What Innovation Means in the Computer Game Business

[Brian Koontz]

It occurred to me when reading some posts on this forum that games are treated independently with respect to their worth. A game is treated as a success or a failure (to a business) strictly with respect to its degree of profit.

Here are a few examples of how games are NOT independent financially, and how much more than their retail profit or loss matters financially...

#1: A Creative Game

Some games influence other games. If a business profits by that influence the amount of that influence is "added" profit. An ideal (business) situation results in total control over that influence, so if Game A produced by Publisher A influences Game B produced by Publisher B, Publisher B has to provide monetary compensation. This is an extension of the concept of "intellectual property rights" applied to computer game design.

#2: Innovation as Research and Development

I find it puzzling that noone talks about R&D with respect to developing computer games. Its today's innovation that produces tomorrow's games. Other industries (with a well developed R&D model) have no such problem putting dollars into things that produce nothing obvious... why then do game designers have to see results in each and every one of their games? Can't a game be STRICTLY a matter of R&D? The closest thing this industry sees to R&D is the creation of graphics engines... John Carmack is more of a low-risk R&D producer than a game producer... other developers then make games with the production of his R&D.

#3: Control of Human Resources

The humans who work on games are not mercenaries. There are countless relationships between publisher and developer, programmer and artist, etc. Part of a game's success or failure is how well a game's construction goes with respect to the attitude of all humans who intimately surround the game. To a publisher for example, the human annihilation that went on during the Daikatana development meant the game was a failure even before any sales numbers were determined.

[DaveC]

1) Creative Games: Sadly there are many creative and good games/companies that do not get their due. In the industry and community these are usually remembered fondly. However, as far as financial success goes they did not qualify. This reminds me of the story that William Gibson told about shopping the Johnny Mnemonic movie. None of the studios would touch it as a $2 million art film, but many were willing to fund it as a $25 million "big name" flick. I think the game industry views projects in a similar way. There are very few companies that are willing to take a chance on a game that would most likey be succesful on a small scale. At least I haven't heard of any.

2) R&D: No one talks about R&D because 99% of game R&D is done on the fly and is going into the next game. It's one thing to look back at last years game engine and another to tip your hand about next years.


3) People: This is entirely up to the people that run the company. Like any business there are mercenaries. Hell, half of the audio done on games is done by the lowest bid contractor. The whole atmosphere in a company rests firmly on the shoulders of those in charge. The passion for a project starts at the top. This is also reflected in the choice of employees. Do you hire proficient artists that can do that job, but don't really care about gaming? Or do you hire passionate people with a slightly lower skill set, that have the desire and vision to get the job done?

[Jessica]

1) Creative Games: Sadly there are many creative and good games/companies that do not get their due. In the industry and community these are usually remembered fondly. However, as far as financial success goes they did not qualify. This reminds me of the story that William Gibson told about shopping the Johnny Mnemonic movie. None of the studios would touch it as a $2 million art film, but many were willing to fund it as a $25 million "big name" flick. I think the game industry views projects in a similar way. There are very few companies that are willing to take a chance on a game that would most likey be succesful on a small scale. At least I haven't heard of any.


This is, sadly, so true. It gets even worse. At one publisher/developer I worked for several years back, it was announced at a producer's meeting that, henceforth, the company would consider only those game proposals that management believed had a chance of selling 400,000+ units, in order to maximize resources (this was when 200,000 sales were considered platinum).

My immediate comment was "You just doomed this company to mediocrity," which earned me dirty looks from management and a distinct feeling that I should print up copies of my resume. The only way to maximize chances of 400,000 sales per game (or whatever number) over time is to not take risks, which means you have to imitate best-sellers and push like a fiend to get your clone on as many platforms as possible, then OEM the crap out of it later on. Does this picture sound familiar to anyone? (And by the way, the above mentioned company is moribund and on the auction block.)

This concept of going for the sure thing flies in the face of the industry's own experience. For example, The Sims! series has sold 20 million units, which means, at a minimum, somewhere between $200 and $300 million in gross profits for EA. Yet Will Wright had to fight like hell to get EA to allow development of the game; if Sim City and the rest of the Sim series hadn't been good sellers, The Sims! would never have been developed.

