How important are independents?

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.

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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.

<<<cue video>>>

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!

Comments

[Mirik]

Good read. Of course, it's not as motivating for beginning developers to start small, either. Big ambitions often spur the smallest studio's. Having to start doing, from their ambitious point of view, inconsequential outsourcing work or licence titles, may also burn them out before they get to the point of having enough to find their own game. Worse yet, more likely they get almost no royalties and have to beg a publisher for a new gig to stay in business right after.

So even though they could decide to go slow, that is difficult and demotivating as it is, it seems to me.

[Pag]

A very interesting presentation.

I wonder, however, if long established independant developers don't have the same limitation as publishers when it comes to creating new IP. Typically in art and entertainment, it's the newcomers who bring the ground-breaking creativity (not to bash on experienced creators who's work is often of superior quality). Look at the studios mentionned in this article: Edge of Reality, id, 3D Realms, Ritual and Gearbox, few of them have created original titles in the last few years.

This industry really needs a way to fund riskier but lower-budget project.

P.S. I've mentionned this post on my blog (http://sacredcows.pagtech.com>http://sacredcows.pagtech.com/)

[Bryce]

Allow me to dissent,

Independents, in their current form, are relics. They're the last remnants of a dead generation, holding on through the years, slowly getting edged out one by one through buyout or eventual collapse largely because the products that they make cost too much and are of only limited appeal because they are run - for the most part - by the same guys who were running them 15 years ago. They're just going to seed, and although they have their hardcore fanbase and general industry 'pull', their current output is becoming about as relevant to modern, interesting design, as the latest album from the Rolling Stones, David Bowie or Michael Jackson.

Independents are deadweights, and their continued presence creates a creative stall in the industry's mindspace because people are still looking to the likes of Peter Molyneux and a whole generation of hasbeens for creative vision. Their only importance is self-importance, and frankly they've grown too old for this shit.

'Indies', on the other hand, meaning those tiny Introversions and IGF type developers, are what is interesting, and will be the fountain of creativity in the coming years. They have more energy, less cynicism, better constraints through a lack of reputation, and they're starting to gain some exposure. Indies don't seriously think in terms of IP, franchise rights and so on. They think in terms of their next game, their tiny office rent, and their next game after that. As it should be.

Get out of the way old guys.

[Greg]

Tosh.

As defined this way, an independent studio:

a. Today gets a reasonable royalty because it has the financial resources to at least partially pay its own development funding (despite the current high costs of development for the conventional channel);

b. And therefore must have been in existence for many years and had some reasonable hits back in an era when development costs were lower and it was actually possible to make money on the kinds of contracts offered to newbie studios.

In other words, the stock of "independent studios" can never be replenished, because those conditions aren't coming around ever again--and the those that remain will inevitably be depleted over time (can you say 'Lionhead'?).

This is a positive vision?

We need to break free of this business model and find a new one.

But then, you knew I'd say that, I'm sure.

[Greg]

Or sort of what Bryce said, without the ageism. Old farts have something to teach young turks.

[Cliff]

Well I'm old (36) an Indie (Positech Games) AND I'm ex-Lionhead. I must win a prize or something surely?
It always makes me chuckle to hear about firms the size of Lionhead described as 'indie'. they had around 150 staff and did deals with motorola and chrysler. They published through EA and Activision. A studio that size is as much part of the big industry mindset as an in-house EA studio.

[Charles E. Hardwidge]

This is a fair view but only one perspective.

Since seeing my IP commerically realised back in the 80's, and a lot of the tech and content ideas I've been designing and prototyping emerge into the mainstream, I think, the core issue is a matter of capacity and determination. There is much to learn from old ways and new ways. Ultimately, you have to decide where to lead and follow. This is a delicate thing.

I will succeed, but on my terms.

[Bryce]

"Or sort of what Bryce said, without the ageism."

I was being dramatic.

I'm talking more about the company-level psychology. Someone like Cliff shows that it's perfectly possible to get out there and do something at any age (as are many prize-winning novelists). It's the companies, the ingrained cynicism that has come with them, and the serious lack of worthwhile ideas coming out of them.

Think about it. When was the last really exciting idea to come out of an independent developer that wasn't just a sequel of their previous work? I think five years at the very least. These companies have gotten into trying to own their niche's and produce little product lines and all that sort of stuff, which is fine, and then whoring up all the press by talking up these tired concepts as innovative etc (especially Molyneux).

