With studio closures seemingly popping up left and right (Iron Lore, Stormfront, Sega Racing Studio, Castaway, Pseudo Interactive, Perpetual Entertainment, to name a few) in this age of massive next-gen budgets and continued industry consolidation, we decided to get some perspective on just how tough it really is (or isn't) on today's video game developers and discussed some winning strategies for staying in the game.
There have been many studio closures in the news recently. Is it really a difficult time to be a developer right now?
Denis Dyack (President of Silicon Knights): Yes. The rising cost of development and a divided console market are making it difficult for both developers and publishers. Even with the growing popularity of video games, there are still too many games in the market, and we are approaching, if not there already, a state of performance oversupply for games.
Tom Kang (CEO of Wideload Games): It's an interesting and opportune time to be a developer. It is definitely more risky given that this is a hit-driven industry and games are more expensive to produce. In addition, we're relatively early in the transition to next-gen consoles. However, there's also more opportunity since there is lot of investment coming into the industry due to its high growth rate. At this point, you can get projects funded from diverse funding sources, i.e. established publishers, media conglomerates, new publishers, private equity, mezzanine finance, IP development funds, etc. Developers have to be smarter business people now and learn to manage risk better.
Chris Charla (VP of Business Development for Foundation 9 Entertainment): Short answer: It's always a difficult time to be a developer!
No, seriously, we are still as an industry recovering from and fully embracing the change to the next-generation of development systems—and games—and we're seeing some studios going through more trouble than others. Especially as consolidation in the publishing industry increases, the first half of 2008 has been a little volatile for developers. We believe scale matters, which is why we've built Foundation 9 the way have. As the costs of development go up, the publishers are expecting more from developers, and rightly so. We believe having a large, well-capitalized, stable company that can deliver on multiple platforms, is a big plus right now.
Mario Wynands (Co-founder and managing director of Sidhe Interactive): Consolidation, rising development costs, and fracturing of the market have created great challenges for developers under the traditional model. There seem to be fewer projects out there and margins are under immense pressure. For those projects on the table, publishers are taking far too long in the greenlight process now, shortening development timeframes and hampering quality as a result. It's a tough period where it can be hard to avoid signing the wrong sort of deal in the face of possible closure. And it's going to get worse before it gets better.
Developers will have to be nimble and responsive to opportunities in order to successfully negotiate this period.
Josh Williams (CEO of GarageGames and InstantAction.com): It is a challenging environment for many developers. Project scopes and budgets are huge for traditional retail games, and that makes projects long, hard to get done, and risky for all involved. The model that we see working is smaller games with just as much fun, but that can evolve over time. The alternative and much riskier path is trying to do the traditional big bang approach of huge retail titles. That model works, but it gets costlier and riskier over time, so only bigger and bigger companies can play with it.
Eric Peterson (President/CEO of Vicious Cycle Software): Competition is steeper than in the past, and the consolidation of developers and publishers is occurring again (a cyclical event in the industry). Game development costs are higher than before, which results in larger studio/team sizes and that can equate to more risk.