Let The Games Begin: Inside Iceland’s Rising Video Game Development Scene

It isn’t often that an entirely new cultural medium is born. But over the last few decades, video games have taken over the world. With over three billion active players, games have emerged as both a new art form and a vastly popular form of entertainment, birthing an industry that’s grown bigger than movies and music combined.

Iceland has over twenty active game studios and countless independent developers, making everything from online card games, to virtual reality sandboxes, to an adventure inspired by the country’s history of witchcraft. But one game looms large in the landscape — the multiplayer spacefaring universe of EVE Online.

Mission improbable

EVE is Iceland’s biggest video game success story. Launched in 2003 by Crowd Control Productions, aka CCP, it’s a massively multiplayer online (MMO) universe where players can mine, trade, build, and battle each other in large-scale, high stakes wars.

“We thought we were making a hellscape simulator with a capitalistic flair, and it turned out we were making a friendship machine.”

Hilmar Veigar Pétursson is the studio’s CEO. He joined in the year 2000, with a simple aim — to do the impossible. “I was first recruited to be Chief Technical Officer,” says Hilmar. “I accepted, on the premise that everyone agreed that what we were about to try could not be done. We worked like maniacs for three years without salary, sleep, and food, and somehow we were able to shape the game. And we have spent the rest of our lives chasing its tail.”

Many MMOs have come and gone in the 20 years that EVE Online has been running. Hilmar credits EVE’s social aspect as a major reason for its longevity. As well as collaborating in-game on industrial-sized projects, players have been known to holiday together and attend each others’ weddings, with over 1000 players congregating in Reykjavík for the annual FanFast meetup event.

“The first line in the script of EVE Online is, ‘death is a serious matter,’” says Hilmar. “We thought we were making a murder, death, kill, hellscape simulator with a capitalistic flair, but it turned out we were making a friendship machine.”

Controversial tech

Alongside regular EVE updates, CCP is also working on Project Awakening — a new game set in the EVE universe and built on blockchain technology. Using blockchain in games has proved controversial, with a fractious online discourse about everything from environmental impact to cryptocurrencies.

Hilmar seems weary of the debate. “There’s a lot of dialogue in the industry about the mechanics and technologies of games,” he says. “But generally, gamers don’t really care. They just want to play great games.”

“We’re being vocal about it because we want to be upfront and clear, so people know we’re doing it,” he continues. “Like many things, it’s controversial because it can be used for good and bad. But at some point we just stopped talking about it because it’s been made clear. The game is not about the technology it’s built on. It’s about what it enables. Ultimately, the proof is in the pudding, and we will let the game speak for itself.”

A vibrant industry

Creating EVE in Iceland also led to the emergence of an ex-CCP game developer alumni. Many of them have struck out to do their own thing since leaving, resulting in a wave of new independent game studios.

“We’ve had cycles of companies coming and going, but now we’re at a place where there are some serious entrants.”

“We’ve had cycles of companies coming and going, but now we’re at a place where there are some serious entrants,” Hilmar says. “We are extremely proud that the extended alumni of CCP are everywhere. We have Island of Winds being made by CCP alumni. Porcelain Fortress is always doing something. Kards by 1939 Games is doing quite well, especially on mobile. And Pax Dei is moments from release—an extremely ambitious project with a lot of former CCPers.”

This burgeoning scene is growing fast. “We reached the important milestone of CCP being less than half of the industry, if you count the number of employees,” says Hilmar. “So CCP no longer employs the majority of game developers working in Iceland. It’s become quite a vibrant industry.”

Independent people

CCP was also instrumental in founding Icelandic Games Industry (IGI), an industry-focussed member organisation that seeks to further the development of Iceland’s fast-growing video game business.

“We were working on the thesis that it’s better for CCP if there’s an industry, and we’re not just alone,” says Hilmar. “It’s better for framing in the economy, and attention from government. And if there are other gaming companies, it just feels better. Icelanders can be overly independent in some phases, but because we are so dominant in this particular industry, we were able to make it holistic from the get-go.”

Fishing, nature…. video games?

