Is venture capital drying up? Or is
money still out there for game companies to get?
BG: Let's see. There has been a lot of rain lately. I don't have a strong sense
of what's going on at general game companies. I think it's harder to invest in
companies that want to compete with Electronic Arts and Microsoft. They have
franchises, and they have world-class talent and a bunch of distribution power.
Dean
Takahashi covers all the gaming investments. I'm not in touch with all of that.
He says that it's the biggest number in 2008 that he's ever seen. Sounds right
to me. I think in general, venture investors hate to invest in what they call "hits
businesses". The business has to have a breakthrough hit in order to
succeed.
The
reason is that it's hard for analysts, especially non-gamers, to guess in
advance what a hit is or what's going to be a hit. They like to invest in
technology systems. There have been a lot of bets in virtual worlds.
I think there will be another round of investments in virtual worlds. You know,
the iPhone is kind of new, so the venture guys do like betting on discontinuous
events. But I don't know. I'm not paying attention to all the game investments
being made.
What shape do you think the game
industry is going to take in the next few years? There is all this publisher
closure and consolidation but also an explosion of indie power on digital
distribution platforms and things like that.
BG: Well, I think the internet changes everything. I think in general, the
hours of game and internet usage keeps increasing, and that's likely to turn
into money. So, the real issue with the console video game business is not
usage and popularity but cost. And so our costs need to come down.
I also think the internet is a way to get a better return on the money
invested, because the hours of usage of games have risen with budgets. So, the
budgets have gone from five million to 25 million, and the hours of usage for
PC software has also grown, but the revenue hasn't. The number of units is up
maybe 25 percent, and the price has gone up 10 percent, so you have your costs
going up by a factor of five and the revenue going up by half.
One way
or another, if you get people to pay for the extra hours, everybody's problem
would be solved. So, if you had people that play Battlefield -- or let me think of a non EA game -- Half-Life or Counter-Strike, some of the most-played games of all time, and
people would pay the same amount if they played it for 20 hours or 400 hours.
The
internet gives you a chance to do what Blizzard did with World of Warcraft, charge for the extra hours. And if you can
charge for the extra hours, it solves everything.
Yeah, it kind of solves everything except from the perspective of the consumer,
unless they don't realize it... I mean, if you're playing Counter-Strike now and suddenly you have to pay, then that looks
like a horrible thing for a consumer. If Counter-Strike
3 comes out, and that is free-to-play, pay-for-items or something like
that, that doesn't look like a terrible value anymore. I mean, it's gotta be
planned from the beginning, obviously.
BG: No. All Counter-Strike would have
to say is, "You know, for 50 bucks, you can play for a hundred hours, and
after that, you have to watch commercials," you know. That's fair.
[laughs] Yeah, I guess so. It depends on
what consumers are willing to stomach.
BG: Yeah. And if they didn't know the difference, they'd think it was fine.
Otherwise, you could play Counter-Strike
for free with stick figures, or you could buy art. You know, you pay extra for the
art. That's another way to do it.
At some point, you look up and like, "Okay, you can't have Counter-Strike anymore because the costs
have just gone up by a factor of five, so you have to start paying 250 bucks
for Counter-Strike, or what we'll do
is charge 30 bucks for it, and then, you know, 25 cents an hour after 80 hours."
It's just a pricing model. Either you got to get more revenue for the
development dollars or you cut costs.
It seems unfortunate that a lot of people
have figured that cutting costs is the way. But cutting costs just sort of gets
you less of the game a lot of time.
BG: Yeah, I guess that's the way it is with products. Or you say, video game
designers ought to be paid like schoolteachers instead of like computer
scientists.
You can do that, too, and start paying them 38 grand a year, and
after they put in 10 years, they can get 65 grand a year. That will reduce
costs. But the thing it that the Will Wrights of the world are becoming
investment bankers.
[laughs] Yeah, I was talking Yuji Naka,
the Sonic Team guy, in the past, and he was talking about how in the film
industry, the further up you move in the chain, a director is still a director,
no matter how acclaimed he is. But in games, if you want to advance your
career, you just got to get pushed up into the executive ranks, and you don't
actually get to make a product anymore. It seems like a different sort of
payment structure would help keep creators creating.
BG: That attitude's wrong.
How so?
BG: Let me write out a list here -- 20 favorite designers over the last 20
years, and see what they did in their job after making the game that you like
the best. And you're going to find most of them kept designing.
So, you can
always do it in an organization. You can say to the quarterback of that team --
he had a great year, let's make him the coach this year. Organizations can do
that, but most don't.
Right, but as far as I understand,
designers aren't paid necessarily more as their games are more popular at the
level of scale that, say, as film directors do. So, if you want to advance your
career from a financial standpoint. Like, say you become a creative director.
You're not necessarily designing, you're overseeing design. Do you know what I
mean?
BG: It's all in organization choices. Again, it's like if you're a football
team, if you want, you can call it quarterback. "Congratulations, great
year. Next year, you're the coach." But most teams don't do that.
I
actually don't know the details, but I think Shigeru Miyamoto at Nintendo
probably did not get increasing value as the games he was responsible for got
outside success. That may be more Japanese. That's probably an issue for Hollywood movie stars back when they were
employed.
Right. In the studio system and all.
BG: Yeah. So, it's not a requirement. It's a structural choice that companies
in the industry can make. In all creative businesses, there's kind of a
struggle for value, and you can always go into a creative business and see how
the business guys are claiming more than their fair share of the value. It's
kind of what they're good at.
It's true. That's why they're business
guys.
BG: You can go back to Marxism if you want, but history is full of struggles of
when value gets creative on trying to decide who gets credit and rewards.