UP DOWN UP: Why some game companies succeed, while others fail

by Kim Nordström

Ever wonder why some game companies succeed while others fail? This book explains why.

Game industry veteran Kim Nordström spent two years interviewing over 100 of the industry's most successful founders, CEOs, and leaders, about lessons learned and wisdom gained from their biggest wins and most disastrous failures. UP DOWN UP will help you navigate your game company through success and failure.

UP DOWN UP is a cheat code to understand what makes the world's largest game companies succeed.
- Justin Waldron, Co-founder, Zynga

Kim offers us rare 'backstage access' to the challenges game companies face and insights from the leaders who have navigated them. Any leader looking to strengthen their team and navigate the storms should read this book. You’ll find countless ideas you’ll want to reference back to again and again.
- Lyndsay Pearson, VP & Creative Director, the Sims Franchise

Kim's book brilliantly distills wisdom from game industry leaders into entertaining lessons. A must-read for practical insights on management.
- Alex Pelletier-Normand, CEO, Rovio

Kim's book contains some of the best war stories of free-to-play game company building ever collected.
- Kristian Segerstrale, CEO, Super Evil Megacorp

Every current and future leader in the game industry should have this book on their bookshelves because they will need to go back and reread it over and over again.
- Michail "Mishka" Katkoff, Founder, Deconstruction of Fun

This book is an amazing treasure trove of wisdom.
- Chris Wilson, co-founder & CEO, Grinding Gear Games

UP DOWN UP contains quotes and stories from some of the most successful game company leaders and creators in the
Alexander Seropian, co-founder, Bungie
Arjan Brussee, co-founder, Guerilla
Audrey Leprince, co-founder & CEO, the Game Bakers
Brendan PLAYERUNKNOWN Greene, Creator of PUBG
Carolin Krenzer, co-founder & CEO, Trailmix
David Helgasson, co-founder & the first CEO, Unity
Emily Greer, co-founder & previous CEO, Kongregate
Fredrik Wester, CEO, Paradox Interactive
Gary Dale, CEO, Sega Europe
Hamilton Chu, co-founder & CEO, Second Dinner
Ian Livingstone, co-founder & CEO, Games Workshop
Igor Bukhman, co-founder & co-CEO, Playrix
Ilkka Paananen, co-founder & CEO, Supercell
Joakim Archen, co-founder & previous CPO, Next Games
Justin Waldron, co-founder, Zynga
Kristian Segerstrale, CEO, Super Evil Megacorp
Lyndsay Pearson, VP & Creative Director, the Sims Franchise
María Sayans, CEO, UsTwo
Michail "Miska" Katkoff, Founder, Deconstruction of Fun
Niklas Hed, co-founder & the first CEO, Rovio
Rina Onur Sirinoglu, co-founder, Peak
Rob Pardo, previous CCO, Blizzard
Samuli Syvähuoko, co-founder & the first CEO, Remedy
Sebastian Knutsson & Riccardo Zacconi, co-founders, King
Sophie Vo, Founder, Rise & Play
Warren Spector, Creative Director, Deus Ex & Disney Epic Mickey
and many more...

Genres: Nonfiction, Business, Games, Video Games

327 pages, Kindle Edition

Published January 19, 2024

Reviews

[Stefan Ramirez · Rating 4 out of 5]

This is an excellent read on the business of video games. It’s not prescriptive at all but shares great thoughts from many folks that have gone on this journey. I found it relevant, and thought provoking. I feel like I had some solid takeaways, that apply in my current role, after reading it.

[Kim Pallister · Rating 4 out of 5]

I might be a tad generous giving this four stars. It'd depend a bit on who I was asking.

The author considers how companies’ cultures, strategies, tactics and circumstances affect their success, and does so through many examples pulled from interviews with many dozens of game industry professionals. I found it a decent read, and for some folk peripheral to games, or new to the industry, I’d recommend it because it’s a passable (but not great) business book with a pretty good side dish of industry history.

I had two issues with it that make me reluctant to recommend it to some folk, or at least have me caveating my recommendation:

First, the business advice is a bit weaker than it could be. The author pulls heavily from short list of theories/models (McKinsey’s three horizons; Christensen’s Innovator’s Dilemma, etc) and then fitting his industry examples to these. He’s not entirely wrong when doing so, but using a greater number of models could have provided a lot of missing nuance (e.g. using Moore’s Zone to Win would have given a lot of color to why companies often can’t overcome ‘2nd horizon’ challenges, etc).