One would think that stagnant PC game sales, versus the success of risk-taking games such as The Sims, would tell management wonks everywhere something. Or am I missing something here?

[Brian Rucker]

I think there's some hope out there in different places (and it's not like we're not getting good games at all - look at last year, at least three different titles came out from that could be considered important on some level: BF1942, Medieval: TW and Morrowind - maybe NWN too but I don't know enough about the community generated content to say for sure.)

For one thing indie publishers and clearing houses seem to be making ends meet with online sales and publishing. Many of them support several small design companies that also seem to be surviving.

Another thing is the emerging importance of player extendable content and an engaged fanbase to keep sales strong. Just this week I found small fan communities for two games I thought were completely extinct but these folks keep on making utilities, mods and custom patches. Take a look at Morrowind and I'd be willing to guess there's still a baseline rate of sales inspired by folks interested in mods and the mod community. My guess is that they'll only get better as time goes on and we'll see some very interesting developments. NWN falls into the same category. Work with the fans and they'll keep your product alive.

Lastly, and I don't know why we haven't seen this yet, the idea of patronage of designs by wealthy private individuals should come of age eventually. We've seen that the freakin' Army can do things right with enough money and time. Why doesn't Spielburg take a look at BF1942 and WWII Online, scratch his beard, and notice that a hybrid project done right could be the next big thing? Where are the guys that sunk millions into a highly speculative, highly risky, LoTR trilogy of films because they loved the subject? Is it just that nobody gets what PC games could be if someone put the time and cash into bringing truly revolutionary content and design into being?

Games with the best designers doing 'dream projects' backed by a few folks with deep pockets could dwarf projects knocked out in a rush with a budget or marketing scheme placed before the concepts of the design. We've got the technology to do amazing things and few folks seem to get it or in a position to maximize on it. Why not do a few right and completely dominate?

[DaveC]

The game industry is going through some major fluctuations. It's being tossed around like the "next big thing" by some and looked down on as a money pit by others. Some smaller companies are being swallowed by mega-corps, some are flourishing and some are going down in flames. Big budget games are flaming out and small team titles are cashing in. I think the only thing you can say about this industry is that if you think you know everything about it then you are surely fooling yourself.

[sellthekids]

My immediate comment was "You just doomed this company to mediocrity," which earned me dirty looks from management and a distinct feeling that I should print up copies of my resume. The only way to maximize chances of 400,000 sales per game (or whatever number) over time is to not take risks, which means you have to imitate best-sellers and push like a fiend to get your clone on as many platforms as possible, then OEM the crap out of it later on. Does this picture sound familiar to anyone? (And by the way, the above mentioned company is moribund and on the auction block.)

sounds a lot like the music biz, where the labels have coagulated into the big four or five and they all would rather put out another Christina Aguilera clone or Staind knockoff than really invest in a risk.

hmmm, now that i have mentioned 'risk' it sounds a lot like plain ol' business, where being risk-adverse is pretty common. of course, the risk-reward principle applies.

does the game industry run the chance of becoming increasing more like the music biz? will there eventually be just a few big publishers/developers?

[xahlt]

I don't understand how it doesn't sound like every media business. How is it shocking, surprising, or especially disappointing that it applies to the games industry?

[Jessica]

My immediate comment was "You just doomed this company to mediocrity," which earned me dirty looks from management and a distinct feeling that I should print up copies of my resume. The only way to maximize chances of 400,000 sales per game (or whatever number) over time is to not take risks, which means you have to imitate best-sellers and push like a fiend to get your clone on as many platforms as possible, then OEM the crap out of it later on. Does this picture sound familiar to anyone? (And by the way, the above mentioned company is moribund and on the auction block.)

sounds a lot like the music biz, where the labels have coagulated into the big four or five and they all would rather put out another Christina Aguilera clone or Staind knockoff than really invest in a risk.

hmmm, now that i have mentioned 'risk' it sounds a lot like plain ol' business, where being risk-adverse is pretty common. of course, the risk-reward principle applies.

does the game industry run the chance of becoming increasing more like the music biz? will there eventually be just a few big publishers/developers?

