterdam, they really want to go for education. The schooling over there makes it a very good place. Utrecht has its incubator. It’s quite unique, what they have at the Dutch Game Garden. Then you have Amsterdam. Amsterdam is like Helsinki. It’s a flagship. It’s the center. That makes GameOn interesting, because we work with Amsterdam to help those companies land.

We do know that Oculus VR wants to be in Europe, for example. But where do they find a new managing director? If they can find one in Amsterdam, that would be awesome, because if they open an office there, then you get developers wanting to be close to them. They might actually locate or relocate themselves in Amsterdam. Getting companies to land in the Netherlands will drive future success.

Dexel: It’s a comparative advantage for the Netherlands. Not just for startups and small to medium-sized companies, but also for large companies to use the Netherlands. If they want to move into Europe, most of the time they choose the Netherlands.

GamesBeat: The Finnish example — is that the clearest one for you to follow? You put decades of work into this and you wind up with things like Supercell, creating thousands of jobs.

Leeftink: If you look at the results and the track record of Finland, but we do it in our own Dutch way. We have, to some extent, better capabilities. But it’s obvious that they have done a great job there, like some other countries and cities. Berlin is another example of where things are happening. We want to bring Holland to a place in Europe and the world where we’ll also become a hot spot for the game industry.

Dexel: We have a lot of similarities with Finland. If you look at the World Economic Forum, you’ll see that Finland is an innovation-driven country, like the Netherlands. A lot of things are already the same. The luck that Finland’s had could also happen quite easily in the Netherlands. It’s how you create the luck of having something like a Supercell.

GamesBeat: Jobs are great to have, but I think some people have always worried about the game industry and how it has a lot of violent or socially questionable content sometimes. Does that part of it concern you in some way?

Leeftink: Well, if you look at what happens and what’s produced in the Netherlands, that’s not our main concern, I would say. I mentioned that we’re already pretty big in the applied overseas gaming industry. It may be a bit typically Dutch, but… I’m not very worried about these kinds of developments. I’d also say that for the very aggressive… One thing, we’re rather unconventional in the Netherlands. We’re open-minded. But we also have rules, so… It’s not a main concern. In fact, not any more or less than it is for any other industries.

te Brake: I don’t think we’re going after any GTA kind of titles. What I’m seeing right now—You saw some guys on stage yesterday, and you saw the type of games that they make. It needs to be fun, 110 percent entertainment. That’s the genre. Clash of Clans is a war game, of course, but the characters and the style are such that it doesn’t have that aggressiveness. Having said that, World of Tanks, I wouldn’t mind having one of those in Holland. It’s just shooting at tanks. Then you have planes and you shoot at planes. No blood. [laughter]

Dexel: There’s a kind of code of conduct that’s already inherent in the culture of the Netherlands.

te Brake: Yeah. That’s important.

GamesBeat: Things like the incubators seem to be spreading all over. You have your Dutch Game Garden. Is that another area where more support or more incubators are going to be springing up?

Leeftink: We’ve seen incubators growing in the Netherlands in a lot of cities, a lot of places. Sometimes they’re stimulated by local governments or by universities. The way I see it, we don’t know yet what the right formula for incubators is. Maybe there are more successful formulas. Sometimes we’ll stimulate them with a little money. But what we’re looking for, and what incubators do, is bring people together, bring entrepreneurs and young talent together. That’s important for the Netherlands.

Dexel: In fact, you could say that every university here, and we have quite a lot of them, they all have incubators. Some specifically focus on certain areas, and they’re very successful, but we also have generic ones, and in those generic ones, it’s possible to start a gaming startup as well. But we’d also love to see some dedicated incubators like in Utrecht, where we have a critical mass that can really boost that.

te Brake: In Finland there’s already the mentality, the passion, of “I’m going to make a kick-ass game.” It’s the same in Holland. But access to growth money is easier there. In Holland there’s become a bit of an assumption that there is no money, so people think, “I’ll do my best with my game, out of passion, but I can only remain at this level.” The discussion we had yesterday, one guy was saying, “If I can make one good game a year, I’m happy.” And he really means that. But then I start to talk to him about, “If that one game a year isn’t happening, how do you survive?”

