183. An Open Letter and Response to Ilkka Paananen, CEO of Supercell
In my role as advisor, educator, and consumer watchdog, I wish to address Paananen's concerns and help his company and other game developers navigate the EU's impending Digital Fairness Act.
Background Information
I became aware of Ilkken Paananen’s open letter almost immediately when he posted it to LinkedIn on October 8th, 2025. He is the CEO of Supercell, one of the world’s most commercially successful mobile game developers. He is challenging impending EU regulation, the Digital Fairness Act, on the grounds that:
It will destroy one of the most successful industries in Europe
Developers were not given the chance to contribute to the regulation
Regulation will actually harm consumers
Industry should be trusted to self regulate
At the core of the disagreement is the F2P business models employed by the industry. I am a huge advocate of F2P but I have been warning developers and consumers since 2011 that their variant (“Fun Pain”) is consumer antagonistic. This is not an inherent property of F2P, and F2P is not a consumer antagonistic business model. I fully expect the F2P business model to survive the DFA.
International regulators did consult with industry. They evaluated all published works on the subject and determined that I was the only public source of the information they needed to protect consumers from the predatory business models they were investigating. So they asked me to help them and of course I did. This was in 2013 and I was summoned to testify before regulators from ~80 countries at the ICPEN summit in Panama.
The other witness that testified at the summit was a VP from Disney attached to their Club Penguin product. I did a forensic analysis of one of the most child-exploitative products on the market, Marvel Superhero Squad Online. This was a Disney product. The Disney exec asserted that industry should be trusted to self-regulate. This is the same argument that Paananen is resurrecting in 2025. Based on the strength of my testimony, this argument was Dead on Arrival (DOA) in 2013. When the top german regulator tried to cross examine the Disney exec, she immediately threw down her translator and fled the very large conference room on foot (running).
If anyone in the room was uncertain about the risks to consumers that I was illuminating, that uncertainty evaporated after that display by Disney.
The Entertainment Software Association (ESA) was created under a different name in 1994. It then created the Entertainment Software Rating Board (ESRB) in the same year. Its purpose was to respond to concerns over violence in video games and to generally delay or prevent regulation of the industry. This was the mainstay of the industry’s attempts to promote “self-regulation” in lieu of external regulation. This has been their strategy to fend of regulation for over 30 years. In 2016 I showed that the ESRB was actually encouraging exploitation of children, not preventing it.
Consumers and the regulators that protect them don’t trust the industry to self-regulate. They were given over 30 years to show that they could, and they failed. The industry operates for the benefit of industry, not consumers. When Paananen says that being pro consumer is in industry’s best interest, he is correct. But his and other’s actions have not aligned with that. This implies a knowledge of “right and wrong” and a choice to not do what is right. Waiting 31 years for a train that never came, and which will never come, is too long. It is time to move on and empower consumers.
Regarding that the industry was not allowed to participate in the regulatory process, they were invited to do so and declined in 2013. All major parties (Apple, Google, all major publishers and developers) were invited to the 2013 ICPEN summit, along with the American regulators. All declined except for the one Disney executive. I, as the top industry expert on the subject of consumer protections in online games, was involved and my public papers (available for free on my substack) were used as source materials. Anyone can consult them.
Industry could have met with me or any regulators in 2013 or any year after that to negotiate favorable terms that would protect consumers. I think they could have negotiated very light regulations in 2015. By 2020, they would have been offered a less favorable deal. By 2025, the deal is going to be decidedly less favorable. This is the price of running out the clock and souring consumer sentiment. I have sent a message to Ilkka Paananen inviting him to work with me to improve the DFA. I would imagine that the results of any such collaboration would be taken very seriously by the EU’s Consumer Protection Cooperation (CPC).
I will address the remaining two concerns of Ilkka Paananen directly, as I think my advice to him could greatly benefit him and others:
Dear Ilkka Paananen,
The very first line of your open letter was:
“Why does Europe want to end one of its biggest tech success stories?”
If this was directed at regulators, this is not the purpose of regulators or regulation. I think you know this, and know that it is both insulting to them and a misrepresentation of their intent. I am going to try hard not to respond to you in kind. If you were addressing consumers, I think you have misunderstood the situation. Regulators are responding to complaints by consumers, not the other way around. You’ve been “underwater” with gamers for years now.
This is reflected in the ever diminishing performance of your new products. I think it is fair to say that you know how to make games better now than you did 10 years ago. That isn’t your problem. Your problem is that your anti consumer business models and behavior (including the language in your open letter) are souring the public on your brand. They are also increasingly adept at identifying unfriendly business models without intervention from any external source.
Your older titles are propped up by free promotion from platforms like the Apple Store, which gives you a huge market advantage. This advantage also acts as a barrier to entry to new competitors, and I would credit this preferential relationship with propping up your company and preventing more consumer-friendly products from reaching consumers. I would expect that preferential relationship with distribution platforms to end with the introduction of the DFA (at least in Europe), and this is actually a much bigger threat to your company than the content of the DFA.