A friend of mine who spent 17 years in the music industry recently made the same comparison between that and games, and added, "Hit-driven industries are pure evil. Chasing the next hit turns honest men into liars who will do anything to anybody to get it."

I think we're already like the music industry, unfortunately.

[Jessica]

I don't understand how it doesn't sound like every media business. How is it shocking, surprising, or especially disappointing that it applies to the games industry?

It may not be a particularly surprising or shocking development, but for people with a passion to build games that will absolutely rock other peoples' worlds, it can be especially disappointing to discover that, in many companies, it is all about the benjamins, with little more than lip service to creativity.

It is also disappointing because hit-driven industries rarely turn out new types of work and, when they do, it is almost by accident. Thus, we get stuck with the same old thing.

Brian may have hit on something in his message above; it may take outsiders with money to give us a chance at retrieving some of the risk-taking of the 1980s, when we were still a fresh industry.

[Dave Long]

I think you folks really should clarify that you're talking about the PC games industry, because on the console side, the big publishers have always and continue to sell the majority of the products. They also take a lot of chances. In the last year we got things like Ico on PS2, Robot Alchemic Drive on PS2...both from big publishers Sony and Bandai. Bandai has .hack on the horizon, which may look like a traditional RPG, but doesn't really play like one due to the game's unique setting (a MMOG that's "real"). Then we've got Nintendo's Animal Crossing and Cubivore (Animal Leader in Japan).

Maybe this plays into the mercenary thing...in Japan, where all these games were made, there isn't the kind of mercenary attitude we have in the US development community. People don't move around nearly as much as they do here. Consider that Sega's big developers, Suzuki, Naka, Mizuguchi, Nagoshi, have been there for years. Yu Suzuki has been at Sega since the mid-80's. Most of Nintendo's internal teams under Miyamoto have been there for years. Capcom, Konami, Namco...all have basically the same people they've had since back in the NES days. That affords these (successful) people a lot of leeway in creating original products. In the US, by contrast, many teams are lucky to put out two games before they disappear. There are a few names, Will Wright being one of them, that command enough respect here to push something through like The Sims. It should also be noted that some of the biggest US/European games have come from teams that have been together for a long, long time with people running them since their inception... Grand Theft Auto: Vice City from the former DMA Design, Halo from Bungie and even Neverwinter Nights, from Bioware. But the culture of US games in general is mostly created by the suits. The people making the decisions on games in the US usually aren't the people making the games. That's just not true in Japan.

Those are just a couple game examples from very large publishers. The console industry always has a lot of innovation going on, you just have to pay attention to what's going on. I'm not really worried about the lack of innovation at Electronic Arts and their disinterest in trying new things. We've seen too many times how their upper management has no clue about the actual games, but does a great job at just hitting their expected numbers. They've got an ace in the hole though...no matter what else they do, they can count on EA Sports saving their bacon year after year. Arguably, things like Medal of Honor are reaching that status as well. The EA FIFA games apparently sell well worldwide. They have licenses for every major sport and most minor sports. It's a license to print money. That article about them being the next Disney couldn't be more wrong. Disney has smartly tried to expand their animated offerings as well as pushed some good content through their teen/adult oriented movie distributors. They're not remaking the same stuff each year which is essentially what EA does, with the exception of online, where I'd argue they're at least trying...but failing to capture something a little different.

Anyway, I think this thread looks like an extremist point of view from the other way. There are a lot of great, creative games. In fact, there's just too many of them. The industry needs a weeding out again. Every team seems to spawn an offshoot anymore that plans to create the next big thing. That results in far too many developers and far too many games that really aren't better than mediocre or maybe have one cool hook and nothing more. Despite all the grumbling about tight dollars at publishers, the industry is still growing. There's just a lot more people out there expecting to make money from it than there were even two years ago. What smart publishers should be doing is locking up the real talent so their games can have a consistent level of quality AND innovation. That's the way Japanese publishers have always worked, so it should be no surprise that they're still consistently among the top sellers worldwide.

