Solving Paradox: How the historical strategy game maker stayed alive

Over the last decade Paradox Interactive has earned a mixed reputation. The Swedish developer is known primarily for its unique brand of deep historical simulation games that take a long time to master but allow players experiences that can’t be found elsewhere.

But it seems that for every well-reviewed epic strategy title, Paradox releases a buggy, broken mess. One step forward, two steps back. Take for instance a two month period from 2012.

In February of that year Paradox released Crusader Kings 2, perhaps its most successful in-house effort to date. It’s one of the company’s best-reviewed games, reaching beyond the strategy niche to be nominated as one of game site Kotaku’s best of the year.

Just a month later Paradox published a game called Gettysburg: Armored Warfare, a blend of real-time-strategy and first-person shooting. Programmed almost entirely by one person, the online game was released in an unplayable state. Its Metacritic average review rating currently is an abominable 22, the lowest of any Paradox title.

Heavy weighs the head of Fredrik Wester, the CEO who wears the crown at Paradox Interactive.

“Changing a games company is like turning ... a big battle cruiser,” Wester says. “What I think is that in [2014] you’re going to see even better improvement than that. We’re on the right path, but we still have a very long way to go.”

Today’s Paradox Interactive is, to hear Wester tell it, a different company than the one founded more than a decade ago. It’s not enough for its games to be unique. They need to be able to find a broader audience.

And the games have to work.

MISSPENT YOUTH

Fredrik Wester’s first business came to a screeching halt when it almost landed his mother in a Swedish courtroom.

Wester has been playing games since he was 6, growing up with an Atari and later a ZX Spectrum. He eventually found the best games came from outside Europe and he and his brother, Daniel, started importing games when Wester was just 15.

The boys placed advertisements in several Swedish newspapers, and the main sales line was their home phone. Before long, more than half of the time that phone rang, there was someone on the other end wanting to place an order for Nintendo games.

Business was good, and even though their mother was annoyed by the phone calls, she had to admit that it was a decent income for two kids not yet out of high school.

There was only one problem with their endeavor: all of these games were pirated.

“I wasn’t of legal age,” Wester says, “so a letter was sent to my mother. It was this whole mess. She freaked out.”

The letter was a cease-and-desist order from the main legal agent of Nintendo in Sweden. If the boys didn’t shut down the business, their mother would be sued. Eventually there was a conversation between these lawyers and the Wester boys. Fredrik and Daniel had no idea that what they were doing was wrong, and stopped taking orders immediately. No legal action was taken, and they and Nintendo went their separate ways.

RIGHTSIZING

Wester went on to graduate from university in 1998 with a degree in business. He and a partner started a management consulting firm. The pair helped technology companies become more efficient, to optimize their growth during the later years of the dot com boom. Wester’s specialty was online customer service systems and processes.

“We made customer service super efficient,” he says. “We could cut the costs in half. ... It was very simple to make money back then. You could invoice almost anything to anyone. But in 2001 — after 9/11 — that market just collapsed. The whole IT bubble was over, and I started looking for new opportunities.”

It was in 2003, more than 15 years after his inauspicious start in video games that Wester returned to the industry. He took a consulting job writing a business plan for Paradox Entertainment, a media company that split its time between licensing intellectual property and making video games.

Executives there wanted to transform the computer games division into a triple-A studio, to have it compete with the biggest titles of the day. As Wester looked into the business he realized this was the type of thinking that doomed its last project, an ambitious free-to-play massively multiplayer first-person shooter.

Had the title been completed it could have been revolutionary, but in the end the project was canceled and more than 30 developers lost their jobs.

Wester told the executive team members that to try for another triple-A title was madness. His more modest plan for growth was to play to a core audience of strategy fans, and to expand into a publishing house that supported other companies in bringing their creative vision to gamers around the world.

But that wasn’t the solution executives wanted to hear. They saw more value in developing their licensing division. Paradox Entertainment chose to double down on a recent acquisition, the library of Robert E. Howard, and chose to dedicate itself to managing the Conan the Barbarian intellectual property for games and motion picture adaptations.

Instead of supporting Wester’s turnaround, Paradox Entertainment made the decision to close the computer games division and lay off the remaining seven staff members.

Wester saw an opportunity. Along with the former CEO of Paradox Entertainment, he bought out the computer games division and took those seven staff members, and rights to all their games, to form Paradox Interactive. While Paradox Entertainment got Conan, Paradox Interactive walked away with the rights to several successful grand strategy games.

It also acquired a veteran game developer named Johan Andersson.

GRAND STRATEGIST

Andersson was only 30 years old when Wester became his boss, but he was already an old hand in the games business. He had begun his career in the early ‘90s after dropping out of Stockholm University, despite the objections of his family.

