Binu Philip, President, Edge of Reality

Edge of Reality, based in Austin, Texas, is an independent console game developer with 76 employees and two teams, and is probably best known for a string of relatively high-profile ports and licensed games, including Nintendo 64 ports of Spider-Man and multiple games in the Tony Hawk series, as well as developed-from-scratch titles like Pitfall: The Last Expedition and Shark Tale. The studio has been in business for eight years, and will be shipping their ninth title, Over the Hedge, also published by Activision, in May.

Building on this solid background in licensed titles, Edge Of Reality has decided to step into new territory and is developing its own IP for the first time, a yet-unnamed strictly “hush, hush” next-gen project that the company has been working on for over a year - an audacious step for a company used to producing for-hire titles for major publishers.

We recently sat down with Binu Philip, president of the company, who spoke last month at SXSW ScreenBurn on “The Future of Independent Video Game Studios”, and he illuminated Edge Of Reality's history, future, and how independent console game developers can thrive in a difficult market of developer consolidation.

GS: Start off by telling us a little about how the company has evolved.

Binu Philip: We started off in 1998. The two original founders of the company were Rob Cohen and Mike Panoff. And the first few projects really reflected the type of people we had at the company at the time (which were technical people).

We worked on some N64 port projects (from the Playstation to the N64). Those projects were ideal because of the relatively short turnaround times, nine months or so. It allowed the company to get capitalized without going outside for funding. It allowed us to take on small challenges, and grow bit by bit.

When the first company started, it was really with the intent of eventually getting into full-blown development, and eventually getting into a position where we could create intellectual property that Edge of Reality owned. And in order to do that, we did a number of work-for-hire projects. Starting off with the ports, and then into developing games based on licenses and franchises that other people owned, including movies and game franchises that existed on other platforms, taking them into the consoles.

So I guess, for us the key was to build the business step-by-step over the long haul, maintain our independence, maintain ownership of our technology. Look to long-term success, and be careful about growing too fast.

GS: Should developers strive for independence?

BP: I think, at the root of it all, developers are creative people. And creative people need to be in control of their work, to own their work, and be in a position to profit from their work. When you create a game that resonates with the audience, and sells lots of copies, you should be in a position to benefit from that.

GS: Doesn't all that require a lot of patience?

BP: Anything truly worthwhile generally requires a lot of patience. It seems to me that most developers don't possess enough forethought - it's not programmed into their DNA to think very long-term. They're either thinking from project to project, or just very short term. Instead of doing what it takes to build real value over the long haul, I tend to notice that many developers think in terms of maximizing short-term money by selling their studio.

We made it a goal to save money and build our technology, and our company in order to one day create intellectual property that we own, and can benefit from, in perpetuity. Most developers, in my opinion, need to be more patient, and believe in themselves. As opposed to taking a short cut, and looking to sell a company after one or two games.

GS: Anyone can go and do work-for-hire, but that can be brutal. How do you do it and keep employees motivated and the company healthy?

BP: You have to work on games that you enjoy working on. We have many people here that enjoyed working on DreamWorks games because it is something they can play with their children. We also have Sims fans and Tony Hawk fans, so those titles were natural for us.

Another key to doing successful work-for-hire is finding projects that have the right amount of resources behind them - the right amount of time to work on them, the right amount of money for the amount of people that it's going to take. Once you have the right resources to deal with, it's a question of delivering the kind of game that the owners of the license or franchise want.

That takes communication, delivering a prototype that shows off some of the gameplay experiences that they're looking for. And then, being disciplined about hitting the eventual ship date. So the key there is making sure you deliver what your publisher wants. And making sure that you're not in some multi-year R&D phase which is out of scope for the game.

	Edge of Reality will be shipping their ninth game in May.

GS: In the end, doesn't it come down to how many copies your work-for-hire sells?

BP: That absolutely has a lot to do with it. You want to make sure that you're doing commercial work that generates royalties. So you have to be careful about the projects you pick out, as well.

Back when we had a chance to do Tony Hawk 1 for the N64, just before that we were offered a deal from Infogrames to do a Driver port. At the time, Driver was a massive success. But we ended up going with Activision and Tony Hawk because we liked Activision as a company more, and we believed in the future of Activision.

At the time, Infogrames was in questionable circumstances, and things have continued to deteriorate for Infogrames as a company. Although Driver was a larger franchise than Tony Hawk at the time, we decided to go with Tony Hawk, and in the long run, it really paid off. The deals that you don't do are almost as important as the deals you do.