Secondly, I found his lens on the industry (largely focused on the last 15-20 years and primarily focused on mobile) was too narrow. For example, he claims “there have only been 4 significant disruptive changes in the games industry so far”, then calls out digital distribution, rise of mobile, F2P biz model, and GaaS/Liveops. If he were to look with a wider aperture, he might see that others were just as if not more significant: personal computers, the internet(!), floating point processors and later GPUs, etc. Viewed on a broader scale, one realizes that the disruptions surely aren’t over, they’re constant.

As long as the reader keeps caveats these in mind, the book is still worth the price of admission.

[Naseer Alkhouri · Rating 2 out of 5]

If I'm mean, this is the longest LinkedIn post. Founders and CEOs are superheroes. if you fail try again.

There are some good points, there are some great points.

But I believe it fails in, where do you even start? This book assumes you have the people and the capital - because you've already worked years in a successful company and you have the connections to start your own - you even have your co-founder(s) waiting for you to take the step because at the old place you had great chemistry and now you're bringing that to the your new thing.

[Joakim Achrén · Rating 5 out of 5]

Kim has put together an amazing book on how game companies succeed. The questions Kim asks are important, as they shed light on success in creating games companies. I must-read for any gaming founder, or executive. Anyone who dreams of starting a games company.

[Bard Hole Standal · Rating 5 out of 5]

This book is an incredibly good insight into how many of the top (mainly Nordic mobile) game studios work and how think about their games in terms of business. I especially found the ending chapters deeply insightful about the different stages of growth and decline these companies went through, and the different strategies to remain successful. Truly an remarkable book that gives insight into the business of games. I think a lot of people in the game industry would benefit from reading this book.

[Goktug Yilmaz · Rating 5 out of 5]

General:
* Timing in the market is a key factor in building a successful game company. It could very well be the most important one.
* Teams that celebrate having raised capital from a VC don't understand what they have done. You shouldn't celebrate that, you haven't yet delivered anything; there is no game, no audience, and no revenue. Celebrate when you have achieved that, but remember you are sharing the rewards.
* Path of control, often a longer path. You are, trading your time for maintaining control. You could create a decent profitable game with loyal audience on a smaller budget. But, if you want to create a top 20 grossing mobile game or long-term be in the top 10 bestseller list on Steam, a small budget won't do it.

Industry:
* Like all industries, the games industry goes through revolutionary and evolutionary changes. Games go through a revolutionary level change every 5-6 years, or a bit less seldom.
* All successful game companies go through the same cycle UP then DOWN, and if they’re lucky UP again.

Game Company Success Metrics:
* 1. Developing a game that players love whilst simultaneously making money off of it.
* 2. Growing your game whilst also keeping your players and employees happy.
* 3. The ability to keep your game(s) interesting by reinventing it.

Principles:
* Principles are there to create clarity and alignment.
* Key: Everyone must have the same motivation: build something together and be aligned on the ambition level.
* Principles only work if they are followed to the letter by the executives who create them.
* Committing your principles to paper will:
* 1. Force you to think more deeply about them
* 2. Ensure you can capture them in the right words
* 3. Helps communicate them to others

Ways of Working:
* Without guidance on the overall Ways of Working across the company, people make changes for the sake of it. A new person who comes into a company will change things in a way that makes sense for them, and allows them to achieve results, but not necessarily in a way that makes sense for the company overall.
* Think long and hard about the behaviours you want in your company.
* Create habits and norms that everyone naturally follows. You ideally want to “program” these into the company, through a learning and training process that makes it all so natural and obvious that everyone just does it without thinking. Habits and norms should be so deeply rooted in the company that there is no need for anyone to be reminded of how to do things or why to do them. It’s what people just do, without thinking.
* Incentivize good behaviour and disincentivize bad behaviour. When a person breaks a principle, the people around him/her should immediately respond. Simply stating that: "We don’t do things like that, we do things like this."

Artists vs Entertainers
* Artists paint for themselves, they care less what others think.
* Entertainers want to walk into a crowded stadium that is sold out. They look for an area to entertain!
* In any industry artists might have some success that won’t last.
* It's about serving. The players are counting on you to continue to deliver amazing experiences to them.
* Find the balance between creativity and commercialism.
* It is near impossible to create a successful F2P game without integrating monetization as a core gameplay mechanic.

Delegation:
* “Only three things happen naturally in organizations: friction, confusion, and underperformance. Everything else requires leadership.” - Peter Drucker
* Similar to RACI charts but better, the 7 levels of delegation: https://share.cleanshot.com/CkrLw0FJ
* Example: https://share.cleanshot.com/RrSMPXy9
* Aim for 2s (sell) and 6s (inquire) and avoid 4s (agree).
* 2s and 6s create clarity, 4s endless discussions.
* Aim for 1s (tell) and 7s (delegate) for interactions with other teams, the boss above the team, and different teams reporting to the team.

