Headup's future as an independent company

It's not often that companies part ways on good terms, but this was the case for Thundeful and Headup when their three-year partnership came to an end in January 2024.

The Germany-based company was sold as part of Thunderful's restructuring process earlier this year, which Headup's CEO and founder Dieter Schoeller describes as "very smooth" when we catch up at this year's Devcom.

Schoeller notes that the main reason for parting ways was that Thunderful "went in a different direction over the years" and found that indie development wasn't a core part of its business anymore.

"From my perspective, Thunderful said they wanted to double down on the larger productions because the markets got tougher," he explains. "We didn't part on bad terms – they just had to focus on their strategy. I mean, there were three CEOs and four CFOs in three years, so there was a lot of strategy shifting in between."

Schoeller also noted that Headup may have been a "little bit too quirky" for Thunderful towards the end – "[especially] for a corporation which is trying to streamline its operations."

While Schoeller is open to another partnership in the future, it depends "on the offer and the value of the proposition."

"I'm not actively seeking one, but there are good companies out there – ones that share the approach to entertainment and sustainability of the product," he explains. "I think it would come from the indie region, even if it's a bigger indie. We're not the size for major players, it has to have a certain threshold for those to be interested. But partnering up with a stronger indie, sure. It all comes down to the quality of the people, to be honest. If I feel like I could go on vacation with those people, then that's a good team."

One of Schoeller's biggest takeaways from the partnership was navigating the current climate of restructuring, referring to Thunderful cutting 20% of its workforce in January 2024.

"I founded Headup 15 years ago, and I've never had to lay off anybody. I took the whole team back [after the partnership], so we didn't have any layoffs which I'm very proud of – let's hope it's sustainable. Also, nobody at Headup ever left, which means I'm working with the same people. The hope is for me to make it sustainable for the whole team because [redundancies] don't seem to be stopping."

Schoeller believes that for the industry to get better, particularly in Europe, it needs to look at how the entertainment industry is run in the United States.

"We still have a steep learning curve ahead of us," he highlights. "We're not competing for money or production necessarily, but we are competing against Amazon Prime, Netflix, Audible – we're competing against time and entertainment. That's where we have a lot of learning to do.

"If you look at Devcom for example, there are a lot of great talks on the technical side, monetisation, analytics, but not so many talks on flow, entertainment, and why users actually want to spend time with your game.

"The entertainment factor is just not in our genes yet. And as we're competing on a global scale, I think we need some high learning. The creative and intellectual talent is definitely here."

"There is a good market for indies who embrace the mentality of user-generated content, shareability, and social communities"

This is something Schoeller is looking to do with Headup, while also focusing on finding "fair and acceptable" free-to-play models for core players.

He highlights the success of Terraria as an example of this, which initially launched in 2011 with Headup publishing the collector's edition in 2012.

"It's a premium purchase once and [it's] maintained for over a decade or more – it's still selling," he notes. "If you look at the top ten best selling video games, two of them are what you would call independent titles.

"These are Minecraft (in its origin) and Terraria. Both are sandbox titles working as a service, but getting a lot of user-generated content into the hands of its players. There is a good market for indies who can embrace the mentality of user-generated content, shareability, and social communities."

But now Headup is an independent company, are things harder without the resources Thunderful provided during their partnership? Schoeller adamantly says it isn't.

"It's a different scale. We sold Headup roughly a decade after we founded it. The reason why I sold it wasn't because it wasn't profitable, it was a seller's market – prices were good.

"I thought maybe my team would become bored of indie budgets. I was afraid that quality people might leave because they wanted to work on bigger stuff, so I thought this would be the right next step to get onto bigger budgets and showcase the team's talent while working on bigger productions."

However, Schoeller soon discovered that this approach "wasn't necessarily more enjoyable," and found that "the screws are a little bit looser if you go indie."

While the future for Headup as an independent publisher is bright, Schoeller is wary of the wider industry and the difficulties indie developers are faced with.

"It's hard for a lot of people right now," he says. "Because of my background with smaller studios, [I've seen] developers get frustrated with their first release failing and then moving into other industries as a result.

"We're losing talent because we don't get enough support for smaller studios from government funding, or help in the beginning as they don't have the network.

"Smaller studios need time to learn marketing or they need to look for external partners, and they're not given the time or the funds"

"As an industry, we blew the bubble a little too fast during the pandemic. I'm worried about the talented, passionate people coming in and not getting their second chance. Because everyone gets their first chance, but you need a second as the first one is more for learning, making mistakes, and showing your quality. If they have to leave before that, then that's where I feel we've lost something as an industry."

Schoeller emphasises that to tackle this, it's all about creating a solid support network and providing funding "to enable those developers to learn, grow, and conquer their next project."

"Right now, they're all stuck in this cycle of, 'Okay, we're doing our first project, but actually we need to think about the pitch for the second, but we're not done with the first one yet' – it's too much on them."

He does bring up the prospect of self-publishing as a solution, but is aware that not many developers have the capabilities to do so.

"A lot of smaller studios need time to learn marketing or they need to look for external partners, and they're not given the time or the funds to do that," he notes. "They just release their game, and then they're frustrated with the returns because they have no grasp of the real market numbers."

Schoeller is open to funding these studios, but "all within the means" that Headup has. He's also keen on helping indie studios become more sustainable to avoid these pressures – especially when marketing a game during release.

"It's all about getting through the first layer of visibility [on platforms like Steam]," he explains. "We work very closely with Valve on that, because we have a Steam expert in-house which really helps. If you put up a page which is attractive and appealing, with the right trailers and assets to communicate it well, people will pick it up.

"Because it's such a large audience, we don't need to sell to the whole of Steam, we don't need to sell to bigger markets. We need to have a faithful audience of maybe 20,000 players that makes every indie title break even.

Despite these challenges, Schoeller is very optimistic about future successes for indie studios Headup works with and supports.

"A hit will come," he says. "We've had hits in the past like Bridge Constructor. That was a breakout hit, we didn't plan for it. But sometimes you just need to get lucky."

Schoeller concluded: "Usually only the winners talk in this industry, and the losers don't. It's either great news all over the place, or it's high level cutting of staff. I don't want to overdo it, I don't want to oversell us – just imagine Headup as an indie rock band. We do what we do. I mean, we've been profitable for 15 years, so we must be doing something right."