GS: How does the aspiring independent developer choose a publisher?

BP: First of all, you have to make yourself known to the publishing world. Develop contacts at all the major publishers. Explain what your strengths are, and what you can do for them. You have to allow yourself time to land your first contract. You're hopefully going to be in a position where you have several offers to choose from. You might be in a position where you have to pick from a deal that's less than ideal.

In which case, you have to do your best to get through that, and use it as a learning experience to, hopefully, get your second deal. Not everyone is in a position where they're going to have their pick from five or ten contracts. You have to do the best you can, with whatever time frame you're given. That experience will be a building block. Start building out your studio resume. And hopefully go on to bigger and better projects.

GS: Should an independent developer take all the contracts they can get?

BP: I'm certainly not going to pretend I know all the answers. But I think it's a mistake to sign a deal for every game you have an opportunity for. Focus on building your studio, and developing your practices the right way, and thinking long term. You're better off executing one game the right way, than doing two or three games simultaneously, at a high degree of risk.

GS: Is there any way to make sure you're not treading water, that you really are building with each title?

BP: You have to go for the projects that are going to earn you royalties. Once you're earning royalties, money is really what amounts to freedom in this business. Once you start earning royalties, you can bonus your people well. You retain enough in savings: that buys you independence. It buys you the time to cherry-pick projects. It buys you the time to create an original property. And take your business to the next level – from a work-for-hire studio, or a port studio – to create original work that you own.

GS: How does your technology evolve, when you're an independent developer?

BP: In our case, we started off doing N64 ports, we did a quick N64 engine. When it was designed we had no idea that it was going to be used over and over again on multiple projects. Thankfully for us, Mike and Rob created an N64 engine that was very competitive and was definitely good enough for us to do five projects on.

When we evolved from N64 ports, into full-blown development, we had the renderer, and we did a very quick pass at our game tools. We weren't thinking too much in the long term, we were thinking more in terms of, ‘Okay, let's ship this game on time.' As a result, the components of our game-code were not very compartmentalized, it was very much hard-coded, and not stuff that you can easily take from game to game.

A large part of the games that we did during the earlier PS2 days were games that, aside from the renderer, had to be built from scratch, over and over again. What's different now is that – with the experience we've got going through the N64 cycle and the PS2 cycle –we can think long-term. We've spent the last couple of years designing our next toolset, which involves a lot of compartmentalized code.

We can take the AI code from one game, improve upon it, and continue to tweak it for the next game. We're continuing to iterate from solid quality, from day one with each of these game components.

GS: What about partnerships?

BP: Make sure you have partners that compliment your skills and your personality. They have to be somewhat business savvy in order to really be an equity partner in a studio. If they're going to play a back seat to everything, then that's bad, because you want their opinions on the way things are going to be run. Our partnership structure works really, really well. The three partners at our studio complement each other very, very nicely.

It's rare that we'll ultimately have a disagreement on something. When there is a disagreement, we'll try to talk about it from all sides and try to be as objective as possible. And, at the end of the day, once we've talked everything through, we'll make a decision together. It's worked for several years without any major disasters.

GS: What does the independent developer have to careful about?

BP: Be wise with how you spend your money. It's all too easy to bonus yourselves too much, when you're in a position of earning royalties. In our case, as owners, we've taken modest bonuses. We're letting the bet ride. We're investing in ourselves, to take our business to the next level, where we can take a bet on an original IP. And if the bet fails, we still have money in the bank to continue as a company. That wouldn't be the case if, as owners, we'd taken out all the money that we'd gotten in royalties. We bonus our people well, and we're very conservative with our capital.

GS: Is this a good time to be an independent developer?

BP: It's definitely a lot of fun. I remember reading that managing a game studio is a game in itself. And that's very, very true.

This is actually a really good time for us, because we're seeing the decline of some major licenses. Every major publisher is interested in original IP now. We've been working, for the last eight years on licenses and franchises. And now, as we're taking this large bet on our original game, it just so happens, the market is wide open, timing wise, for publishers to want that sort of a thing.

GS: And in conclusion?

BP: Declare your independence! You have to pay your dues. You have to think long term. You have to be conservative with your capital. You have to take care of your people. You have to continue to refine your practices, and your experience. And you really have to think long-term.

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