The current chairperson of IGI is Halldór Snær Kristjánsson, the CEO of Myrkur Games. The studio is currently working on its first title — an ambitious single-player adventure game called Echoes of the End.

“It’s set in a new fictional universe we designed from scratch.”

“It’s set in a new fictional universe we designed from scratch,” says Halldór. “We wanted to create something that was fresh and interesting and fun to us, and we hope there’s a large enough audience who enjoy the same things.”

Halldór’s role at IGI touches all aspects of the games industry, from helping out startups, to working with universities on their game development curriculum, to lobbying the government, and acting as an ambassador for the Icelandic game industry. “I don’t think people know just how much we have in store in the next couple of years,” he says. “I think if you speak to me again in a year and two, it’ll be like: the Icelandic game industry is actually an industry.”

The arrival of video games has had a big impact on the economies of other countries. In Poland, CD Projekt Red — makers of games like The Witcher 3: Wild Hunt and Cyberpunk 2077 — has been reported by Bloomberg as the most valuable company on the country’s stock exchange, including the national bank.

“It’s not directly comparable, but CD Projekt Red made an explosion in the Polish economy out of nowhere,” says Halldór. “It completely stunned everybody. A plethora of new studios came from that, and made a thriving new industry. That’s exactly the cycle that I think we’re looking at in Iceland right now. We’re at the cusp of that wave. We have fishing and nature, of course — then all of a sudden there’s an entire new sector that can become a huge part of who we are, and our economy.”

Hitting the wall

But it hasn’t all been sunshine and roses in the video game industry. Video game sales boomed during the COVID lockdown, which resulted in wild growth expectations, and massive investment. But when lockdown lifted, sales declined, and the investment dried up. This led to an ongoing wave of layoffs that has rocked the global industry throughout 2023-24.

Halldór’s outlook remains positive. “I still 100% believe that we’re in a growing industry,” he says. “We had a small investment bubble due to COVID, but the industry is here to stay, and it’s going to keep going regardless. I think there are still wonderful opportunities within the industry. And I think, you know, people are going to keep playing games. So that’s not really an issue. Whether you’re starting a studio, or trying to get a job in the industry, both of those things are certainly still possible, despite this wall we’ve hit.”

Virtual hairdressers

For people looking to enter the games industry, there are many online resources to get started. “I always say, just go make a game, no matter how small,” Halldór advises. “Open up YouTube, and get the tools — they’re all free. Start making something that’s fun. Show it to your friends, show it at game jams, and make it a part of your portfolio. You just become a game developer.”

“We’re at the cusp of an entire new sector that can become a huge part of who we are, and our economy.”

There are a surprisingly diverse range of career paths available. “Something that industry onlookers sometimes don’t understand is that we’re not just hiring software engineers,” says Halldór. “We’re hiring so many different people for this industry. A third might be software engineers, but the other two thirds are mostly creative. So that can be 2D designers, 3D designers, character modellers, people who make clothes for characters, people who make hair for characters, people who make environments, people who make sounds, people who make music, and writers.”

“That’s the beauty of this industry,” he continues. “It’s the perfect marriage of technology and creative arts. And it ultimately creates export for the country in a digital product that is sustainable. And that’s harmonious, and beautiful.”

Garage band style

While video games are often talked about in terms of sales and industry, there are other facets to the medium. Game Makers Iceland is a grassroots organisation that also looks at games as a form of culture and community.

“Game Makers Iceland is for everyone. People who work in games, people who want to, and people who make games as a creative outlet.”

Alexandra Diljá Bjargadóttir is one of the organisation’s co-founders. “Game Makers Iceland is for everyone,” she says. “People who work in games, people who want to — and people who want to make games as a creative outlet or hobby.”

Game Makers Iceland was initially conceived as an community outreach programme for IGI, but went independent in 2018. “We wanted to really open up the events,” Alexandra explains. “We wanted to go beyond the IGI member organisations and invite students, independent artists and developers, and people who are on the fringes of the industry, or outside of it completely. It’s not that IGI was against that, but it works on behalf of the commercial video game industry in Iceland. You have to be a member organisation to be represented on the board. We wanted to be more like, garage band style.”

