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The New Studio Model


October 29, 2004
 

It doesn't bother me too much when I run across the standard "decline of the industry" article from the gaming press. Every gaming journalist seems to have his or her own bone to pick. And it certainly makes for a good headline.

But it gets scary when the mainstream press starts to pick up on the idea. Reuters says there's a "crisis of creativity." CNN says, "it's easy to believe innovation is dying." The Philadelphia Inquirer says that seeing the same brand names, like Mario, Lara, and Sonic, over and over again is "the gaming equivalent of watching non-talents such as Anna Nicole Smith and Paris Hilton on TV."

We're at a creative crossroads here. It's no breakthrough statement to say that the game industry has been remarkable lately for being unremarkable: derivative games, derivative sequels, and derivative licensed properties. But maybe the real lack of creativity is in our approach to the fundamental management structure.

Publishers will tell you that the public wants games based on existing intellectual property. On the other hand, you can argue that the higher sales figures for licensed properties are the result of a limited selection of good, original games and the publishers' lack of willingness to get behind anything, marketing-wise, that isn't already an existing brand.

At the same time, the Entertainment Software Association recently released a survey showing that about one-third of gamers would like to see fewer licensed titles, especially as technology expands the boundaries of what's possible.
Regardless, the publishers aren't flashing the green lights very often for new, original titles, while those that are produced wither on the vine, unadvertised and unappreciated.

Meanwhile, independent developers are fighting a two-front war: maintain creative integrity and pay the rent. Development houses are being gobbled up by larger publishers at an alarming rate, and those that fail to be assimilated have a tough time making ends meet. Sure, there are quite a few successful independent developers right now. But how long will they stay in control of their destinies before business pressures and a lucrative offer lure them into a publisher's system? There always will be notable exceptions, of course, but I already miss the days when companies such as Rare, Westwood, Looking Glass, and Bullfrog made names for themselves by pushing the creative envelope.

Developers and publishers need to reach a compromise that balances the security and pre-existing audiences that licensed IPs bring with the developers' itch to get their original game concepts on store shelves.

What studio system offers American McGee the best chance to create his next videogame? Is there something better for Peter Jackson than a long-term relationship with Electronic Arts? Would a new perspective on game development offer J.K. Rowling the ability to direct the next Harry Potter game exactly the way she wants it, with just the right level of involvement?

Looking at these examples, it's apparent that the industry needs a hybrid production model, one that alleviates the business and administrative headaches of the creative visionaries, but doesn't turn over creative control of original IP to publishers.

This kind of model - a hybrid of current game development structure and the production-end structure common to Hollywood - is well within our grasp.

Original IP

We say we want to return to focusing on creating original IP. What are we really talking about?

  • Publishers desire less financial risk.
  • Creative visionaries desire the opportunity to make the games they've always wanted to make, with full creative control.
  • Developers (programmers, artists, animators, and designers) desire creative, comfortable environments that place the team members first.

These ideas are possible if we rethink the way publishers organize internal development studios. Right now, several publishers are moving toward a model where off-site development houses are consolidated into a few, central locations. EA has this down to a science and other publishers are following. The centralized model reduces overhead, encourages sharing resources, and streamlines the entire development process.

While that makes plenty of business sense for the publisher, it's wrongheaded from a creative perspective. Centralization more often than not stifles creativity, or it merely appears to, which is almost as bad because it can scare away talented individuals.

So, how do you marry the low overhead of centralized development with the creative, fresh ideas that will earn the most money?

In the New Studio Model, a publisher establishes a new internal studio - art, programming, animation, audio, general administration, legal, and quality assurance - into a Development Core that can handle four to six projects in a support role. The mission of this studio is to apply its development capabilities to original IP, acting in support roles for the lead programmers and art directors on the projects.

This Core focuses solely on original IP. Projects based on existing brands are directed to traditional publisher studios, while the publisher's flagship studio continues to provide common resources, such as sales, marketing, and human resources support. These don't need to be on site with the Core.

