Developer Cash Printers
Posted on Feb 1, 2011 in History and attached to Fall of the Independents
Last week I looked at several development studios who were bought out by larger companies. Some of them faded away, some of them got screwed over, and some of them were successful and retained creative control over their projects. As a follow-up post to this, I want to take a look at independant studios which have created a 'safety net' of sorts to prevent themselves from disappearing into the mouth of one of the publisher giants.
Increasing the Cash Flow
The best way to stay independant is to increase cash flow. Game development is a time-consuming process, and many studios are developing their latest and greatest games from the profits of their last releases. This money is not constantly flowing in, because games don't really have a habit of selling much after the first few weeks after release.
Considering this, it's easy to see that many studios can run out of their own money well before a game is completed. This is where the publishers come in. They provide funding for a studio to complete a game, in return for a large cut of the profits. The problems arise when the publishers impose deadlines, conditions, and so on - these usually conflict with the developer's interests. The result is a game that the developers aren't exactly happy with, is usually rushed to meet a specific release date, and is overall not as good as it should have been.
So, how do independants avoid getting crushed by the publishers? The answer is easy: find a way to make money that is constantly rolling in (or at least more frequently than once every game release). Unfortunately, it is very difficult for anyone to do this - even when you aren't trying to make games at the same time. Nevertheless, some studios have found a way to do just that.
Epic - Unreal Engine
Epic Games are well known for the Unreal Tournament and Gears of War series, among others. They also developed the Unreal Engine, which is designed primarily as an engine to be licensed out to other developers. This has been hugely successful, as can be seen when you look at the list of games that use it. Unreal Engine licenses aren't cheap, and allow Epic to spend more time developing their games, as they have an additional source of revenue.
Epic put a lot of development time and effort into the Unreal Engine for this exact reason. They could have stopped developing it when they had enough to develop the games they wanted to make, but continued on, knowing that if they had a polished engine, it would be very popular in the game industry. That initial extra effort has proven to be profitable, as Unreal Engine 3 is easily the most popular engine in common use today.
Blizzard - World of Warcraft
Love it or hate it, World of Warcraft has certainly made Blizzard Entertainment a lot of money. WoW is easily the biggest MMO game right now, and has been for years. Blizzard are raking in subscriptions from 10 million or so users every month - even with costs to maintain servers and so on, that's a lot of cash.
Blizzard haven't really been independent for a long time (most recently, they merged with Activision in 2008), so they aren't really an independent studio, from a technical standpoint. Regardless, they have been so successful, they basically have complete control over what they do, even with publishers looming over them. This is most evident considering that after 2008's merge, the joint company was renamed Activision Blizzard. Blizzard had grown so large at that point, they were considered equal enough to Activision to deserve to be in the company name.
Valve - Steam
Valve's first game was Half-Life. 6 years later, they released Half-Life 2, as well as Steam, a digital distribution platform. Back in 2004, not many people liked the idea of Steam (or indeed digital distribution in general), but today Steam is the leader of the pack, by a large margin. Steam has a huge userbase and a huge list of games, both of which (I assume) equal huge sales and huge profits.
Valve have been able to take their sweet time doing anything with Half-Life 2: Episode Three because they don't have any pressing need to release it. This is because of their huge profits rolling in from Steam sales. This is the ultimate way to avoid being swallowed by a publisher: become a publisher yourself. Valve have even started aquiring several smaller studios, much like the larger, retail publishers do. Let's hope they don't become too evil.
It Prints Money!
I guess it's just a life cycle that may be present in a lot of companies - they get bigger, or they get aquired by another studio in their attempt to get bigger. While I like to see independant studios succeed, it's inevitable that at one point or another, they will be part of a larger collection.
Recently, we have seen smaller 'indie' developers (consisting of one or two people) start popping up - this is good to hear, but who knows what will happen to these people in 5 or 10 years? Will they be aquired by a big company, or become a big company themselves? Or will they somehow manage to avoid both of these cases and stay small and successful? Only time will tell.