My reasoning here is that “the bright spot in the economy” that you describe has been for the benefit of a few at the expense of many. I have been documenting the mistreatment of consumers by developers since at least 2013, and detailed issues with Supercell products in my 2015 “Secrets of F2P: Threat Generation” paper (41B on my substack). I did not call out Supercell by name because by 2015 as an industry leader there were many developers trying to succeed by copying your formula.
A large portion of the proceeds of those dubious methods that I described in 2015 (what the CPC now calls “Dark Patterns”) go to American based platforms. That money exits the EU economy and does not benefit the EU. Your brand damage will intensify once your methods are branded by regulators as derogatory. Platform holders will not want that taint to transfer to them, and they certainly don’t want to share in the next regulatory wave.
Now I want to get right to the heart of your concerns, because I want you to win here. I want the entire industry to win. The DFA puts the use of “Fun Pain” variants of F2P under threat. Nowhere does it attempt to get rid of F2P. It wants premium currencies to be more favorable to consumers and less favorable to developers. I’ve used these before in my earlier designs, so I understand how uncomfortable losing premium currency would be.
Post 2014 I stopped putting premium currencies in my designs. Or, in the case of my blockchain based games, I made my premium currencies refundable/tradeable. I believe these more advanced designs are more profitable than my previous designs, which were already more profitable than the “Fun Pain” variants that you and others depend on. If you make your premium currencies fully and painlessly refundable (as all my designs over the last 10 years do), almost all of the concerns of the CPC will go away. Demanding fiat currency deposits (like a bank) but categorically refusing to return those deposits (something even banks aren’t allowed to do) is a privilege you are claiming at the expense of consumers that you should not possess. Your letter seems to imply that you feel entitled to this because it transferred a lot of money from consumers to your and other game development companies. I think we can both agree that your current and previous business models would have failed without this exploit.
If you manage to convince the CPC to continue to give you these special privileges that certainly do not “improve the experience for consumers”, then you really would not be in a position to ask for additional privileges regarding currencies you create. Those currencies don’t benefit consumers, they benefit you. Your arguments in your letter no doubt helped “rally the troops” but are not going over well with gamers or regulators.
You also seem to imply that you can’t function without these special privileges, even though the industry operated fine before without them. Those more friendly models disappeared because they could not compete against the unfair advantage you were using. You can operate without a special economic privilege, but you don’t want to. Converting to business models that are fair to consumers will be an added expense, will take more time, and you might have to interact with someone that has different ideology when it comes to the developer-consumer relationship. These are all pain points, I get it.
What you don’t seem to get, at least publicly, is that everyone would have to deal with the same pain points. I would like to believe that there are pro consumer developers out there that won’t see the ideological differences as pain points, but that they’ve been blocked from entering the market due to barriers to entry that have been erected.
Here’s the upside to you: These new rules would add costs to everyone, at least until the new pro-consumer paradigm has fully replaced the old “dark patterns” paradigm. Regulations have historically been used to protect industry incumbents from competition from new market candidates. You can afford these costs. We are well aware. Smaller fish will not be able to afford those costs, unless they somehow make a good deal with providers of the replacement tech. This gives you a head start to re-exert market dominance while also benefiting from the improved performance of more modern consumer friendly business models. If you act quickly to adopt the new regulations, you could even resurrect your brand by selling yourself as “newly pro consumer”. The window of opportunity there is limited as each new open letter you write demanding special privileges will accelerate your brand decay.
My final point goes beyond brand to legacy. I’m not unempathetic. No one likes being described in a derogatory manner, such as “consumer/child unfriendly”, “Dark Patterns”, or a Bad Actor. This also would cause platforms to abandon you. I think everyone would agree that that’s not something you want as part of your legacy. So getting these sorts of descriptions removed from regulation would of course be of relief to you. Unfortunately, I think that ship sailed back in 2020 or even earlier. You had that chance and squandered it. The army of lawyers assembled to protect industry incumbents forces the CPC to definitively paint Bad Actors as such, in order to prevail legally and politically.
You have more money than anyone will ever need. I would imagine that now your legacy is of greatest importance. You can make games that fail, over and over, and that’s not a real worry for you. But it’s not too late for a brand deathbed conversion. Consumers love that kind of stuff. I don’t know why it is so rare. If you fully embraced the DFA, and honestly worked with the CPC, you could probably even get a few perks added. You could also sneak in some barriers to entry against future competitors. All that while coming out smelling better with consumers.
Give it a thought Ilkka. I’m not an emotional person. I don’t have an ego. I may not be “happy” to help you, but I will help you if you ask, without being entitled to my help. I’ve been trying to do that for over a decade without much reciprocation. I seek a better outcome for consumers, who have been on the losing end of game development for some time now. The result has been them spending their money elsewhere, and that’s causing massive layoffs and an existential crisis for game development.