Paradox Interactive

Separation from Paradox Entertainment (1999–2004)

Paradox Interactive's origins started with Target Games, a Sweden-based board game company. Target had been producing board and tabletop role-playing games in the 1980s and 1990s, and ventured into video games. By the late 1990s, Target was struggling financially, and it ultimately folded into bankruptcy by 1999. The video game division spun off into a separate entity, Paradox Entertainment, which published video game adaptions of Target's games. The new division selected an image based on the skeleton of a platypus, which originally given the scientific name ornithorhynchus paradoxus; the division considered its design philosophy to be "weird and unique" like the platypus. Between 2000 and 2004, Paradox Entertainment released the first titles of several grand strategy games, including Europa Universalis, Hearts of Iron, Victoria: An Empire Under the Sun, and Crusader Kings. The company had several mediocre releases, as well as a failed, ambitious attempt at releasing a free-to-play massively multiplayer online game first-person shooter title on a triple-A scale, leading to more than 30 developers losing their jobs when the project was later cancelled before its completion.

By around 2003, Paradox Entertainment began buying the intellectual property rights to various franchises like Conan the Barbarian from Robert E. Howard and Solomon Kane. Fredrik Wester, current CEO of Paradox Interactive, stated that around 2003 he had been brought aboard by Paradox Entertainment to help write their business plan, which included the drive to transform their video game division into a triple-A studio. Wester cautioned them about this, pointing back to the studio's previous unsuccessful project. The Paradox Entertainment executives did not take this advice well and decided it would be better to shutter the video games division and focus exclusively on licensing their acquired brands. Instead, Wester, along with the Paradox Entertainment CEO Theodore Bergquist, bought out the video games division retaining the Swedish Paradox Development Studio and all seven of its developers including Johan Andersson and Henrik Fåhraeus. They gained all intellectual property rights to the studio's past games, forming Paradox Interactive in 2004.

Growth as a publisher (2005–2015)

One of the first titles that was planned by Paradox Interactive was Crusader Kings, another grand strategy title. Their publisher, Strategy First, filed for bankruptcy about two months into its release, costing Paradox revenues from those sales as well as the lack of a North American distributor. After the launch of the digital storefront Steam around 2003, Wester experimented with digital marketplaces by offering downloadable content for Victoria via their website. The experiment proved successful, and subsequently in 2006 the company launched Paradox On Demand, a digital storefront with several of Paradox's back-catalog for sale. This eventually was renamed as GamersGate later in 2006. To help support it, Paradox looked to sign on games from developers as to bolster the company's reputation as a world-class video game publisher. Wester stated in 2013 that many of these games were "terribly bad", but that some proved to be strong performers, such as Mount & Blade. GamersGate eventually was spun off to be its own entity in 2008, while Paradox continued to acquire additional titles to fill its distributor catalogue which helped to finance continued development of grand strategy titles from the Paradox Development Studio. By 2013, the company had reached 100 employees, and established new offices in Stockholm, Sweden.

Paradox Interactive continued to publish numerous games from smaller developers over the next several years, finding success in games like Magicka from Arrowhead Game Studios (the publisher's first title to break 1 million copies sold) and War of the Roses from Fatshark. Wester and others in Paradox admitted in 2013 that this approach had been ambitious and led to issues with quality control in the resulting games, leading to a general impression about Paradox games being buggy. The publisher had greenlit and invested in several titles by its internal studios without careful review that failed to pan out, such as East vs. West, a spin-off from the Hearts of Iron series, By 2014, the company had made a decision to become much more selective of which titles to publish, making sure they were able to provide the necessary quality control support each title needed before agreeing to publish. Crusader Kings II in 2012 was one of the first games developed and published by Paradox with more attention focused on development timelines and testing to avoid past mistakes, and Paradox has since followed a similar model on its future titles.