--Dave

[Troy S Goodfellow]

But it's not like creativity is not being rewarded with good sales. I'm sure that a lot of really original ideas aren't reaching the mainstream, but you look at sales for The Sims or the original Rollercoaster Tycoon - two hugely creative games that got their due. And broke into the broad market beyond the hobbyists.

I don't want to seem like I'm arguing that in order for a game to be good it has to be successful, but you can't deny that in many cases successful games are also creative, even if its only in small ways. Great games are copied, whether they are good sellers or not, and even a medicore game can have a couple of great ideas that spawn a slew of better imitators.

The worst part of the game design/marketing business isn't the lack of creativity, but the emphasis on developing a brand name series. (Steve Baumann wrote an editorial on this in the latest CGM, so I won't repeat his case here. You can look it up.) Now, this is not the same of "lack of creativity" - some of these sequels have significant elements of creativity and originality in them. But the sameness of titles year after year just gets burdensome.

Troy

[DaveC]

The worst part of the game design/marketing business isn't the lack of creativity, but the emphasis on developing a brand name series. (Steve Baumann wrote an editorial on this in the latest CGM, so I won't repeat his case here. You can look it up.) Now, this is not the same of "lack of creativity" - some of these sequels have significant elements of creativity and originality in them. But the sameness of titles year after year just gets burdensome.

Troy

I wonder about this "developing a brand" stuff. I mean people have success in music and movies without having to be constant sequel producers.

[Chris Nahr]

I wonder about this "developing a brand" stuff. I mean people have success in music and movies without having to be constant sequel producers.

Yes, but in music and movies you look at the stars. The developers behind computer and console games are largely invisible because they don't appear in their own games (thank God :P). I don't think many people look at the credits. The closest a development studio can come to achieving name recognition is to reuse the same title, like Mario or Final Fantasy or The Sims or Age of XYZ or whatever. In other words, develop a brand. You don't have to exactly clone the gameplay or the characters or the story, just make sure it's similar enough not to disappoint the fans.

[DaveC]

I wonder about this "developing a brand" stuff. I mean people have success in music and movies without having to be constant sequel producers.

Yes, but in music and movies you look at the stars. The developers behind computer and console games are largely invisible because they don't appear in their own games (thank God :P). I don't think many people look at the credits. The closest a development studio can come to achieving name recognition is to reuse the same title, like Mario or Final Fantasy or The Sims or Age of XYZ or whatever. In other words, develop a brand. You don't have to exactly clone the gameplay or the characters or the story, just make sure it's similar enough not to disappoint the fans.

That's a double edged sword. Too much like the old title and you have lost your edge. To different than the old title and you are exploiting a name.

[Anonymous]

Brian may have hit on something in his message above; it may take outsiders with money to give us a chance at retrieving some of the risk-taking of the 1980s, when we were still a fresh industry.
See also: Half-Life.

[Oppressor]

I wonder about this "developing a brand" stuff. I mean people have success in music and movies without having to be constant sequel producers.

Yes, but in music and movies you look at the stars. The developers behind computer and console games are largely invisible because they don't appear in their own games (thank God :P).

*cough* Derek The Coke Machine Slayer *cough* John Romero wants to make you his bitch *cough* Seamus "I believe all objects in the world are made of superbouncer material with a frictional coefficient of zero" Blackley *cough* I think the only reason developers are largely invisible is because their employers don't want them to be visible, and they make them sign draconian NDAs to insure that. The rest of 'em have figured out that being a loose cannon pays. Now releasing a crappy game - that's bad.

I gather there is a belief that if a developer talks techno trash as opposed to some blow dried marketdroid "keeping it reeeeeeeyuhhhl" that some competitor might pick up on the idea and scoop them. Yeah right. Like there's a quality game overpopulation problem or something. Developers have the ability to make themselves into stars any time they wish. They just need to get agents and the rest will take care of itself.