I say they've lost the energy that they used to have in the process of becoming businesses. I was watching that Metallica documentary (some kind of Monster) where you realise that these guys with their families and their issues and stuff are now middle aged men, and they worry far more about how they will be perceived than they ever would have done 20 years previously. But, yaknow, the Metallica franchise has to keep rolling on etc... And that's what long-in-the-tooth independent development has become. The Texas scene especially, but actually game development in US/CA and UK in general, has grown too old and stuck in its ways, and has seriously gone to seed as a result. That environment produces nothing worthwhile any more.

So it's time to eject that nonsense and get back to what matters, which is making games any way you can. Whatever Cliff etc are doing is automatically far more interesting than whatever Valve or 3D Realms have to offer at this stage because it's going to be fresh at the very least.

[Tom Schaffer]

Interesting read. I'm always very interested in reading such things, since I'm working for a small indie team in Austria (Bongfish).

I think one big question is: who are the allies of !small! indie teams? For example I don't think it's too hard for studios like Lionhead or 3D Realms to get the big coverage on their next game, but it's a lot more difficult for small team to get any coverage at all. Sometimes when I talked to journalists I got the feeling that I'm a beggar on my knees, while I certainly knew that neither our game nor ourself did deserve to be treated in such a manner.

Kieron Gillen once demanded, that developers should behave more like rockstars. OK! here we are, willing to tell something interesting.

[Charles E. Hardwidge]

Leadership has to come from within. You have to take a calm, measured, warm, and friendly approach to the things you do and the people you meet. From this, all success will be built. Some will try and run you down, others will try and make you feel important. None of this matters. Like a good game design, all that matters is you flow. Your best friend and worst enemy is yourself. Results follow action, follow thought. Attend to this and you will succeed.

For instance, I listen to and acknowledge the achievements of Carmack, Spector, Miller et al, but I don’t hold them up as being unquestionable gods. There is good and bad in everyone and everything, and I never give up the right to make my own judgement, am prepared to be wrong, and where I make mistakes will try to learn from them. I have my own share of achievement, which is considerable in its own right, but mustn’t get too carried away with myself.

As an example, in the United Kingdom the big guns of politics have run into a reality wall with the public. The strategic parallel between politics and the game industry is in the similarity between the big interests, such as the publishing, media, and development establishment, and the smaller end of the spectrum, such as small publishers, blogs, and independent studios. By setting a new agenda and communicating that with others, so the look and feel of the system changes.

At least, that’s how I see it.

[Bryce]

That's how you see what?

[Charles E. Hardwidge]

That's how you see what?

Everything. :)

[Scott Miller]

-- "I listen to and acknowledge the achievements of Carmack, Spector, Miller et al, but I don’t hold them up as being unquestionable gods."

I don't hold anyone to such a high standard either, and would recommend no one should. When it all comes down to it, we're all just developers trying to achieve success. There are many roads, and I was one who started right at the bottom. I still work extreme hours (up until 3am last night working on Prey) to ensure our games are as good and as innovative as possible.

As I said before, while we remain within a single genre, we still strive for innovation. Duke 3D had a long list of innovations. Max Payne had several key innovations. Prey has several compelling innovations. I feel good about what we're doing here, versus many of our competitors who seem to be in an innovation rut, or only innovate in terms of graphics technology.

[Jare]

"Duke 3D had a long list of innovations. Max Payne had several key innovations. Prey has several compelling innovations"

You still make it sound like the scope of innovation in your games is decreasing with each product. Must... not... write... while sleep-deprived. ;-)

[DML]

The main problem with software development (game development, business development,etc) is *unrealistic schedules*. Everyone wants everything for nothing. SO many problems would be relieved if this was removed. If you're careful about hiring, you'll find that the people you get mostly want to do well. They are looking for ways to make something awesome. However, the mindset is completely different when someone is standing over you with a whip putting extreme pressure on you to do the impossible. Yes, sometimes people need to be urged to do the right thing instead of the fun thing, but there's a low limit for this.

Would Scott Miller be Scott Miller if he had a slave driving manager beating him on his back with an impossible schedule?

Until we can get the people who hold the money to come to terms and be honest with this aspect, then nothing will change.

I'm not a game developer, but I'm a big gamer and enjoy your posts. This one really resonated.

[Charles E. Hardwidge]

Reading through the topic, again, and looking at the various comments, I just can’t get over how what we’re dealing with is a people thing. As Scott said months ago, perception dictates reality. Then there’s my position, that perception is an illusion. Bottom line, I guess, it’s all a matter of choice.

I’ve learned things the hard way, and through a path I’m not sure anyone commenting in here would chose to take. Whether you’ve got it all laid on or you’re being squeezed, there’s no one single way to succeed or fail. We can do either in spite of the circumstances. Who we are matters.

