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Interview: How Bethesda's  Fallout 3  Helped Seal id's Sale
Interview: How Bethesda's Fallout 3 Helped Seal id's Sale
June 25, 2009 | By Kris Graft

June 25, 2009 | By Kris Graft
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There are a number of reasons why Doom house id Software sold to Bethesda Softworks parent Zenimax -- more security, positive synergies in their product lines, talent, and mutual respect.

But there are more concrete factors as well, one of which was the roaring success of Bethesda's Fallout 3, launched last year. Renowned id developer John Carmack told Gamasutra that Fallout 3's blockbuster status solidified while acquisition talks were underway.

"We looked at this and thought, if they can take this old niche IP like Fallout and turn it into this huge, successful phenomenon, then I think they are incredibly capable of taking Doom 4 and changing the world with it."

On Thursday, Gamasutra spoke with Carmack and Bethesda PR boss Pete Hines about the details surrounding the acquisition, collaborative opportunities, and whether an independent id found that it had to join a larger company in order to survive an often uncertain games industry.

First, can you explain how this relationship developed, and led to an acquisition? Everyone was floored with the news, no one saw it coming. How long was it in the works, and who was the first to say, "Hey, we should talk to id"?

John Carmack: The first contact was when [Zenimax CEO] Robert Altman talked to [id CEO] Todd Hollenshead at E3 last year, so it's been almost a year. And, yeah, I would've been shocked too, if a year ago you said Zenimax would acquire id Software. First of all, I would've said, "Who?" When Todd first mentioned this to me, I had never heard of Zenimax. It was only when they mentioned Bethesda that it was a company I could relate to there.

Whenever people would hear that id was being acquired, generally, people would think, "Well is it Activision or EA?", as if those were the only two valid companies that could do this. But when you really think about the pros and cons of an acquisition by a different company, there's a lot more there than just the street capitalization value of the company. ...

We've listened to offers -- even before Wolfenstein was even published. And usually we'd have to make trade-offs. It's nice when somebody comes to you and offers a big dollar figure for your company or something, but if you plan on continuing to work there, you have to balance things that you enjoy about your job with other things that might happen later post-acquisition: How much is your work going to matter in the future? Are you going to like the people you work with? Are your ideas going to be shot down? Are the directions that you think are important for growth, and the technology you've developed going to be supported?

You don't immediately know the answers to these things. But Zenimax turned out to be almost uniquely interesting for us. They are extremely well-capitalized -- they're not a tiny little fly-by-night organization. They don't have the massive bulk of an Activision or EA, but they do offer some degree of security, and it looks like they can deliver on the publishing side of things.

But one of the most compelling things was that all of the rollout success of Fallout 3 was happening as we were talking to them. We looked at this and thought, if they can take this old niche IP like Fallout and turn it into this huge, successful phenomenon, then I think they are incredibly capable of taking Doom 4 and changing the world with it.

From the id standpoint, we do worry about security and the future going forward. As game development has started to take up tens of millions of dollars and four years or so to develop a title, we've still been successful, and frankly, profitable. But there is always that worry as we move from 50 to 100 employees that there are a lot of employees and their families dependent on this business. And there's always that worry, what if one of our titles doesn't succeed? There's a lot of reasons why a title might not succeed; maybe it was a bad design, maybe it was a botched implementation, maybe the market has changed.

But more significantly, maybe our publisher decided it had better things to put its efforts behind. And that's been a real fear of ours in the last five or six years, as publishers have had more and more internal studios, and they have their internal studios doing products that are competitive with ours. That's an uncomfortable situation to be in. It's nothing malicious, but there are just natural run-the-numbers sort of things on where they want to focus their efforts -- and it's usually not on the titles owned by external developers for which they don't have sequel rights to. ...

With Zenimax, we avoid this conflict of interest. ... Bethesda does best-of-breed RPGs, which has no direct overlap with best-of-breed first-person shooters. So it's a situation that's entirely complementary. We have huge mutual respect and admiration here.

It almost sounds like, the way you worry about competition from publishers' internal games and security -- was the sale a survival mechanism for id?