“My grandfather was very suspicious,” Andersson says. “‘Why are you dropping out? I mean, you’re going to get a good education there. You’re smart!’ I just knew that there were some friends of friends who had started a company and made a success of themselves making computer games.”

Those friends of friends were the founders of developer DICE, now known for the Battlefield series, and word of their success lit a fire in his small group of college acquaintances. Already a decent self-taught programmer, he followed when his peers moved to Norway to work at a young company called Funcom, then barely more than 30 people. He was quickly hired, and set to work making 16-bit games for the Sega Genesis.

Little did he know he was walking into a trap.

In 1995, Andersson was part of a team making a bizarre beat-’em-up called Nightmare Circus for the Sega Genesis. The circus-themed game was severely delayed, and when the Funcom producer assigned to the project got pulled, Andersson was tapped to take his place. Sega was heavily invested in the game, and before long sent its own executive producer to Norway to take stock of the situation.

Two weeks into that visit, “Sega got pissed off,” Andersson says. He and his programmers were airlifted to California and sequestered to finish the game. Trapped in an apartment with his small development team, without a car or a valid driver’s license between them, they were at Sega’s mercy, crunching 14-hour days, six days a week for months.

The only upside was that they all were still covered by Norwegian labor laws, and received full benefits, including overtime, for the duration. Regardless, it took a heavy toll on the team.

“When we got back home [to Norway] it took three weeks and all the other programmers had resigned. They didn’t want to work there anymore.”

But Andersson stayed on for two more years. Instead of breaking him, the experience made him a better programmer, and fueled his interest in project management. He had work to do porting other games, and as he puts it, “you don’t quit projects while they’re not finished.” It was that dedication that would help him, just a few years later, when he came back home to Sweden and found work in the computer games division at Paradox Entertainment.

After all the action titles he had made for the consoles, he wanted to start making games more like the ones he enjoyed playing. The first game he worked on at Paradox Entertainment was Europa Universalis, published in 2000. Based on an obscure French board game by the same name, it allowed players to take control of various European powers starting in 1492 and lead them through 300 tumultuous years of history.

The closest comparison is to the Civilization series, but EU offered players more control over the political, religious and military aspects of their complex kingdoms than any title before or since. Andersson simply calls it, “Risk on crack.”

EU was a hit, and the sales of that game alone were all that was keeping the games division afloat. It was that title, and Andersson’s team, that Wester bet on when he spun the games division out into Paradox Interactive in 2003. But the team needed another game, another franchise to prop the company up and keep revenue rolling in.

While the group rode the long tail of sales for EU, Andersson and his team of seven had been busy making that new game. And it was up to Wester to sell it.

PUBLISH OR PERISH

Crusader Kings was built on top of the EUengine. It was an original grand strategy game that started in the year 1066, a period of time when Europe’s nations were not yet truly formed.

Instead of countries, players would take on the roles of individuals; kings, dukes, even minor lords would be allowed to fight against their neighbors, other lords, even the pope to gain power. Courtly intrigue would play a major part in the game, as would dynastic succession, giving each playthrough the potential to develop into an epic family story where players carved empires large and small of their own.

As the game neared completion morale at the company was high. There was just one problem.

In 2004, Paradox Interactive’s publisher, Strategy First, went out of business. Paradox Interactive’s main sales channel to the United States disappeared, and along with it went two months of revenue.

“They owed us a lot of money,” Wester says. “Almost 20 percent of our yearly revenue.”

Wester had experience in customer service. He knew that if CK pre-orders didn’t make it to customers on time, he could lose the trust of fans and torpedo the future hopes of the then year-old company.

And so began a crunch period unlike any that Johan Andersson had ever experienced. Wester spent three weeks setting up an online portal where customers could order games, and then started looking for partners for packaging and shipping. The best he could find was $2 per box, but it was still more than the company could afford.

“So we packed 4,000 boxes in a week,” Wester says. “We went after work to our warehouse and each packed boxes for three hours. ... I just told two people [each day], ‘You and you, you’re coming with me after work this week to pack boxes in our warehouse.’ And they were like, ‘You’re crazy.’

“But that’s what we did. ... We spent 15 hours each ... and walked with them ourselves in big bags to the post office.

“Funny thing is,” Wester says, “back in those days it was always the attitude — we still have that attitude — ‘We can do this!’ ... Every now and then, when there’s a company party and someone is complaining, ‘Oh, we don’t have the right beer,’ or something like that, I just take them aside and say, ‘You know what, when we released Crusader Kings ... ‘ and then I pull this whole anecdote out.”

But CK wasn’t the hit the team had hoped it would be. Anemic sales were blamed, in part, on bugs. Working from a shoestring budget, Andersson and his team had been forced to skimp on quality assurance.

