How critical were expansions, bundles, and player-created content? Were these elements part of your vision?
TG: To design a successful game, I think about three basic pillars: deliver fantastic gameplay, create a unique graphical look, and fill a void in the marketplace. Age of Empires was the first historical real-time strategy game on the market. Microsoft was convinced, based on a previous experience, that expansion packs never make money, so they weren't interested in doing them. So, that wasn't part of the original plan.
When Age of Empires blew away Microsoft's sales forecasts, we convinced them to publish Rise of Rome, our first expansion pack. That expansion pack was the most profitable game that Microsoft had ever published. Microsoft was then convinced that expansion packs were the best way to make money.
Player-created content was always part of the strategy, although we never attempted to monetize it. We wanted player-created content to be an extra value that our customers got for free.
How did you get in touch with Microsoft in the first place?
TG: I first approached Stuart Molder at Microsoft during the 1995 Game Developers Conference. He was giving a talk on publishing games with Microsoft. As he finished his talk, Stuart was mobbed by hopeful game developers who were anxious to show off their game demos.
They were hoping for a break that would land them a major publishing deal with Microsoft. The scene reminded me of sports fans jockeying for an autograph from a revered superstar. I could tell it wasn't the best way to rope a bull.
I decided to sit in the back of the room and act disinterested. I never looked up until the mob had dissipated and Stuart was packing up his materials. On my way out, I casually told him that I headed up a game company that included some legends like Bruce Shelley, co-designer of Civilization. This was my ticket to further conversation, as Stuart had appeared on a television show with Bruce. I told him we were working on something big, and I would be happy to let him know when we were ready to demo it. We exchanged business cards, and I departed, hoping that I had made a memorable impression.
Six months later, I called Stuart and left a message that we were ready to show our game. Microsoft had a team down in Dallas within the week. Microsoft was still new to the video game business and was struggling to be taken seriously by gamers. They had not yet made a hit game. They were actively looking for a gem that could plant them firmly in the center of the computer game business. Microsoft was wowed by our demo, and Ensemble Studios was on the dance floor.
It's a validating feeling to be wooed by Microsoft. They are great at giving you attention when they want something. They threw some really crazy parties. On one occasion, they threw a Roman toga party. The entire San Jose basketball arena was commandeered for this soiree. It was the most lavish party that I've been to. Everyone was required to wear a toga supplied by Microsoft. This party featured a table piled high with turkey legs, giant goblets of wine, and female models posing as white statues standing atop columns of marble. There were wild animals, gladiators, slaves, games, fortunetellers, fire jugglers, and more wine. All this was led by the Caesar of ceremonies, Alex St. John.
The most memorable event was when a fully-grown 400-pound lion escaped from its cage and walked the floor freely amid hundreds of drunken, dumbfounded guests carrying turkey legs. Major catastrophe was avoided as the lion was shooed back to his cage without incident. I never saw another giant man-eating cat at a Microsoft party again.
While getting Microsoft to the table was an easy task, negotiations were a long, drawn-out process. We shopped the game to multiple publishers, including Hasbro Interactive, Electronic Arts, and 7th Level. When negotiating with Microsoft, it's important to play the field. Microsoft negotiates hard. They don't respect you unless you do the same. I could write chapters just on negotiating with Microsoft. However, one important rule is "do not get into the ring with Microsoft unless you're prepared to go the distance. If the negotiation takes under six months, you got a bad deal."
Age of Empires
Negotiations are often about compromise. Was this your experience with Microsoft? Did you ultimately get a fair deal?
TG: Negotiation is often about compromise; however, negotiating with Microsoft is more often about leverage. In my years of negotiating with them, I didn't often see them give in on any points they didn't have to, and I learned not to give in on any. I learned that when negotiating with Microsoft, you will only get what you ratchet away from them. With other companies, I've experienced willingness to compromise. It's just not Microsoft's style, though. I felt that we always got a fair deal with Microsoft, but it was always a lot of work.
Can you give me any examples of the sort of things that Ensemble and Microsoft haggled about?
TG: Money was the main issue -- royalty rates versus the development advance. The greater the cost that the developer is willing to pay for on the front end of the project, the higher the royalty rate the developer deserves on the back end. We would have liked to have retained the intellectual property rights to Age of Empires, but since this was our first game and we had no track record, I didn't think we had the leverage to swing it. I also wanted control over marketing, but we never saw eye-to-eye on that point.
Was a sequel or trilogy part of the deal?
TG: No, we were a little naïve at this point. Our first sequel proposal included eight games over four years. This was crazy, but Microsoft was drinking the same Kool-Aid that we were, and they thought it was a great proposal. I'm sure glad that we didn't sign the deal, because we would go on to average two years per game. We would have been locked up for 16 years.
I did know that the next Age of Empires game would be a medieval game, but that game wasn't negotiated until long after the first Age of Empires shipped. Six months into the development of Age of Empires II, we still had not finalized the deal terms with Microsoft. To compel Microsoft to compromise on terms, we made a difficult decision to stop work on the project, which jeopardized the holiday ship date.
When Microsoft sent their production team down to Dallas to see the latest progress, they found the entire company playing ping-pong, billiards, video games, and board games. We were doing anything but working on Age of Empires. That caused something to happen up at Microsoft, because within a week, we had finalized the deal terms that we had been negotiating for six months.
The third Age of Empires topic was the most controversial. Some of us wanted to do the colonial time frame, and some of us wanted to move straight into World War I and II. It was the subject of heated debate within Ensemble. Microsoft was very happy to keep their distance from this topic, so they left the issue to us.