JC: Well, it allays a lot of risk for us. We were doing just fine delivering on the game plan that we set out for ourselves a couple years ago. Certainly, we figured that being acquired was always a possibility, but we honestly thought that the best time was to go out and do great with Rage then do great with Doom 4, and that might be a reasonable time to start listening to some offers.

But the Zenimax offer was compelling enough that the idea of letting Doom 4 be the first big breakout title for id under Zenimax, it looks like as good of a time as any.

The risk reduction certainly was part of the sale, where it is nice to have a little more security than just our own internal studio. We were making the move ourselves to diversify a bit, and this speeds that up, and adds an instant layer of additional security.

It also allows us to grow a little bit more aggressively. We were tentatively expanding towards an eventual third team, but we were doing that in a slower, wait-and-see mode, taking it one step at a time. While now we can just say if great people become available, we want to hire them, because eventually we'll have a third team, and we'll be working on three titles under one roof. ... I don't think we'll expand to four or five teams. ...

How have your respective workforces reacted to the news? What do they think of the acquisition?

JC: We made a simultaneous announcement at Bethesda and at id. The first reaction was that everyone was a little bit shocked. The rumor mill wasn't terribly effective at informing anyone like this was going on, so many were caught flat-footed. ... After the announcement, I just heard from people over and over about how Fallout 3 was incredible and their favorite game of all time. And [Bethesda executive producer] Todd Howard told us of all the big id fans they have there at Bethesda. ...

Pete Hines: From Bethesda's side, there were a lot of jaws hitting the floor, a lot of "Holy shit". Everybody at our company views id the same. These guys are at the top of the industry in terms of what they have accomplished, and the amount of respect they've earned over the years.

...[id] has agreed to come up and show Rage next week to everybody at Bethesda, so everybody there can see it firsthand, because we heard amazing things about it. It's been a great meshing of cultures and personalities.

JC: We're going to take every opportunity to share our knowledge, hard-won wisdom of recent product cycles, anything we can share technology-wise, Bethesda is welcome to cherry pick. We already have slated our plans years ahead, so there aren't going to be any massive changes. We're not going to splice id Tech5 into anything Bethesda is doing. But anything they want to cherry pick, they're more than welcome to.

Pete, you mentioned a meshing of cultures. Bethesda and id are under the same roof now, Bethesda is partnering with Splash Damage, Zenimax Online is led by a former Mythic guy. So there's this common thread of old school PC gaming companies that have rapidly evolved into multiplatform development studios. Do you think that those PC roots and that culture helped both Zenimax and id find common ground as well?

PH: I think the bigger common factor is more the personality and ego, or lack thereof.

JC: I never thought of that angle, but there might be a little something to that, I'm not sure.

PH: The thing is, all the people you're talking about have spent a lot of years working in this industry: John Carmack, Todd Howard, Matt Firor. These aren't guys that just showed up five years ago. They've been doing this for a long time, and doing it really well. More than anything, the culture was a common way of looking at how video games are made, how good video games are made. ...

JC: There are also things that we want to learn from Bethesda -- the things they're doing with downloadable content, marketing, we want that to be applied on our behalf for our products. We don't want to say, "Leave us alone, we want to be exactly as we were before." We're going to do all the things we have been doing, but there are opportunities for us to improve as a result of this.

Any chance, and this could be out there, that somewhere down the line we could see a jointly-created game, or is it safe to assume products will be separate?

PH: I don't think so. They're building up their teams, and they already have four amazing brands they're working on. So they already have enough titles to work on that they own. On the flip side, Todd [Howard] and his team have their hands full with The Elder Scrolls and Fallout.

JC: I expect there will be some fun little crossover things going on, but not major products strategically dictated as some sort of collaboration.


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Comments


Kevin Reese
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Yet another great interview. Gamasutra you rock.

Z Z
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Fallout 3 is a great game, just like Morrowind, and just like Oblivion, but the thing they all have in common is that they're essentially the same game. So to say through Fallout 3 we see potential for Bethesda to take an old niche IP and turn it into a success doesn't really mean much when it's the same game you've always been creating, reskinned. Besides Fallout was an RPG to begin with so it fit well enough to keep Fallout fans somewhat happy, bring in the morrowind and oblivion fans then produce a few brand new fans. It's likely that if you fit DOOM into a Bethesda game mold you might gain new fans and the Bethesda fans, but your older fans are probably not going to be too happy.