Ideally, the Core has a strong management infrastructure with common goals that allow it to operate effectively. While that may sound awfully corporate for a developer, it's not so different than a current developer/publisher relationship. The key difference is that this corporate structure has clearly defined business goals that leave the creative goals in the hands of developers.

The Core's role encompasses all the needs of videogame development, short of the top-level talent and creativity. By itself, the Core can handle the nuts-and-bolts end of the videogame equation. The Core, then, is organized like a fully-equipped Hollywood production studio. Everything you need to make a movie is under one roof.

You Bring the Design, We'll Do the Heavy Lifting


What They Need

Publishers Need

  • Balanced game catalogs between original IP and licensed properties
  • Top-notch development talent
  • Reduced financial risks and cost certainty

Visionaries Need

  • Opportunities to develop original IP while maintaining creative integrity
  • To retain rights to that original IP

Developers Need

  • More creative opportunities
    Greater share of financial rewards
  • Greater personal exposure and recognition
 

Now that you've got the nuts and bolts in place, it's time to attract the top-level talent that will provide the spark of creative life.
Let's envision a model where a publisher invites top-level talent and offers them the opportunity to control their creative destiny on a single-contract basis, with the Core providing the heavy lifting capabilities.

Imagine the possibilities for a publisher who sets up these kinds of relationships, where the likes of Peter Jackson (director, Lord of the Rings trilogy), Warren Spector (designer, Deus Ex), and Patrice Desilets (creative director, Prince of Persia: The Sands of Time) are all working in-house solely to develop the most creative games possible. The common thread between all these visionaries would be the desire to embark on the creative endeavor they've always dreamed about without the headache of managing a developer.

The Core makes that possible with its modular development scheme and support capabilities. Similar to how a Hollywood production studio operates with top-level writers and directors, the creative gaming leads - for example, the lead programmer or lead programming team, the art director, or the lead designer - partner with the publisher and direct the work of the Core to support their game designs.

As we'll see, a three-part relationship (see "What They Do") crafted along these lines stabilizes the often tricky relationships between publishers and the creative talent that drives new properties. Moreover, it provides a stable, creative environment for the team members who make up the Core.

A Win for the Publisher

The publisher is fronting the cost for the Core, a centralized development studio that can service four to six development teams. Surely, this is a major financial risk. How does the New Studio Model work for the publisher?

Attracting key, creative talent. By offering the opportunity to work on its own game, a studio stands the chance of working with some of the most creative individuals in the industry. Done right, the Core concept allows a publisher to contact key creative talent and essentially toss them the keys to a top-notch development studio. It's a chance to finally make the game they've always wanted, but without the risk of striking out on their own and creating a brand new studio from the ground up.

To a visionary - perhaps one who has struggled in the past with projects assigned to her or him by a publisher and a marketing department with their own agendas - this is an enticing prospect.

The publisher will invite this key design visionary to set up an internal development team within the Core to craft the project of the visionary's choice. Using the raw materials of the Core - think of Hollywood's camera, costume and carpenters - visionaries could design their games without interference, set up a development schedule, and control their own destinies in much the same way they might have done had they formed a studio.

Shared resources equal lower costs. The structure of the Core is similar to the current, well-established model executed by EA. By combining the best development teams into a central studio model with shared resources, the publisher enjoys significant cost savings.

Manpower is a publisher's largest expense. But under the New Studio Model, the publisher is contracting talent, as opposed to hiring outright.

Under the model, the costs of the Core, along with the benefits, equipment, and other non-development costs, are shared with the visionary via contractual deals in which those costs are covered through a shared royalty structure. Again, we come back to a Hollywood example where the visionary shares the costs to get the game done in exchange for the greater potential on backend sales. The lower overall cost of the Core adds to this value, too: The shared resources and lower overhead result in even greater profit potential.

What we have, then, is a model where the publisher minimizes financial risk, while the visionary is encouraged to take an even greater ownership stake in the product being delivered.

