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What next for independent and in-house studios?

Looking at the state of play for the world's games studios
by Owain Bennallack
April 14, 2008

Inspired by the results of last week's Develop 100, Develop exec editor Owain Bennallack, who also wroe entries for the book, analyses the trends from the listing of the world's most successful studios…

Writing studio profiles for the Develop 100 always turns up surprises. Who knew quirky Cooking Mama had sold enough to propel Office Create into our top 50? And do we really need so many award-winning Canadian studios who’ve never made a game you’ve played?

Reviewing a year can reveal big trends, too, but here 2007 was messy. In a period dominated by the push-me-pull-you between independent developers, publishers and console manufacturers, seemingly anything went.

We had mega-mergers, such as Activision Blizzard. And yet we also saw Microsoft slim down by returning Bungie to independence. So perhaps format holders don’t need to own studios? Except that Sony bought Evolution in September, after the huge success of MotorStorm.

Traveller’s Tales went to Warner, Bizarre Creations to Activision, Climax Racing to Disney - an old story reasserting itself anew. In recent years, Elevation Partners constructed a super-developer and indicated new money from outside of games might reshape things, but by October it was flogging BioWare and Pandemic to… Electronic Arts.

But it doesn’t even boil down to EA buying whoever it wants – not until it secures Take Two, not to mention Ubisoft.

SAME OLD DIFFERENCE
As empire building execs reshape the industry like Greek gods playing dice over chessboards and canapés, excited talk on the ground in 2007 as ever concerned new distribution channels and even – contrary to all visible evidence – the resurgence of independent development. In reality, 2007 supplied more prosaic truths: Making blockbuster games is ever more entrenched with the biggest players, and voluble people with opinions don’t like working for publishers. Bungie is perhaps the exception that proves the rule, making headlines precisely because going it alone as a big independent is these days newsworthy.

Die-hard romantics will lament this state of affairs, but a cadre of senior management now exists who’ve never known independence nor aspire to it. Typical is a jewel Microsoft has kept hold of – Forza developer Turn 10 – whose head says he’d prefer to make games snug in Redmond’s cocoon than worry about balancing the books.

PlayStation Home and Xbox Live Arcade, casual games, mobile distribution, advertising, micro-transactions – these might eventually change up the playing field, but for now it’s business as usual. I’m no longer even convinced the death of boxed retail product will truly open things up. Some newcomers will emerge, but access to well-managed talent, deep pockets and marketing blowouts are the constituents of a nearly all modern game hits, and digital distribution won’t change that.

For all the hand waving over Wii or XBLA, what’s really changed recently in mainstream gaming? Most of the business model innovation that’s latterly come to consoles has been on PCs for over a decade. New ideas are being explored – particularly cross-media projects like Guitar Hero Aerosmith and EA’s game-into-movie Dead Space – but again, it’s money, scale and corporate credibility that enables them.

OWNERSHIP NOT FOR SALE
In 2008, just like 1998, it still boils down to intellectual property. Whoever owns the content has the most power. Thus merging to own as much as you can makes sense.

In some businesses, such as music, IP ownership is in play. Stars like Radiohead sense an opportunity to regain control, and the unsigned artist who’s a legend on his own MySpace page is now routine. Accordingly, private equity boss Guy Hands, who bought struggling EMI, is able to slash back the company’s ‘waste’, from mews houses to £20,000 budgets for candles. i.e. the sort of fluff that was the music industry until recently.

With free music everywhere, do you want to own the songs, the talent, iTunes or the T-shirt stall? As the question is answered, the power will shift. In games, nothing has changed regarding IP ownership. For every Introversion or Telltale Games there are hundreds of developers who want to make the next huge Halo or Zelda and accept the ownership compromises required.

It’s hard then to see 2008 or even 2009 playing out differently to 2007. The big will get bigger, the small smaller.

On that last point, I mean nimble start-ups being formed to exploit those new niche channels, as opposed to established, high-quality outfits shrinking. For the few sizeable indie Euro studios left – Realtime Worlds, Rebellion, Blitz, Eurocom, Kuju, and a handful of others – life looks grand, unfavourable exchange rates or grant gripes aside.

Fewer big indies means more work for those who remain. The problem is that remaining independent seems perversely risky, compared to the instant reward some would get for kissing a bloated suitor’s hand. Not a bad problem to have.

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