Good friend, Binu Philip, co-Founder & Biz Guy of Austin's Edge of Reality, kindly gave me permission to post a talk he gave at the South by Southwest conference (SXSW) last month. I really liked his message, and so I present it here in full. And sorry, you'll have to use your imagination on the engine demo he gave, but trust me, it is amazing jaw-dropping next-gen tech.
The Future of Independent Game Studios
We are in year one of a platform transition. As with every transition, we face a myriad of serious issues. Rising development costs, higher production values, unfriendly publishing contracts, recruiting shortages, all make tough challenges for independent studios. What is the rightful place in the game industry for independents? Who in their right mind would want to be an independent?
As Gimli said in Lord of the Rings: “Certainty of death. Small chance of success. What are we waiting for?!” I sometimes wonder if this is the motto for independent studios these days.
Let’s start our talk with a one minute tech demo that was captured completely in our proprietary engine.
Our studio has been in business for 8 years now, and in that time, we’ve shipped 8 games resulting in many millions of units sold. We built our company gradually taking on small projects, executing them, and them moving on to larger and larger projects.
In order to have a discussion about the future of independent game studios, we must first have a discussion about intellectual property. Specifically licenses versus original intellectual property.
Licenses have played a large role in the growth of the industry. Licenses fill a need by consumers to play a game based on content they are familiar with and want.
The downside of licenses is that they are not as creatively fulfilling to make as original game content. Some large licenses have declined in sales and popularity in the gaming world such as Harry Potter. It is rare to find intellectual property that maintains strong popularity across various media such as film, games, tv, books, and comics.
Coming up with new properties is a necessity for our industry to thrive. The industry needs new intellectual property that is aimed at the gaming market first, not at films first. Translating a game from a film means that the developer is often tied into design decisions that limit gameplay in order to be true to the movie fiction. Games should be made with gameplay in mind first.
One major problem is that publishers are typically run by green light committees made up of a variety of people with different back grounds. Unfortunately, most green light committees are dominated by people who don’t have recent development experience. They are set up to minimize risk for the publisher, and this is the antithesis of innovation. You can’t create original game franchises without taking substantial risks. It often seems that green light committees operate like a driver trying to drive forward by concentrating on the rear view mirror.
Most publishers look to reduce risk by creating copy cat products by letting TRST dictate what they should make. Creating something new and compelling is extremely difficult, and exponentially more difficult when you must convince a large group of people at every step along the way.
I believe that today’s greenlight committees are well set up to handle licenses and established franchises, but they have a much tougher time gauging new original properties.
Creating new intellectual property requires a lot of patience and trial and error. This is difficult to do when most publishers have extreme pressure to perform on a year to year or even quarter to quarter basis for stockholders. One of the major new IP’s launched by a publisher recently had only 24 months of development time. We are already 24 months into the development of our original game, I could not imagine being forced to ship it so soon.
There are a finite amount of licenses that are worth having. Licenses often carry short development cycles which results in shoddy quality and lots of overtime for the team which leads to burning out good talent. Licensing costs are also going up as license holders become savvier about the economics of the video game business. Licenses may carry more predictable sales, but margins on licensed games will continue to be squeezed.
Owning a stable of original franchises should be a priority for publishers because it gives them greater control over their profits and their destiny.
The real value of an independent developer in today’s video game industry is in its ability to create compelling original content. Independent developers don’t have to answer to the stock market or to green light committees during the process of making an original game. By independent developers, I am really talking about veteran studios that have been in business for a while and can afford to self fund a significant portion of a game.
The risk of creating original properties is better suited for independent studios for a variety of reasons. Independent studios by nature have to be better than internal studios in order to stay in business. If an independent puts out one too many duds, the studio will fold. If an internal studio at a publisher puts out a dud, there are still other products in the publisher’s portfolio that can make money. Most internal studios do not offer royalty plans for their developers. This is a disincentive to developers who really want to work hard in a creative field and enjoy the fruits of their labor. Why try as hard as you can if you know that you won’t earn royalties and you will likely not get fired if your game fails? Internal studios have much less natural selection than independent studios.
The natural selection process at independent studios is much more fluid. If an area of a game isn’t shaping up as expected, we will work with the person responsible for that section, and if necessary, replace them. Independent studios have to perform.
Studios that are acquired often lose their identity and branding. This is a huge psychological disappointment to the developers within that studio because they are being assimilated into a larger parent company instead of being part of a cutting edge small independent studio. Instead of focusing on making great games, internal studios generally have a large amount of politics and red tape to deal with because they do not control their destiny.
Independent studios generally have smaller teams. With smaller teams comes better communication and greater clarity of vision and focus. Team members feel much more ownership of their portion of the game. Smaller studios have more freedom to do research and innovate b/c they don’t have to ask permission from a corporate parent. Larger internal teams have hellish communication problems. They are also at the mercy of the whims of upper management which is usually off site and often not in a position to make the best decisions about a particular project. Internal studios are often required to use shared engine technology between the various internal studios. This rarely works out well because no one engine is ideal for every type of game you can make.
In my opinion, established independent studios are extremely important to the future of the industry. It takes time to build a quality independent studio. You need to work out your processes and grow slowly. Hopefully the games you ship earn you royalties and you can save enough to fund your own title. Another route is to try to get an investor. The problem with this is that investors are always looking for an exit strategy and a return on investment in a timely manner. They aren’t necessarily interested in creating high quality IP’s if it means patience, trial and error.
You should be proud that Texas is a hotbed of independent development. Companies such as ours, id, 3D Realms, Ritual and Gearbox are all contributing to the industry by creating original franchises and maintaining the creativity and freedom that comes with independence.
Thank you for your time. Enjoy the rest of the show!