Leadership:
* CEO is there to remove obstacles for everyone and ensure the company is moving forward.
* I am here to do what is best for the company. My job is to ensure that everyone here works towards doing what’s best for the company. If we as a company are successful, it’s because the teams make amazing games. If things go wrong, it’s on me. In all my 1:1’s, start with: ´How can I help you?´

Teams:
* King
* 5 founders worked together for 10+ years, before releasing Candy Crush on FB in 2013, and mobile in 2014. Before they built over 200 games, all with a F2P model, before F2P was a well-known. They became data-driven, built a complete custom tech backend and frontend, and got really good at running live games and engaging with the audience.
* King had been training for over a decade together, preparing, improving, iterating, and learning. They knew what good looked like and their Ways of Working were best in class.
* Playrix:
* In 2016 and 2017, they released Gardenscapes and Homescapes, generated more than $3B in revenue combined - 15 years after they started creating games together.
* Teams that take the time to really gel have a much better chance of achieving success. Take your time in the beginning, don’t rush, do your research, and lay the foundation. Building a company is about building knowledge in the team. They have been training together for a long time, and know what needs to be done.

Team Cultures:
* Supercell culture:
* 1. Passion for excellence
* 2. Thriving in a culture of independence and responsibility. Has an entrepreneurial spirit who is proactive and takes responsibility and ownership
* 3. Great human being

Phase Focuses:
* Startup phase:
* Maximizes the time for everyone to build a great game
* Live phase:
* Minimizing screw-ups. When you run a live game, screw-ups are so costly that they can jeopardize your entire company if things go bad.
* Growth Phase:
* Maintaining momentum and overall output. Trying to control too much, and slowing things down, will limit you.

Live Game Players:
* What do the players want?
* What of everything they are asking for, should we deliver to them?
* What level of risks are we willing to take?
* What would upset them in such a way they would leave the game?
* Will we build out the game for our existing audience, or deliberately go after new players?
* The audience is our boss, and our future is now all about making them happy.
* The deal: We bring enjoyment to them, and they will spend time and money on our game. This is as close to becoming a rockstar as we’ll get in the games industry.
* You need clear principles on how to interact with your players and fans, where to draw a line in the sand, and how much to listen to them as they complain or salute you.

Hiring:
* Everyone is hired to achieve what the CEO believes in. If you can't get behind that, things will be hard for you.
* Marine, the Army, and the Police
* Marine: The startup that deals with chaos and finds solutions on the spot (Startup phase)
* Army: Finds a way to scale up and secure the territory (Growth phase)
* Police: Sustains order rather than expands it (Mature phase)
* Some people want to be in the Marine, some just Army. You show the Police new things, they just don't know what to do with it.
* You simply can't ask a normal person to build epic shit.
* Hiring too many people, too fast to solve short term problems often causes issues down the road.
* Riposte Games: “We build expertise internally and then we outsource for scale”
* “If you double the team size, it takes twice as long for them to create anything.” Chris Wilson - GGG
* I have asked many leaders why they still tend to hire more people even though they clearly know and agree that “more people will not increase productivity”. A standard answer is that “it’s just these few new roles, and then we will not hire more”, although that is rarely the case.
* Even the most experienced leaders and management teams tend to fall into this trap, even if they, in reality, know that more people will not solve more problems. Going for hiring people somehow always seems to be the most common go-to solution when growing and scaling a game company.
* Most interviews conclude that leaders still believe they can get their hiring right this time, without jeopardizing the culture, and not lowering the overall output of the company - without actually having a plan.
* Once you have started hiring people, it will be hard to stop. It becomes a self-fulfilling prophecy, and a tricky balancing act.
* Running a large organization requires very different skills than creating and building a small organization. When you run a large organization, you become very good at tasks such as complex decision-making, prioritization, organizational design, process improvement, and communication. When building a small organization, there is no org to design, no processes to improve, and communication is simple.
* 50% of the work is done by the square root of the total number of people who participate in the work. Example: “If there are 10 people in a project, 3 of them will do 50% of all the work”
* Derek Price stated in his research: As your company grows, incompetence grows exponentially, and competence grows linearly.
* “I believe that 20-25% is the maximum that a company can manage to grow in employees every year.”
* Co-founder of HP: “No company can consistently grow revenues faster than its ability to get enough of the right people to implement that growth.”
* "If we reduce the number of employees for better short-term financial results, employee morale will decrease. I sincerely doubt employees who fear that they may be laid off will be able to develop software titles that could impress people around the world."