Not every game that emerges from the Core would be a blockbuster success, of course. But I'm betting that the combination of cutting-edge talent, license-free original IP, and low overhead would provide a far greater chance for profitability.

Let go of the creative, keep control of the business. In the New Studio Model, the publisher relinquishes creative control to the visionary. On the other hand, the publisher retains business control of the Core. Is this a negative or a positive aspect? In the long term, it's a tremendous positive. Let someone like Shigeru Miyamoto handle the Miyamoto vision. The project's overall status and funding would still be balanced by a publisher partner with business sensibilities. With a centralized Core operating with robust, shared resources and visionaries who are the cream of the crop, the "it's done when it's done" mentality would be an exception and not the rule.

Besides, publishers need to stick to what they know best: marketing, sales, tech support, IT, and human relations. Let the visionaries handle what they know best: the ideas that spell the difference between a game you rent and a game you pre-order and tell all your friends about.

A Win for the Visionary

Make the game you've always wanted to make. What's in it for the visionaries? It's simple, really. The New Studio Model allows visionaries to try their hands at making games without the risk of personally funding a studio.

Take the typical creative lead of a top-selling game. This designer/producer/artist/programmer might have a dynamite game concept, possibly several, sitting on his or her home computer. But the developer might not have the desire or the financial wherewithal to make a gamble on a new company. However, he or she might be willing to take control of a bigger and better project, given a more realistic opportunity. The New Studio Model, with a sense of cost certainty and allowable creativity, might be the best bet.

For industry veterans who choose to participate in the New Studio Model, the ability to work on a project of their choice holds real value. Very few of us get to work on our "dream game," but this model would give more individuals the option to work on the game of their choice.

While the New Studio Model would certainly attract the unknown stars of our industry, what would happen to people like Louis Castle and Jason Rubin who already have the means to start their own company (or, in many cases, have already been there and done that)?

For these veterans, the New Studio Model contracts could be double-tiered, offering fewer benefits for rising stars looking for a break and greater benefits for those visionaries with a proven track record. Additionally, the New Studio Model would offer seasoned veterans the opportunity to take full creative control of a project while removing the headache of managing the day-to-day operation of an independent company. With the cooperation of the publisher and the skills of the Core, these veterans could focus 100 percent on making great games.

Hollywood talent players. Through my experience working on previous Shiny titles, I've met more than a handful of Hollywood visionaries who are itching to get involved in games. The New Studio Model would allow these Hollywood names to get a game project up and running, while maintaining full creative control. At the upper levels of Hollywood, these visionaries could rely on the increased publisher support to allow them to direct the project as they see fit - as much or as little as possible, depending on their interest or the demands of their Hollywood projects.

Keep your IP to yourself. Imagine the difference between Will Wright creating The Sims for EA, and Will Wright owning The Sims himself.

This is perhaps the most important aspect of this exercise. Imagine a model that rewards the individuals who dream up new IPs by letting them retain the rights to their IP, rather than defaulting those rights to the publisher.

"Why would any publisher let the visionaries own the rights to their own brilliant ideas?" you ask. After all, the publisher coughed up the money. It's never been particularly fair, but hey, neither is life. Publishers won't hand over their revenue streams without something significant in return. The trick here is to make the deal a winning situation for both parties.

I propose that, under the New Studio Model, the visionaries own their IPs and earn royalties based on it. In turn, the publisher would have rights to publish games based on that IP until it passes on a first-look option to produce a game for a specific period of time. Again, this is akin to how Hollywood operates. Producers and studios often purchase the rights to produce films based on original IP (books, for example) for a fixed period of time. The writer retains the rights to the original IP. Kubrick and Nicholson be damned; Stephen King will always ultimately own The Shining.

Done with games, this model encourages greater creativity and provides the most beneficial environment for both the visionaries who actually dream up new properties, and the publishers that want to make profitable games. The visionary owns the IP outright, but the publisher basically owns the IP, too - or, at least, the part of the IP that actually makes money.