I look at Scott’s deliberate circumscribing of the game types he produces and my own hesitation to press on, and could argue that both of us are trapped by equal and opposite dreams and nightmares. By letting go of these blocks, perhaps, new doors to success might be opened.

I think, there’s a lot of truth in life being what you make of it.

[Binu Philip]

I’m glad to read the responses so far! It’s certainly food for thought. Here are a few further comments:

Mirik: Growing slowly towards independence is a hard road to take. Fortunately, as an independent studios are not tied to one publisher. You have the option to talk to as many publishers as you like for potential projects. If you’re a good developer, you should be in demand. How much you're in demand will mostly dictate what your royalty rate and the deductions allowed in calculating your royalty. It's not impossible to thrive as an independent studio.

Pag: Actually, Gearbox put out Brothers in Arms, 3DR helped put out Prey, Ritual is doing SiN Episodes, and we’re working on an unannounced property. There is a lot of new stuff going on.

Bryce: I appreciate the respectful comment, and I hear what you’re saying. I like what the IGF people are up to, and I’m hopeful that they will create mass market appeal. However, I don’t agree that independent studios are relics. At the end of the day, in a free market economy, it is the consumer who decides how well an independent studio does. If we don’t perform, we go out of business, period. It’s not about self importance, it is survival of the fittest.

Greg: Personally, I agree that a future with 20-30mm development costs on a AAA title seems really bleek. We believe we can make a AAA game for far less than that. Our development efficiency comes from our tools, which we’ve spent the last two years working on. There should be a future article on how our tools work, it will explain further. Another source of efficiency for next gen development is being able to outsource to high quality low cost art houses, primarily overseas.

Cliff: Lionhead were large, but I still considered them independent b/c they were not owned by a publisher with deep pockets. Their destiny was largely in their hands.

Bryce: We have a lot of respect for Epic, 3DR, and Valve. Despite the fact that they are smaller and independent, they are also more likely to come up with something fresh and innovative that will appeal to the masses than most internal studio teams. They have no one to answer to but themselves, and to consumers.

Tom Schaffer: If you’re asking who are the press allies for independent studios, I would say that many people in the press are rooting for independence. They are tired of sequelitis. They want something new and independent studios give them a chance for something new. If you’re looking for press, they will be drawn to cool new games. A good PR agency is also a big help. We just hired our first one last week.

[Mirik]

I'm glad to say I've helped a few small and upstarting independant projects get into the spotlight in my days. *proud* :)

Not much came from it so far, but who knows...

[Bryce]

Binu: "At the end of the day, in a free market economy, it is the consumer who decides how well an independent studio does. If we don’t perform, we go out of business, period. It’s not about self importance, it is survival of the fittest."

The essential thrust of your original piece is that the reason that independents are important in the games ecosystem because they represent the most important font of imagination.

I say that's not true any more, that while it may have been ten years ago, most of the independent companies have either sold up or entrenched, and they rely heavily now on their brand and their franchise logic to justify their own existence.

This is because they have nothing new to offer, and they haven't had for quite a long time. They've grown older, and as a result much more afraid of the future, and therefore of taking a risk. When your independent sector is at the point that it speaks exactly the same sort of business babble all the time as a big corp, it's a real sign that they have matured past the point of actually producing good work. So they may survive, they may even prosper, but they are not important or relevant.

Survival fears are what's holding them back an slowing the rest of us down, because the gaming media still think that these companies are it vs the big bad publishers. They're just not, they're every bit as conservative as the publishers that they claim to define themselves against, and their output is now creatively just as neutered.

[Charles E. Hardwidge]

Just caught your comments, Bryce, as I was previewing my own post. Interesting parallel.

For every point Binu makes, I can find an equal and opposite example. Pragmatic issues aside, I think, the overall topic is just one way of looking at things. More than important than size, turnover, or profitability, is quality and integrity. Any poorly focused and inconsistent enterprise operates below par. It is in this space, like war, that effort is wasted.

I've spent a lot of time thinking about this and have concluded the key reason for 3D Realms success isn't what they do right, it's what they don't do wrong. I've seen some pretty bland and mediocre performers succeed because they kept out of trouble. Likewise, the rebel genius gets hammered because where they have vision but poor execution. Here, right and wrong can get a bit hazy.

Looking to the left, we have the monolithic publishers. Looking to the right, we have swarms of independents. However you cut it, competition is stiff and not going to get easier, which is why I'm not going to play the game. If you do get suckered, you just end up dancing to some untested authority and popularity. This is fine for some, but not what leaders are made of.

Some people have said I'm a bit arrogant. Arrogant in the sense that I think leadership qualities should be developed in everyone, perhaps, and that long-term success is only built on mutual success. In this, the circle of capitalism versus socialism is squared in my mind. The Romans favoured the middle way and built a fantastically succesful empire on this premise.