With J.P. van Seventer, who’s running Dutch Game Garden, we have that thing—Say you have two indies. One of them says, “I’m going to go for that one game. I’ll feel comfortable if I can pay the rent, and that’s it.” It’s nice to have that indie fascination. But then another indie says, “I’m going to make that big shot. I’m going to give it a try.” They should be getting the help that we now offer.

GamesBeat: The strange thing happening now is that you can create some very successful game companies, but not necessarily create a lot of jobs in the process. The Vlambeer guys are very successful with just two people, making games like Ridiculous Fishing.

te Brake: But if you do a risk analysis on that, suppose they have that one hit. But what about the second? And also, the game was played by many, many people, but the revenues are only a few thousand a week. So how much do you really buffer in times where maybe you don’t have a game that’s that successful? Everyone should make their own choice, but the fact is, if someone says, “I want to be the next Supercell,” there at least should be a blueprint for how we can help them.

Two, the incubators, obviously, are very attached to schooling. That means that free-to-play, the trends right now, should definitely be addressed better in schools than they are today. That’s where we can help. Having events like this is very important, but also, having someone that’s made his name in the industry invite them over and talk to those students.

GamesBeat: How much do you feel you’re sort of competing with other countries for the game industry? Do you feel like you have to pull some companies out of other places in order to bring them to the Netherlands?

Leeftink: I don’t really think in terms of competition with other countries. What we want to do is be very attractive to entrepreneurs and for investors to do games and do business in the Netherlands. Of course, we’re looking at other countries to see why they’re attractive in certain areas and whether we can learn from them. We think in terms of, “I want the Netherlands to be on the short list for entrepreneurs and investors when it comes to potential places to invest.” It’s up to them where they put their money, but we want to be a very attractive country to this industry. We do think, as I said, that we have all the ingredients available.

te Brake: If you look at cities, I know of one company that did a check and said, “We’re not going to Paris. We don’t want to be in France. We’re not going to Dublin. That’s too far out. Finland is always either too light or too dark, and highly competitive when it comes to recruitment.” So what remains to them is London, which is very expensive, and Berlin, which is very crowded when it comes to tech, and Amsterdam. We just need to be a little bit more proactive. We need to engage the gaming industry.

Leeftink: That’s what we’re doing here with Top Sectoren and the Netherlands Foreign Investment Agency. Other countries have these kinds of agencies as well. It’s not always about money. It’s very much about the climate. Where are the entrepreneurs and the venture capitalists? What’s a good environment? That’s something we’re trying to stimulate further.

GamesBeat: Where do you look at gaming in the broader context of technology companies that you want to have here? How do you view the gaming industry relative to some other categories?

Leeftink: What we see is that the game industry has a lot of linkages to other industries, which are more general. In that sense, we see that they’re very attractive assets to have. Also, in terms of branding, it’s about creativity. It’s about design. It’s about entertainment. We have, in the media sector, some great businesses in the Netherlands. Eyeworks just sold to Warner Bros. We have Endemol. For a country, it’s very good to have this kind of industry, where people feel good, where they enjoy strong branding, creativity, human capital, talent.

The gaming industry will contribute to solving some of these societal challenges we have, which is also a very important theme in the Netherlands. It certainly holds for this serious gaming industry – in health care, for example, and security and so on. Games and gaming will become more and more important and more and more accepted as a tool to improve. It’s an attractive industry to have flourishing in your country.

Dexel: If you look at the hardcore technologies, we have the high-tech research in Amsterdam and in Eindhoven. If you look into that kind of thing, a lot of technologies are coming from the Netherlands. That’s also available to new developers. It also has to do with user interface. It’s not just the game itself. We have crucial technologies available.