Paul Lazenby
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I hope this works but.... honestly i don't have much faith in it.

id has a notoriously big ego (sorry) and likewise to a certain extent Bethesda.

Groups like Bethesda are the new id, but i don't see how joining up with them will help id much unless they are truly open to changing how they make games - meaning that they need to make games that are relevant today, not 10-15 years ago.

steve roger
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I am not buying this separate but equal talk. It didn't work in the South and it is not going to work here.

Christopher Corbett
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When people to discuss a lack of ego, the only conclusion one can draw is an abundance of ego. Were there no ego it wouldn't be a topic for discussion. Having said that, if they keep their product lines seperate and perhaps integrate some tech (Bethesda might benefit from stability Id traditionally has in it's code) then value exists for Zenimax. Outside of the perceived less risk for Id it's difficult to see the value for them. All this is said knowing there is much more to the story which I don't know.

Tyler Shogren
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Sell tons? Yes.

Change world? No. In fact, any game that involves shooting guns as a mechanism of winning is incapable of changing the world.

Alan Rimkeit
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Good interview. But really, I would trust John Carmack on things of this nature. Why would he sell out id just to have it screwed over? I really doubt that he is going to sell id down the river considering it has practically been his life's work. I figure it will all work itself out.



Zenimax is also not famous for buying and dismembering studios like EA used to do.

Jerome Russ
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I come away from any Carmack interview believing the man. Anyone as dedicated to a brand identity as he is to his work would want to see it succeed. The point of Bethesda being RPG, and id being FPS is also a good indicator that things will go smoothly with the major egos involved. ...although Michael Jordan did play baseball, I don't remember him telling Tony Gwynn how to hit.

Colm McAndrews
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B N> "keep Fallout fans somewhat happy"



Oh my absolutely, as a Fo fan, i am so happy about Fallout3, thanks for telling everyone how we feel.

My happiness is so incontrollable i could place C4 below bethesda's office out of joy.

Dave Endresak
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This interview echoes some of my own comments from the original announcement post on Gamasutra. It's a complementary arrangement for all parties. Primarily, I think Carmack hit the nail on the head when he mentioned Zenimax having better marketing ability in today's world, or the world market of the past 5 years or so. id needs that kind of support; it's not enough to make a good game and expect it to sell because, in many cases, it won't.



At the same time, I'm not sure why Fallout 3 would be some kind of turning point except perhaps that there was a subjective feeling of that nature at the time the acquisition began seriously being discussed. From what I have seen and read, Oblivion still has far more popularity and marketability than Fallout 3, and I'd even go so far as to say that Morrowind continues to have at least as much popularity and marketability as Oblivion, if not more.



I'm also not sure where the perception that id has a tendency to release games "when they're done" because Bethesda certainly has the same general approach, especially as far as development lifecycle is concerned. Both companies have a relatively small catalog of games, very similar to certain other companies such as Valve. Quantity doesn't equal quality, so this approach doesn't seem to be an issue as far as success of the company is concerned.



Did anyone else notice that when John Carmack spoke of Doom 4 "changing the world, " he didn't specify whether the change would be positive or negative? ^_^;;

UGOCHUKWU OKONKWO
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I WANT ID SOFTWARE...and I'LL HAVE IDSOFTWARE.

Jason Manley
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GREAT MOVE by Zenimax and Id. The entire industry had the same response..jaws hit the floor with the "What!!". Congrats guys. Truly a good biz move.

Bart Stewart
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Aside from the business angles, this interview gets me thinking about a couple of the game product possibilities that could come from having both id and Bethesda under one roof.



One -- although they downplay it at the end of the interview -- would be a game that features some kind of crossover of gameplay elements. id games have always been about simple hardcore destructive action, while Bethesda is now widely known for lush, complex, story- and character-driven RPGs... so where's the common ground on which some jointly developed game could grow?



The other possibility (which I admit gets back to the biz angle just a bit) is to remember that Zenimax also has under its roof Zenimax Online. Acquiring id means that Zenimax now has access to the gameworlds created by id, and could conceivably try turning one or more of them into its own online properties. This is probably also a bit farfetched, but while we can see what id is getting from Zenimax, what is Zenimax getting from id?


none
 
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