State of the Gaming Union
GameDaily BIZ: So how is D.I.C.E. going for you? What are you taking away from the event?
Dan Rogers: There's probably two things. On the one hand there's the whole ceremony part and the honoring of video game developers and I really think that's a neat idea. I think there's room for improvement in terms of how things are done; you know, D.I.C.E. is a great organization that's trying hard to honor and bring more respect to the video game industry... I think that's neat and it's needed.
So that's the ceremony part, sort of the excuse for everybody to come here, but the other side is what's really happening in the industry and D.I.C.E. more than any other show right now I think, it gives the people that are decision makers in this industry a chance to get together in a quieter environment where you're not pitching anybody. You know, we represent a number of game developers (500 if you add them all up together and over $60 million in business this next year), but these guys need some time, some space just to be able to talk and talk to their peers about different issues in the industry. I get a better sense for what's happening and what folks are thinking here than I do at E3 or GDC...
In terms of impressions, and my mind is mostly on what independent game developers do... but from that perspective as I've listened to things that have happened, you know we're coming off that EA Spouse type of hey, "What about me? What about the individual in this industry?" And I think that that little event, one of the reasons it resonated wasn't just because "let's nail EA." It's a much broader issue, which is that the men and women in this industry are doing some phenomenally difficult and impressive things and it's just beginning to be recognized.
That said, some of the things that I've heard and that I've been talking to people about today and yesterday, from an indie game developer's perspective if we go back ten years and we look at where the industry was, there was a lot of creativity, people were driving PS1 and the game developers really kind of ruled. We spent a lot of money, sometimes foolishly (often foolishly), made a lot of money but at some point the executives in the publishing community of which I was one at that time, we thought, "We need to get the MBAs in here." So for the last decade we've had them; the interesting thing now is that, not that we don't need them, but they found their place and perhaps too much. We've been listening to them over the last 3-4 years too much and companies like Activision and EA and others are waking up and saying, "You know what, I need new franchises. I need new ideas, and I'm not getting them on the inside. So where am I going to get them? I'm going to get them from those radicals that don't want to come work for me, that are working as independent game developers." And that's nice to see. So we're seeing a new level of respect there where a few years ago and independent game developer was somebody that you through stuff over the wall to... We're feeling and I'm hearing it from others that the publishers are really recognizing that, "Yeah we need to go with these outside groups and not all of them are going to want to be acquired."
BIZ: I wanted to ask you about the recent EA/Ubi Montreal spat over the non-compete clause. Is that something that's typical or is it unique to Ubi?
DR: It's still common. And let me tell you, again I look at things through the eyes of indie devs, but they're essentially employees, so when any indie dev signs a deal with a publisher they often are required to sign some sort of non-compete. Let's say that you're building a motorcycle game for lack of a better example. The publisher will tell you, "Listen we don't want you to build another motorcycle game as soon as you're done with this because we're going to spend $7 million or $15 million on this game and we'd really like an opportunity to have it not compete with something else in the marketplace right away." And that's a legitimate request and so the game developer signs a non-compete. "I won't compete with you for three years from the time my game comes out." Now what does that guy do best? He makes motorcycle games, and if he's got a hit product now he can't capitalize with anybody else but that publisher. That's a bit of an issue. So you kind of carefully tread through that minefield but it gets more complicated.
Let's say I can't do a motorcycle game, so now I have to go do something else. If he was really not very smart, he signed his deal and it wasn't motorcycle games, it was two-wheeled games. So now he can't do bicycles and he can't do motorcycles and you name it. And he can't do anything else that might resemble that or else he could get sued. So then he signs another deal with another company and it's a four-wheel game and the same thing happens. And over a period of 5-6 years a developer can find themselves in a situation where they can't do anything that they're good at. And there have been many developers that have had to either go back to their publishers and ask, you know beg, to get freed from those constraints so they can do something with someone else. And other developers have gone out of business as a result, at least partially as a result of not being able to compete.
So it's a huge thing and there's a balance. It's not that the publishers are bad guys; they have a legitimate concern, which is, "We need to fairly build a market for the product we've invested in." And at the same time, the developer's got a legitimate need to do what he does best. So when I read your article, I was cracking up and said, "You know, what's interesting is EA on one hand is complaining they're locked out of these employees and they do the same thing; everyone does the same thing." EA I don't believe does it at an employee level but, like every other publisher, they do it on an independent game developer level.
And that almost leads into another interesting thought. Several years ago I was an executive at Sierra Online and when I first came into that company we had the King's Quest and Leisure Suit Larry lines. And we made a conscious deliberate decision to promote individuals. So it wasn't King's Quest, it was Roberta Williams' King's Quest. Of course part of that was because she was Ken's wife and she demanded that [laughs]. But there were others that followed... and we made more money off of those franchises with the help of those individuals and by branding those individuals than we did otherwise. Phantasmagoria is probably a great example of a product that Roberta was doing King's Quest and these sort of family games and all of a sudden she said, "I want to do a horror game," and she was able to do it because people weren't necessarily interested in another King's Quest; like a Steven Spielberg they just knew that if Roberta's name was on it, it was a quality game. And we've had small pieces of that over the years. You know, Sid Meier and Dave Perry perhaps, and others. Over the next five years we're going to see more of that; I know certainly our agency will push for our clients to be shared in the branding. And ultimately it's going to help the publishers. I honestly believe that.