[Jim Preston]

Developers have the ability to make themselves into stars any time they wish. They just need to get agents and the rest will take care of itself.

This is completely false. Developers aren't stars now because the videogame-buying audience simply doesn't care who makes the games. Whenever I wrote any interviews with developers for the web, they were consistently poor click generators. PC Gamer's famous "God Games" issue in Sept. '99 with interviews with 25 leading developers did very poorly at retail and was, I believe, the worst selling issue of that year. Next Gen went under do in large part to being developer-centric and running lengthy articles with game makers. Only the hardcore gamers and the journalists on a site like this even know who Yu Suzuki, Yuji Naka, or Jason Rubin even are much, less care what they have to say. Developers aren't stars and won't because famous any time soon because there aren't enough gamers who give a shit who makes their games.

[Dave Long]

Hold on there, developers aren't stars here in the US, but they are most certainly stars in Japan. Those folks I mentioned are known in Japan. People come out just to hear them talk. It's an entirely different culture for games there. Part of that is the companies make them available and hold events that even the public can attend, so they're introduced to these guys and can shake their hand. The folks that make Final Fantasy and Dragon Quest are revered.

Here in the US, you can't get into E3 unless you have some ties to the industry. There's no way, other than reading a website or magazine, to find out who these people are. That's how publishers in the US have always had it and they seem to always have liked it that way too. Consider that Atari wouldn't even let you know who made the games originally. Bushnell and friends wanted those games to be from Atari and no one else. Corporate America today is basically the same way. All the real workers get no respect while some suit/corporation takes the credit. Just check the back page of a game manual...the credits almost always list all the promotional people, the marketers and for Japanese games, the localization team... but to find out who REALLY made the game, you often have to see the in-game credits. How can anyone identify with any game developer if that's the kind of credit they receive?

I think people in the US would care more if the publishers weren't so determined to hide the identities of the developers. If some guys from DMA/Rockstar North were able to get their mugs out there, people would know "those are the guys that made Grand Theft Auto III". There's very few US game makers allowed to take any real credit for their game's success.

--Dave

Addendum...BTW, G4 is changing this a little bit. Any gamer that's watching that channel is finding out who these guys are. Developers are getting a lot of face time on there. I don't think it's a foregone conclusion that people don't and won't ever care who makes the games. When developers have interesting things to say (and many of them do), there are going to be people that sit up and listen.

[DaveC]

Hold on there, developers aren't stars here in the US, but they are most certainly stars in Japan. Those folks I mentioned are known in Japan. People come out just to hear them talk. It's an entirely different culture for games there. Part of that is the companies make them available and hold events that even the public can attend, so they're introduced to these guys and can shake their hand. The folks that make Final Fantasy and Dragon Quest are revered.



Among gamers. As for the general public it's no where near the fame of movie stars or rockstars over here. My sister is over there teaching right now and I have talked to her a few times about gaming in Japan. I think people in North America tend to glamorize the gaming industry in Japan.

[Dave Long]

It's doubtful that any industry where you don't actually see the people on screen will ever approach the likes of movie stars or rock stars. However, gaming can produce a fan base for developers and here in the US, we have next to nothing, as Jim notes. At least in Japan gamers know who it is that's making the stuff and make their way to public appearances of said developers. It's a big deal when Yu Suzuki shows up to demonstrate the latest game from AM2. Has your sister attended any of these events?

I think Next Generation was ahead of its time, BTW. The mainstream critical mass wasn't there for a magazine like that. By the time people might have come around to the mag, they had atrophied into something a lot closer to every other magazine on the rack. Their biggest failing was not sticking by their guns and running that monthly interview or big feature on how games are made. It lost its "Edge" if you know what I mean.

--Dave

[DaveC]

It's doubtful that any industry where you don't actually see the people on screen will ever approach the likes of movie stars or rock stars. However, gaming can produce a fan base for developers and here in the US, we have next to nothing, as Jim notes. At least in Japan gamers know who it is that's making the stuff and make their way to public appearances of said developers. It's a big deal when Yu Suzuki shows up to demonstrate the latest game from AM2. Has your sister attended any of these events?