It was the beginning of a long string of ambitious titles that would excite Paradox’s audience of strategy gamers, but would fail to break out into a wider audience as much due to complexity as to game-breaking flaws in the code.

SOLVING THE PARADOX

The solution to the company’s woes, as Wester saw it, was to execute his original turn-around plan and transform the developer into a publisher. Only by maintaining a solid cash flow could it continue to have enough money to support the development of its own brand of strategy games, or to afford luxuries like proper quality assurance (QA).

In 2005, on the heels of Valve’s successful Steam marketplace which had launched just a year previous, Wester ran an experiment. He sold an expansion to Paradox’s worst-selling title, Victoria: An Empire Under the Sun, via download only. He figured it would show him the baseline the company could expect from an online-only marketplace.

The experiment surprised him, and the expansion sold well. That encouraged the company to open Paradox On Demand, to which it slowly added other titles from its catalog. Before long they changed the name of the service to GamersGate. It became a European hub for titles that weren’t available at retail around the world, and the success gave Paradox the cash flow it had been so sorely lacking.

It was a chaotic period, and for a time the company seemed to be flailing.

“We started signing whatever we could sign [to publishing deals],” Wester says. “We signed some games that were just terribly bad. I don’t even remember the names of those games. And then we came across some really good titles, of which Mount and Blade was by far the best-selling series.” Those games, which featured an unconventional blend of grand strategy and first-person melee combat set in a fantasy feudal Europe, helped establish Paradox as a serious publisher. They were ambitious, addictive, and above all stable.

Eventually GamersGate broke off to be its own entity. Wester remains a minority shareholder in the company, and today his focus is on building Paradox Interactive into a company that can stand on its own as one of the great publishers in the gaming world. Andersson became head of Paradox Development Studio, with a responsibility to make great games worth publishing.

Paradox Interactive’s first game to sell a million units, Magicka, in fact, was a not a game that Andersson’s team designed, but instead one that Paradox published. The 2011 action adventure game was developed by a group of students who coalesced with Paradox’s help into Arrowhead Game Studios. A second hit arrived from a small developer called Fatshark the following year with War of the Roses, a multiplayer-only first-person melee game set during England’s bloody civil war.

But Wester is still hard at work changing the perception that Paradox is a company that publishes buggy games. The need for QA influences many of its business decisions today. The internal team has grown to eight. To test multiplayer games, like War of the Roses that require 64 simultaneous players, Paradox has contracted internationally, to countries like Poland and Canada. Wester admits it’s not the best solution, but it’s more effort than the company has made in the past for titles like Gettysburg.

Paradox has grown from seven employees in a basement to over 100. It’s doing it by making its model work, living off publishing revenue and the sales of its back catalog in order to make new games. CK2 sells more copies now, per month than it did a year ago. Wester says the money is helping Andersson make the company’s next title, Europa Universalis 4, its most polished yet.

THE TEST OF TIME

“The thing is, [Wester] is an entrepreneur,” Andersson explains. “He basically starts stuff and takes some risks at times, and comes up with these ideas. But he knows how to sell stuff. He’s a sales person that’s honest.”

Wester shoulders the blame for titles like Gettysburg himself. It’s clear now that his focus is on quality over quantity.

“If we start something now,” he says, “it’s going to take 18 months until you see the progression. So, I think what you’re seeing now is actually us getting better at making games.

“We still have a very long way to go, but so would most gaming companies I would say. Because there is ... more acceptance towards bugs if the game is fun. ... I come from the software world myself,” Wester says, referring to his days as a consultant. “There’s zero tolerance for bugs there. It’s a different issue though, because the software industry doesn’t have to worry about something being fun. Because it’s just function.”

Fun is Andersson’s problem, and with EU 4, he hopes to keep the complexity the team’s fans have come to admire, that gamers just can’t get anywhere else. But the secret is in lowering the level of complication, in bringing in gamers more familiar with simpler titles.

“If you look at Civilization,” Wester says, “it is probably what you can call our big brother, because they sell probably five or six times more [copies] than we do [with EU or CK]. But, we could sell that [many] as well because that target audience, the Civilization target audience, could just as well play Crusader Kings 2 if they got to know about it. So we’re step-by-step building up our audience and building up our recognition for the company and for our games. So that’s what excites me, to see that there is a lot of life in this genre still.”

“Complex, but not complicated is our goal,” Andersson says. “Never remove complexity, just make it less complicated to interact with it. And that’s a gradual process as you learn more and more about it. And there’s nobody else to consult or discuss it with, because nobody else makes these types of games.”

That rarity, as well as an openness to new business opportunities, has kept Paradox Interactive around while its competitors have struggled and fallen. When EU 4 is released later this month, gamers around the world will see if its efforts have paid off.