BIZ: Yeah, I think that's something we're seeing already, even if the developer's name isn't specifically in the title. There are lots of people who will buy the next game from Shigeru Miyamoto or Will Wright or Hideo Kojima because they trust them as game designers to make incredible games. I think it's the same sort of thing with movie goers who go to see a movie because it's directed by, say Quentin Tarantino.
DR: Absolutely. I don't buy a book because it's a Doubleday book; I buy it because it's JK Rowling's or Stephen King. And I think if we play that through the industry we're going to see more of that.
BIZ: But will publishers embrace that? Are we actually moving in that direction?
DR: I think they will reluctantly move toward it, but as independent developers stay independent and grow and you have the BioWare/Pandemics of the world or you've got Foundation 9 or even our guys (ISM's combined clients), you're going to see a lot more pressure to help at least allow the independents to develop their brands. You can do a great game and if the mass market doesn't know who it is, you've lost a tremendous amount of equity. And we realize that and that's something we're really fighting for. I don't think we're going to win overnight. We'll get little small wins here and there. In time, I think if I looked back 15 years from now we're going to see individuals branded and the makers of the game branded a lot more than we are the publisher.
BIZ: And what do you think of the D.I.C.E. television deal? That should help to bring more recognition to the industry and the individual game makers...
DR: Yeah that's going to be cool... We've known for a long time that interactive games are a mass market entertainment, and the rest of the world is just beginning to wake up and smell the coffee, but fortunately they are. So I see nothing but blue sky, really. You know, there are companies that are in trouble right now, and they're always going to make mistakes—that's the risk that they take. It is a high stakes market, just like film, just like music, and it's getting higher stakes. But the rewards are also getting much bigger. Seeing new brands emerge, and a lot of that is coming from creative outside thinkers like the independent game development community, I'm actually really enthusiastic about what I've seen here at D.I.C.E. and what the possibilities are going to be.
BIZ: Do you believe the industry needs a sort of developer's union for more standard rights and negotiating across the board?
DR: You know, I've thought about that and the issue again comes back to that R-E-S-P-E-C-T to some degree. What's interesting, and I've talked to a number of developers about this, people are realizing—I'm going to age myself here—we ain't 21 anymore. We've got families and we have children, and what am I doing for retirement? I can't keep hopping from job to job and my insurance is a mess; my 401ks don't make sense... If this industry wants to have us fluid, then I'm getting frustrated and I'm getting worried. I don't think I'm past the point where I'm worried right now, but I think that could be the beginning of what you're talking about. I'm not against [a union]; it won't hurt us. I'm not sure that it's the complete solution, and I don't think there's a game developer's union out there. There's too many diverse groups, but I certainly could see a programmer's group; I think the artists could actually fold into the Hollywood model...
I just think we're to the interesting point of people saying, "I'm concerned about my future. What am I going to do when I'm 60?" When you're 32-33 and you have a couple of kids around, pulling at your legs, you kind of wonder about that.
BIZ: What have you been hearing from developers about the challenges of making games for next-gen?
DR: The projects are getting bigger [but] they're not as big as what we thought they were going to be. If you talk to Sony they think every project should have a 150 people on it; every PS3 project should have 150 people on it. Across the industry and outside of them and perhaps at EA, that's not the size of a team. A team is 60 people or 70 people and if you get much bigger than that things start to fall apart but the challenge is: how do you grow and how can you downsize rapidly and then build up for the next project? In terms of the independent developers, they have the same challenges now with the larger teams that the publishers did. One of the primary reasons publishers would use independent developers was because they didn't have to pay for their downtime. You know, "I hire that team for 18 months and then for the other 6 months I don't have to pay for them while we're trying to figure out what to do next." As opposed to the internal team, you're paying for those 6 months and that 6 months is your profit margin. And so they would use outside development for that. And they don't have to pay the team after that.
The interesting thing for larger developers is they're now carrying that burden as well, and as they have larger teams it's much more difficult for them to absorb that. So if you've got a 70-person team and you're down for 6 months... you've got a huge amount of money you're losing in between projects. So they're having the same issues, and I think one of the things that most all of the independents are doing now is they're looking seriously at outsourcing offshore art components, primarily art; and the ones that are doing it, that's helping quite a bit. They have to be smarter. That's one of the challenges: "How do we keep these big teams and keep them busy? What happens when they're not busy? How can we bridge that timespan?"
That's one of the primary challenges. The other is technology, but I think that we've got things like the Unreal Engine which people sort of rallied around; that's helping to stabilize components. And as I've talked to many developers, Unreal is not a savior by any means, but it is a stabilizing factor. So even 3-4 years ago when more people were building their own engines, that was this point that was another unknown. So we're eliminating that to some degree, but at the same time Unreal is not completely independent and this is my personal view; I haven't heard this from anyone. It's not a completely independent company. We can't go to RenderWare now because they went to EA, so no one else is going to use that anymore. And Unreal is independent but they're small; I see an opportunity for a company like IBM (this may sound crazy) or Oracle, somebody that has a proven ability to provide tools to an industry and not compete in that industry. And I've talked to several developers about that and they really loved that idea... so that may be a piece, but definitely the technology still remains a challenge.
BIZ: Thanks, Dan.