I think Next Generation was ahead of its time, BTW. The mainstream critical mass wasn't there for a magazine like that. By the time people might have come around to the mag, they had atrophied into something a lot closer to every other magazine on the rack. Their biggest failing was not sticking by their guns and running that monthly interview or big feature on how games are made. It lost its "Edge" if you know what I mean.

--Dave

No, she hasn't attended these events. However, it sounded like you were trying to say game makers are mainstream stars in Japan. Which they are not, at least not even close to level of musicians or TV/film stars.

[Oppressor]

It's doubtful that any industry where you don't actually see the people on screen will ever approach the likes of movie stars or rock stars.

*cough* Stephen King *cough* Tom Clancy *cough* Dean R Koontz *cough* Michael Crichton *cough* Stephen Bochco *cough* Joss Whedon *cough* George Lucas *cough* Cecil B. Demille *cough* David Fincher *cough* Danny Elfman *cough* John Williams *cough* Howard Shore *cough* Charles Kaufman...

Give it time. John Carmack is pretty much a household name. Just because no one else has marketed themselves as well yet doesn't mean it's impossible or even unlikely. Make a game that changes the industry and you can be a star too IMO.

[Jason Becker]

"Give it time. John Carmack is pretty much a household name."

Yea, among......gamers, not the mainstream. I could walk through the mall asking about all those guys you listed and get a number of responses. As for Carmack unless I was right by the local EB I would get nothing but blank stares. Carmack in name recognition is not even remotely close to any of the people you listed outside of the hardcore gaming community.

[Jim Preston]

Hold on there, developers aren't stars here in the US, but they are most certainly stars in Japan.

That's true. I didn't clarify in my original comments that the actual game makers are more well known in Japan. Having said that, they are far from the popularity of J-pop bands much less television and film stars.

When I was in Japan for the 2001 spring TGS, I had the chance to interview Sakaguchi for NextGen and talk to him about the success of the FF series. I asked him what his main motivation was for returning to the series and he responded quietly that he always wanted the respect of his father, who never took videogames seriously (I am not sure whether his father was still alive at the time).

I then asked him is his father was impressed by the cultural captial videogames had amassed in Japan since the early '80s. He was very quiet for a while and then shook his head no and the translator said he described videogames as a "second-class citizen" on the Japanese bullet trains -- not ready to pay the first class fare. I don't know whether he was being typically self-effacing or whether he honestly believes videogames are not taken as seriously in Japan as manga, anime, film or televison. My only point here is that one of the most successful and creative developers in Japan still seems to think they haven't yet earned the acceptance they deserve. Whether that is true or not, I don't know.

Nonetheless, I am skeptical whether videogame makers will achieve the sort of noteriety musicians, filmmakers and athletes earn simply because they are so very rarely seen or associated with their product. True, channels like G4 may change that, but I doubt it. This is, of course, ignoring the question of whether we even want developers to have to get to that level of celebrity. I've always found it ironic that the most successful devs I've interviewed (Wright, Ray & Greg @ Bioware, Spector, Suzuki, Meier, Molyneux, etc.) were the most modest and approachable.

[Tyjenks]

Oppressor, You really need to have someone check that cough out.

[DaveC]

Oppressor, You really need to have someone check that cough out.

Yeah, you'd think with all the oppresing he/she is doing they could afford to use some of the spoils to hire a doctor.

[Oppressor]

Oppressor, You really need to have someone check that cough out.

Yeah, you'd think with all the oppresing he/she is doing they could afford to use some of the spoils to hire a doctor.

Dammit man I am a doctor (DAI #9334765)! Haven't you noticed we're in a recession? I can't AFFORD to hire me.

[Bullhajj]

Oppressor, You really need to have someone check that cough out.

Yeah, you'd think with all the oppresing he/she is doing they could afford to use some of the spoils to hire a doctor.

Dammit man I am a doctor (DAI #9334765)! Haven't you noticed we're in a recession? I can't AFFORD to hire me.

Lol, That's Dr. Oppressor to you guys.