The melting pot

The move to shift focus on the game-making community had immediate effects. “Because we did that, things have been growing ever since,” says Alexandra. “We definitely felt like there was a need for a venue where you could run into anyone — a partner at a VC fund that invests in games, or an artist who makes things purely for the sake of making it. And allowing these different people to meet, and have equal opportunity to make use of this community network.”

“You can make video games in your free time and have that be a valid expression of your artistic intent.”

Game Makers Iceland runs a variety of events that people can get involved with, from social hangouts, to show and tell sessions, to studio visits. They also run game jams at which people form teams and make games in a short amount of time, with no pressure on the outcome.

“Game jams allow people to explore making games in a very safe and supportive space,” says Alexandra. “We set a time frame and a theme to work from, and I think that makes people feel better about creating something small in scope. We get people who work on really big projects participating to make a small game about something that they’ve been thinking about. And we get people who have never made a game before, who are curious about trying it for the first time, or to make a game as a form of artistic expression.”

“Sometimes we think about how we can make more people realise that making games can be similar to painting or writing poetry,” she continues. “You can make video games in your free time, and have that be a valid expression of your artistic intent. Most people who write poetry are never going to publish, or don’t want to. And the same can be true of video games.”

Games as art

It’s a sentiment echoed by Jonatan van Hove, an Iceland-based independent game developer with a strong interest in games-as-culture. Alongside making games like the 2021 squirrel-stalking game NUTS and the in-development sci-fi racer Phantom Spark, he’s been involved in Isle Of Games, an initiative that presents games as installations or concerts.

“A lot of people think gaming is for kids, but it’s clear that it goes far beyond that.”

“We did Isle of Games to show the world that games are more than people think,” says Jonatan. “Gaming often has a slightly negative or embarrassing connotation when you go into adulthood. A lot of people think gaming is for kids, and something people grow out of. But it’s clear that it goes far beyond that.”

One such event saw experimental jazz duo Tumi Árnason and Höskuldur Eiríksson taking the stage at IÐNÓ. They responded to live gameplay from the game Ape Out, in which the player controls a gorilla that’s trying to escape from a lab. At the push of a button, the gorilla shoves guards and scientists into the walls, resulting in painterly colour splatters. Túmi and Höskuldur met each kill with tumbling percussion and squalls of saxophone in a kinetic, dynamic, pulse-racing presentation of the game.

“That was definitely one of the events I was most excited about,” says Jonatan. “It’s about bringing games to live stages and culture spaces, and combining them with other art forms. Games like NUTS or Gone Home play like movies. And if you accept that independent cinema has cultural impact, you should accept that about games too. These games are two to three hour linear story experiences that benefit from being interactive, because you’re left with a very different experience afterwards.”

The independent path

Jonatan contends that independent game developers share a lot of common ground with other creative practitioners. “When you talk to musicians or artists, you realise they have way more understanding of this stuff,” he says. “Our ambitions, and the way we run our creative business, is much closer to a musician, filmmaker, or author, than a big game company.”

But this idea of games as a cultural medium is seldom recognised in how games are funded and produced. “We get clumped up with big games and tech companies in the funding landscape,” says Jonatan. “We have to act like a startup that’s going to have 10 to 100 times growth to get innovation grants or tech grants. And we’re ignored on a lot of the other cultural platforms. Some people have gotten Listamannalaun [a state artist grant] for video games, and some independent developers manage to solve the puzzle. But I would love it if different funding avenues existed for games, like small art grants for projects that don’t necessarily make commercial sense.”

Despite all of this, Jonatan hopes to see new independent game developers arrive on the scene. “You can make games and be interested in the medium, then explore that, and reach artistic maturity and start putting your work out,” he says. “And that can actually be a job, like being a creative independent or a small team. There are plenty of examples of individuals or small studios reaching commercial and cultural relevance, and having both financial success and cultural impact.”

cover image by Arna Beth

Follow our series about Icelandic game development studios here.