High performing team attributes:
1. Can we take risks on this team without feeling insecure or embarrassed? (Psychological safety)
2. Can we count on each other to do high quality work on time? (Dependability)
3. Are goals, roles, and execution plans on our team clear? (Structure & clarity)
4. Are we working on something personally important for each of us? (Meaning of work)
5. Do we fundamentally believe that the work we're doing matters? (Impact of work)

Focusing On Core Competencies:
* As a leader, you need to recognize where you are and what you can do - don't think you can do everything. When we try new things, we drift away from our core competency, which introduces new risks.
* Sticking to what you know will increase your chances of repeat success, and make finding your way back to growth again more likely.
* Your best bet for continued success is to dig deeper where you stand - continue doing what you do best, and find room for innovation and creativity in that.
* The main objective is to secure your current business. You wouldn't have made this far without creating something valuable, and you can not lose sight of that. Always serve your existing audience, and continue investing in what made you successful in the first place. Continue to dig deeper where you already have a proven track record or a loyal audience. If you continuously focus on what you can be best at, you will always find innovation and creative ways to give new entertainment to your audience.
* If you’ve found success and made the same call - then your path forward is actually pretty straightforward. You need to continue to serve your existing audience, and prioritize them before you spend time thinking about new games. In practice, this usually means working with a GAAS model for F2P games, or developing a series of DLCs for premium games.
* This is not the end of your company; it's the beginning. Digging deeper where you stand is about focusing yourself, your teams, and the overall company on what you can be great at, or even best in the world at. It's about staying away from opportunistic investment and the latest trends and avoiding falling into the trap of hubris.

Building More Games:
* Sweet spot: “That game would be somewhat easy and straightforward to make, and we know that our audience would love to play it.”
* Always strive to create new value, but never at the cost of your existing value. Success is rare; take care of it. Listen to your audience, and pour time into your successful game to give it the attention and focus it deserves. What can you best in the world at and at the same time be passionate about?
* Value of innovation is an S-curve. The learnings needed to create and become great at developing a specific type of game takes time and needs many iterations. The first of these iterations provides minimal value to the player, but the base is created in time, and the value increases exponentially. Once the base is created, each iteration is dramatically better than the last. At some point, the most valuable improvements are complete, and the value per iteration is minimal again. So in the middle is the most value; at the beginning and end, the value is minimal, which means that every company should understand that their investments into developing a new game or similar will generate little value in the beginning, but have the chance to accelerate over time if done correctly.
* The problem comes when a game at the beginning of an s-curve is expected to generate the same level of value as a game in the middle or end of an s-curve.
* Next game simple technique: List the ten most critical aspects to include for the game: target audience, engine type, business model, etc.. Ideal scenario: 7-8 aspects are "We know how to do this or how this works". Remaining 2-3 aspects can be unknown. Set out to prove the unknowns when prototyping or similar.
* The theme attracts the player to your game in the first place. The mechanics are what the player does in the game. It's what hooks the player to come back and play repeatedly. These are not two separate components. They must be heavily intertwined and tightly connected to not to create a superficial game. If there is a disconnect, the players will feel it and won't install the game.
* Players: Don’t offer me something completely new; I will be skeptical about it, and you need to convince me over again that it will be good. But if you offer me something similar to before, but with some twists, I will accept it.
* Key: to deliver what is expected and maintain that over time. This is how you build customer loyalty.
* A professor at any business school would explain to her students that the basics of business innovation consist of:
* solving an existing problem for the user
* improving the quality compared to the competition
* making the entry to start using the product cheaper than before or compared to the competition.
* It comes down to 4 areas that we look at for each new game, and they are:
* 1) What new things do we want to add to our next game (revolutionary)?
* 2) What should be moved over from the previous game but improved on (evolutionary)?
* 3) What works as-is and should just be moved over?
* 4) What should not be brought over?

Culture Change:
* A company can change but it's hard, and takes lots time. Need to start from the very core of your company. You need to revisit your foundation with your principles, ambition, purpose, and Ways of Working - and start with changes there. Then, you need to educate all people impacted by the changes. Inform and educate about the new principles. Establish new behaviours and routines.
* If you don't change the foundation first to build new habits, people won't accept your proposed changes. The most successful game companies can be in constant change. They have established principles that dictate how and when to change and at what pace.
* All changes need to be wanted or accepted. A person, who doesn't want the change to happen, will fight the change. The change process must start with a rational explanation for the change itself and create an emotional willingness to change.
* Emotional side => Elephant & Rational side => Rider
* If you reach the Riders of your team but not the Elephants, team members will have understanding without motivation. If you reach their Elephants but not their Riders, they’ll have passion without direction.
* To initiate the change, you need to appeal to both sides with a basic translation of show and tell. Telling includes presentations, charts, theories with discussions, and data-set with KPIs defining what's good and not. Showing is more about developing prototypes and demos where everyone can try it out for real and get a feel for it.