I agree, who we are matters.

On a slight tangent, here's a thought provoking article I turned up:

The Rebel Rules
Daring to be Your-Self in Business
by Chip Conley, A Fireside Book, Simon & Schuster, New York
http://www.refresher.com/!bsrebel.html

It's probably not the place to mention it, but along with Daoism, Buddhism, and martial arts, I've found another philosophy has changed my outlook in a deep and meaningful way. It's focus on quality and relationships, or products and marketing, that I've been yapping on about over the past year or so is coincidental, as is it's encouragement to follow a Roman strategy of avoiding trouble and building on the positive. You may laugh, and it caused some surprise among my Japanese friends. Its name? Shinto.

Here goes nothing... *click*

[gf]

"Survival fears are what's holding them back"

Call me a communist cynic or something, but from a certain pint on I'd say it's the common effect of the richer you get the greedier you get. It's not a fear of survival but a fear of making less money than possible. Once you've make 10 million on something, god forbid you'd make 3 million next time, what a disaster.

id could "bomb" 10 times and still be laughing all the way to the bank and retirement, yet the visually stunning architectural walkthrough (aka doom3) surely sounded like the safer bet.

(Should I ever end up in that situation I might do the same, I really hope not, but who knows. I hope I at least would feel dirty about it ;) )

[Pag]

I wouldn't call the entrenched independants as a case of greed. These studios continue doing what they like and what they're good at. I'm sure Carmack really loves working on FPS -- why should he work on something else?

Few people have many ground-breaking ideas during their lives. In any field, most succesful people come up with a great concept early in their career, then spend their lifetime perfecting it. Their style is unique, so it breaks new ground when it's first introduced. Afterward, the style gets better but it's still the same thing.

Take Monet for example. He's a great painter and he introduced a beautiful and unique style. However, most of his paintings were in this one style. Established game developers are the same: they come up with a style of game that's unique then perfect it. Look at Peter Molyneux for example, most of his games are variations on the "god-game" concept he invented with Populous.

That's why fresh blood is needed in any creative industry, they're the ones who bring the new ideas to the table. A few geniuses can come up with many unique and great ideas during their career -- Picasso painted in a great variety of styles -- but most of the time it's the new people who invent.

[Charles E. Hardwidge]

Call me a communist cynic or something, but from a certain pint on I'd say it's the common effect of the richer you get the greedier you get. It's not a fear of survival but a fear of making less money than possible. Once you've make 10 million on something, god forbid you'd make 3 million next time, what a disaster.

Yup. As I said in earlier topics, the primary fear of change isn't the unknown future, it's the fear of losing what you've got. This isn't communism or cynicism. It's the way things work. However, being aware of this allows you to do something about it. This is one of many reasons why I've developed an ongoing interest in Zen Buddhism.

Few people have many ground-breaking ideas during their lives. In any field, most succesful people come up with a great concept early in their career, then spend their lifetime perfecting it. Their style is unique, so it breaks new ground when it's first introduced. Afterward, the style gets better but it's still the same thing.

My first invention featured in the Sunday Times Innovation Section, and was a piece of novel hardware. An earlier invention, funnily enough, became part of a software product released afterwards. Since then, I've had successes in the so-called soft sciences, and a raft of ongoing developments that have been mirrored elsewhere. The hard part, for me, is getting product to market.

Reading widely and not being scared to ask questions helps.

[gf]

- I wouldn't call the entrenched independants as a case of greed.

I meant that in a general sense, not indies and/or games business specifically.
I chose to call it greed, you could also call it an addiction/dependency if that sounds less offensive. The more you get the more you want/desire. There are, of course, always exceptions.

- These studios continue doing what they like and what they're good at. I'm sure Carmack really loves working on FPS -- why should he work on something else?

I don't expect id to do anything else, I myself am only interested in FP and because of that only work with FP.

Personally when I whine about lack of innovation I mean that within the FP "genre", I beleive there's a lot of good stuff that can be done within it.

Doom3 however, IMHO, didn't even break even (in terms of gameplay) with its predecssors from 10+ years earlier. (I thought it was a visual masterpiece, cool tech, just the worst / most boring game I've ever played.)

Granted, they may not have had any desire to innovate or they just suck at it :) .. it just saddens me that those who've reached the point, where they could easily afford thinking outside the box for a minute, often don't.

[Scott Miller]

http://www.3drealms.com/news/2006/04/new_prey_gamepl.html

New Prey trailer, showing gameplay from very early in the game (when you only have the one weapon, so far).