As it stands today, our industry is filled with creative ideas that developers simply aren't willing to talk about for fear of losing control of them to publishers. With IP rights defaulting to the visionary, we'll see more cutting-edge and creative titles to expand our gaming audience.

A Win for the Developers


What They Do

Publishers

  • Operate the day-to-day business functions of the Core
  • Manage common publisher resources such as legal and quality assurance
  • Handle business decisions

Visionaries

  • Control creative development
  • Direct the development team of the Core

Developers

  • Create the game (art, animation, level design, programming, scripting, audio)
 

What about the grunts in the development team, the guys and gals doing the real work? After all, the developers - people who actually make the games - must benefit as well.

A bigger piece of the pie. In our model, the developers would be either contracted by the visionary directly or hired by the Core, depending on the visionary's interest level in the process. Contracted developers would operate under single-game contracts, organized along the same lines as every Hollywood studio. It's a lowered vision for job security, sure, but the positive benefit to offset that would be contracts that stipulate significantly greater royalty payments.

While it's fairly common for development teams of reasonably successful games to reap gross royalty payments of $1 million or more, the publisher of the title often earns an enormous percent of the backend profit. For the New Studio Model, I suggest that in order to attract the top talent, the developers receive an increased share of the profit in their royalty pool. This added incentive would encourage a greater sense of ownership in the final product, resulting in higher quality overall.

Work directly with visionaries. Developers would be working with some of the premier creative minds in the business. The opportunity to work with Hollywood directors and game industry brand names would be enough to lure some of the top talent currently toiling for obscure development teams.

As mentioned before, developers working under the New Studio Model would be single-game contractors, just like Hollywood talent. An added benefit to this arrangement is the opportunity for developers to attach themselves to successful brands and network with the visionaries creating those brands.

In the end, the developers can finally take credit where credit is due for their work on a project. Very often, their work is hidden from view by publishers fearful of recruiters and competitive studios. But working within the New Studio Model, publishers are best served by actually promoting the talent working under their aegis, as better talent overall serves to attract the visionaries who drive the commerce engines.

Creature comforts. Over the years, I've been fortunate to have jobs at companies willing to support their teams with the tools they need to get the job done. But from visiting other developers, I've noticed that not everyone gets this support. Why are publishers saddling developers with rickety gear?

With centralized purchasing power, teams working in the Core could be equipped with cutting-edge equipment and software tools. Decisions about the office would be made with the team members in mind. Comfortable chairs and large computer monitors would be standard. As equipment would be purchased or leased at the outset of each project, computers would have plenty of horsepower for the entire development cycle. Creature comforts such as ample desk space, television hook-ups and HDTV monitors would be standard. Every effort would be made to equip team members with everything they need to make a AAA game.

Since the visionary is only a part of the talent required to finish a game, the publisher would make all efforts to create an attractive development environment. Studios would be located in reasonably priced places to live, near Los Angeles, San Francisco, and New York but on the outskirts where publisher would be able to pass cost savings onto developer salaries. Offices would revolve around team member needs, with Aeron chairs, dual 21-inch monitors, and fast computers. You get the talent you pay for.

A Shock to the System?

New ideas and new technologies always disrupt the marketplace. IBM thought the hardware was important and left the software to Gates. Polaroid scoffed at digital cameras. Dot-coms created both the fantastically wealthy and the fantastically silly.
Can we learn from other industries, transform our practices, and create a host of new, great games? Can we do it without making someone the victim?

I think we have to.

The media says creativity is dying in the gaming industry. They're talking about game design ideas. But perhaps the real lack of creativity is in our approach to the fundamental management structure.

We all need to take more ownership in our industry and use our collective brainpower to solve the problems that won't solve themselves. Maybe part of the solution is a revised model for studio production, as I've suggested. There are lots of ideas out there, in Game Developer magazine and on personal blogs, for example. I encourage everyone to take a stab at some creative solutions and submit them to a public forum.

_____________________________________________________


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