GamesBeat: It seems interesting that there’s been some decline among the very large companies. The small, independent companies seem to be on the way up, in general. You have Phillips here. They’ve been declining in size. In Finland it was Nokia. They were a job engine for a while, and then it collapsed. It almost seem like the smaller companies, the startups, are the ones that are a bigger part of the future for some companies.

Leeftink: Certainly they will be. If you look at the last 10 or 15 years or so, a company like ASML, producing chip (manufacturing equipment) with a global market share of 80 percent. That was incredible. NXP is growing in the Netherlands and expanding in Asia, for example. There are companies, in the Netherlands and in other parts of the world, which are really the new multinationals. They represent a greater change in leading companies and growing companies. Some of these changes are taking place within the Netherlands. A company like DSM — I don’t know if you know them – used to be in coal and mining, and now it’s a life sciences company.

Dexel: In between it was a chemical company. Now it’s one of the new biotech companies.

Leeftink: In the states that would have worked differently. It would have been an entirely new company. But we see a lot of—Philips itself used to be in light bulbs. Now it’s very strong in medical technology.

Dexel: If you look at the high-tech companies in Eindhoven, where Philips originally set up, there are all-new startups working in technologies that Philips originally started to grow. There are very interesting developments going on in the antennae. The Netherlands are at the top of the bill in that technology. In one or two years, that technology will be in most smartphones.

te Brake: Also, you see that entrepreneurs are standing up, and working together with government to put things in place. It’s a nice combination. That’s maybe a little bit different than Finland, if you’re looking at Finland. I would say that Holland has a very entrepreneurial spirit.

If the government can stimulate those entrepreneurs to step up and do these kind of initiatives—In this case, it’s Marcel Boekhoorn, who has sold several companies, made his own fortune, and now he’s putting it on the line to make it happen. We have the highest density of patents in all of Europe. In fact, Philips has put the blueprint down there, which is awesome. You can compare that to Nokia.

GamesBeat: It also seems like you want to create more modern jobs that can teach digital skills to your young people. You could create jobs in the oil industry, but is it more important to create jobs in the digital industry?

Leeftink: In a sense, that’s right. On the other hand, we don’t believe that a government creates jobs. What a government should do is create the right environment to let entrepreneurs and businesses do their thing and create jobs. What we see is that there are all kinds of hiccups, either because there’s some problem with the amount of seed capital, or other things.

That’s what we try to deal with. Not necessarily with investing a lot of public money in these sectors, but trying to facilitate, to stimulate, to create the right framework of conditions in terms of human capital, in terms of finance, in terms of entrepreneurship, in terms of facilities, in terms of infrastructure. For IT infrastructure is very important. We have a great infrastructure here in the Netherlands. That’s how we see our role.

Like I said, for the gaming industry, all the ingredients are available. If we don’t see a flourishing game industry yet, then we bring people together and say, “Hey, what’s wrong? How can we help? How can we join forces and take the next step?” We’re ready for that next step. It’s not really putting in a lot of public money. It’s not traditional industry policy.

Dexel: That’s why we welcome this initiative from GameOn. They can combine all the ingredients and boost it all together.

te Brake: That’s often the biggest issue. Development is one, but getting the game out there, learning from the marketing campaigns, optimizing that—There are two companies in Holland that have huge distribution networks: iQU and Spil Games. That shouldn’t be the problem. It’s focusing on the right concept – free-to-play, monetization, leveling. It might be that we’ll have to get some talent to Holland to teach and educate our young entrepreneurs here. There’s definitely a will. That’s what I see in our young gaming startups. They admire what they see happening in Finland and Asia. They definitely want to try it.

GamesBeat: It’s an ever-changing business and an interesting business. The platforms are always in flux. 

te Brake: It’s going very rapidly right now. That’s another thing. If we would have done this three years ago, I think we would have been challenged. I think now, today, it’s a little bit more crystallized, where you should focus on.

But if you see how fast things have been going, the moment when we started Spil Games (in 2005), there were still companies like Oberon that were selling games for $19. Three years later, those companies were almost dead. Today they don’t exist. New gaming companies have taken their place. The speed of this industry has been really challenging for everyone.