Hubris from Success:
* When successful, it's easy to become careless and ignore advice. But arrogance will eventually give way to hubris, and suddenly you’ll find yourself faced with bold statements like “We should be able to double our revenue next year”, without much rationale and solid data to back them up.
* Hubris is when you believe you can achieve anything without considering what it actually takes to do so. The consequence is that you focus too much attention on new projects, forgetting what made you successful in the first place. Founders, management and key talent are moving away from the core business that made you successful towards new shiny things. It's often an expensive detour, not only because you have spent time, money, and energy on projects that yielded little results, but it also becomes a problem of opportunity cost, where you could have done so much more on the games that made you successful in the first place.
* Stop saying “I am right” and ask yourself, “How do I know I am right?”
* A safe way to fail is to try to do too many things at once.
* The constant pursuit of more is what commonly drives a company into decline. Success makes people blind and overconfident, and leaders in power tend to stray from the principles and the lessons from what they have previously achieved. Instead of continuing to build on what previously made the company successful, you now believe that your ability will automagically apply to whatever else you set your sights on.
* The problem isn’t just about doing too much, it's also about not focusing enough on your core business. You are confident that at least one of these investments will pay off. But they rarely do.
* The undisciplined pursuit of more is a common early-stage trait for a company going into decline. You should of course make bold bets, invest in new initiatives and go after new genres and audiences. But not by sacrificing that which made you successful in the first place. Always protect your core business.

[Frank · Rating 5 out of 5]

Seldom do you read a book and start nodding along to what is inside. I agree with the majority of it. It’s a very succinct bootstrapping guide to building a studio. BUT, if you have worked in the industry for a large period of time you will do as I do and nod along as you read it. Nothing rocket science here. Id hesitate the author would agree it’s just standard business practice from games business slant - get good people, treat them well, make a good product. Stick to what you know, keep an eye on KPIs and adapt when they move in the wrong direction. But of course the rub : it sounds easy but it’s not. It’s very far from easy. I’d highly recommend reading it if you work in games. Favorite bit : you’re not artists your entertainers. That is pretty much boils games down to its core. You’re there to entertain people not yourself.

[Hampus Jakobsson · Rating 4 out of 5]

Anyone building a game should read this book!

I have not been in the gaming industry myself, but I have many friends—and most of them either dream of building huge communities, making tonnes of money, or just running their wonderful team and building the game of their dreams. Very, very few discuss business models, scaling, team culture, and general company building.

Kim has written an "inside baseball guide" for all, interviewing hundreds of industry luminaries and structured it from cradle to grave of a company. I would REALLY recommend the audiobook as it contains a lot of bonus material with Kim's interviews.

[Anna · Rating 5 out of 5]

Hands down, the best book you can read on the business of video games. Starting with establishing non-generic company values and ending with how to scale and challenges of failure, I think this is a must read for anyone—new or experienced—wanting a real look into the industry. I really loved seeing the quotes and perspectives from so many video game leaders, as well as frameworks to consider for solving problems. Read this book!!!

[Pavel Kasperovich · Rating 5 out of 5]

That is an incredible source of insights for all stages of game company development. They look simple, but it does not make them less powerful. I would argue it is the opposite. Definitely one of the books that worth checking from time to time.

[Yury Popov · Rating 4 out of 5]

Неплохо, собственных мыслей почти нет, но может оно и не нужно. Зато автор поговорил с сотней СЕО геймдев компаний, которые даже что-то посоветовали. Много мобильных f2p, Коллинза, немного Синека, несколько дельных советов о бизнесе, очень мало о самой разработке игр.

[D.H. Dhaenens · Rating 4 out of 5]

A great book with excellent advice. The amount of typos made it really hard to read though.

[Anita · Rating 5 out of 5]

Insightful and interesting book with tons of real life examples from the games industry.

[Karol Gaida · Rating 5 out of 5]

I made 4 x A4 pages fully filled with notes while reading this book. Surerly I will return to this wisdom often!

[Stéphanie Andrade · Rating 3 out of 5]

interesting but a bit repetitive

[Aliyu · Rating 3 out of 5]

Interesting Book, but the author repeats some things so many times, like his constant mention of Candy Crush devs King, it just becomes annoying at a point.