Indie developers get in on the action
Like big-budget movies, video games can cost tens of millions of dollars and take years to produce.
Top game studios have strict, high-pressure deadlines, large development teams and lots of overhead costs. With so much at stake, publishers have become conservative, preferring to put the big development and marketing dollars behind a sure thing.
In 2007, eight of the 10 best-selling games - including "Halo 3," "Call of Duty IV" and "Mario Party 8" - were sequels to previous hits. Together, they sold more than 27 million copies in the U.S.
"We essentially have been building really large, blockbuster titles. Team members become very specialized - which is great, because they definitely know their trade - but getting new ideas was more challenging under that structure," said John Hight, director of product development for Sony's internal game studios, echoing sentiments of executives from several companies. "There is a tendency to be very careful and sometimes that can stymie innovation."
But a new marketplace for creative, offbeat and low-cost games has emerged with the latest generation of consoles.
Microsoft's Xbox 360, Nintendo's Wii and Sony's PlayStation 3 can all be connected to the Internet and the companies have developed networks over which games and other content is bought and sold.
Small, independent studios, such as Torpex Games, are emerging to create those games, and the console makers are scrambling to sign them up.
From his Newcastle, Wash., home, Bill Dugan is leading a team of seven developers building "Schizoid," an arcade-style game in which players fight abstract, glowing space creatures such as the Scorpio, which he described as "sort of like a giant space lobster."
The game, due out on Microsoft's Xbox Live Arcade later this year, also features a unique cooperative play style in which players can defeat only enemies that match the color of their spaceship. They have to work together to defend each other to advance.
Dugan, a veteran video-game developer, last worked at Activision on a team of 86 people building "Spider-Man 2."
His bootstrap startup isn't hemmed in by the same economics of the big-budget studio system.
"With the risk so much lower with a small team, I think it's possible to experiment a lot more," he said. "I think you can come out with a really weird and odd game that some people will love, and maybe it will find its niche."
Digital distribution has other advantages for indie developers.
For veterans like Dugan who have spent time on large, high-pressure products, it allows them to refresh the creative juices that attracted them to game development in the first place.
On the other end of the spectrum, talented young developers can work on a smaller project where they can have more individual impact.
There are solid business benefits, too.
Torpex is acting as both developer and publisher of "Schizoid," with Microsoft as the distributor.
Because the game will be downloaded over the Live network, the company is dodging the cost of producing, packaging and shipping discs for sale at retail.
In the traditional industry structure, the risks associated with that inventory are borne by the publisher. And, of course, the retailer takes a cut of sales.
With the smaller overhead and reduced risk, digitally distributed console games have a better shot at turning a profit - even though that profit might well be much smaller than a blockbuster title, Dugan said.
Neither Microsoft nor Torpex would discuss the specific financial details of their arrangement.
Xbox Live has more than 10 million subscribers, many of whom pay $5 or $10 apiece for downloadable games. Collectively, subscribers have purchased more than 20 billion Microsoft Points, the currency of the Live network. That's more than $250 million.
This network and others like it at Sony and Nintendo provide indie developers access to the high-end game consoles.
"They know that they've got a consumer out there that really loves to buy games and that's used to online transactions," said Chris Satchell, a Microsoft general manager in charge of the development tools Torpex used to build its game. "It's opened opportunity up to a lot of people."
Microsoft extended that opportunity even further into the game-development world last week, announcing a program to let amateur developers build games and publish them on Xbox Live.
The company touted some prominent early examples, including a game called "Jelly Car," which Satchell described as "Tonka toys meets Jell-O."
It's not the kind of concept a developer is going to call up a studio and get $20 million to finish, he said, but that doesn't mean there's no place for it.
Counting this anticipated flood of amateur games, Microsoft expects to have 1,000 titles available for Xbox 360 by the end of the year.
For now, Nintendo and Sony are limiting games on their networks to professional developers.
Nintendo said last week that it plans to launch WiiWare, its own downloadable games effort, on May 12.
"We believe that the current gaming economics ... has created a situation where innovative, risky content is not being developed and we want to open the box on creativity," said Nintendo of America President Reggie Fils-Aime.
In an interview with game-industry journalists in San Francisco, he wondered whether "Tetris," the addictive Russian puzzle game, would be published in today's marketplace.
"The sad reality is it probably wouldn't," he said.
Game developers have long been able to share and even sell small or obscure titles to other PC gamers online. The difference with these networks is access to the console-gaming audience.
Still, digital distribution is unlikely to replace traditional retail sales of $40 to $60 console games anytime soon.
"If anything, I can envision a game being made available through WiiWare that is brand new (intellectual property) and highly innovative, that can in fact lead to packaged software down the road," Fils-Aime said.
Retailers have welcomed the companies' efforts because they make a profit selling the online currency - Wii Points, in Nintendo's case - and on the hardware itself, he added.
With all three major console makers looking to fill their networks with fresh, innovative games, competition to attract indie talent is heating up.
At Sony, Hight has taken cues from recruiters charged with discovering new talent for the company's music and movie studios.
He scours industry events, such as last week's Game Developers Conference in San Francisco, and has made some of his best finds at the University of Southern California, where he lectures on game development once a week.
He signed Jenova Chen and Kellee Santiago, founders of thatgamecompany, to do "flOw," a game distributed over the PlayStation Network. The premise: "piloting an aquatic organism through a surreal biosphere where players consume other organisms, evolve, and advance their organisms to the abyss."
Again, not your typical blockbuster game plot.
It's been a critical and financial success for both Sony and the upstart developers, Hight said.
"It reminds me a lot of when I got started," he said. "Back then, one guy could do an entire game."
He also stumbled through a lot of trial and error, however, something Sony has tried to reduce by pairing young developers it brings into its studios with experienced mentors, as well as financial and technical resources.