Blockbuster or Bust: The New Face of Development?

[joshuaboy]

The Evolution of THQ

From Rockville, Maryland to Agoura Hills, California, which is home to international game developer and publisher THQ. The company's ten studios are based in locales like San Diego, Phoenix, Vancouver, Warrington, Brisbane and Melbourne. Its 2011 release schedule includes the recently-released first-person shooter Homefront, a handful of franchise games like Warhammer 40,000, WWE, UFC and MX vs ATV; and anticipated sequels like Saints Row: The Third and Red Faction: Armageddon. A big year, then. IGN Australia spoke with Danny Bilson, THQ's Core Games VP. To begin, we brought up something of a sore point: that in THQ's 2008-2009 fiscal year, the company posted some big losses. We wondered: what were the biggest costs, and what did THQ do to reduce those costs?

Bilson replies: "In November of 2008, we announced a new strategic plan and business realignment to improve profitability, shifting our focus to fewer, bigger triple-A titles. To achieve these goals, we had to cancel several titles in development and close some of our studios as well as reduce our overall operating costs. We reduced staff by about 25% through early 2009. While this was a very difficult process, we had to position THQ for future growth and profitability in today's competitive market."

This shift toward triple-A titles was motivated by THQ's realisation of an opportunity to "engage millions of players in the best Triple-A titles given the concentration of sales into the top 25 titles," Bilson says. "The key was to create IPs great enough to break into the top tier of games. Recognising this shift as an opportunity for THQ and anticipating the need for new, creative, wholly original IPs prompted us to re-focus our development priorities and upgrade our green-light process."

Besides the franchise games mentioned earlier, Bilson points to the company's "robust pipeline of quality games" as proof that its shift in direction was for the better. He says that THQ has a major title scheduled for release every quarter over the next two and a half years. Besides Homefront, Bilson also groups the upcoming Saints Row and Red Faction sequels under the publisher's original IP umbrella, though by now, these two franchises have been around for five and ten years, respectively.

THQ has given Red Faction a new lease on life on current gen consoles.

When asked about the risks associated with breaking an original IP at this stage of the current-generation console cycle, Bilson responds that THQ views "franchise fatigue" as a bigger risk. "The Xbox 360 and PS3 platforms are very robust, and we haven't begun to max out their capabilities," he says. In past interviews, Bilson has mentioned that THQ has no intention of buying studios; instead, they planned to "acquire talent". "It's not about how many studios we own or how many people we have – it's about great creative inspiring great development," Bilson tells IGN.

The Core Games VP has been more open than most other businessmen when dealing with media in the past; indeed, a little too open on occasion. Like in 2009, when he described Wii game development as a "nightmare" for third parties. We wondered: what prompted this relatively transparent manner of dealing with the media, and thus, with the gamers who read gaming media? "What we're trying to communicate is that this is a new THQ," Bilson says. "As a gamer myself, I know first hand how much people appreciate knowing our plans and overall strategy. We are on the cusp of delivering on the promise we set out for you in 2008: transitioning THQ from primarily licensed games, to owning an impressive line-up of original, triple-A IPs."

Bilson is quick to dismiss questions as to whether this approach is sustainable; not only for THQ, but for the wider industry. "If we do our jobs and make great content, we can be very successful in this business," he replies. "It's more like the movie business today, where the costs have escalated for big blockbuster titles – but now the rewards are very high as well. Call of Duty: Black Ops set a new five day entertainment industry record, grossing more than USD $650 million worldwide. Generally, gamers respect good ideas and sales tend to reflect that, regardless of the scale of the title."

 

[joshuaboy]

Competing on Games

To games critic, researcher and teacher David Thomas, "the industry itself is addicted to blockbusters". As evidence, he refers to the above-stated fact regarding Black Ops' sales figures. Yet, as he points out, the game is a "spin-off of a spin-off of a spin-off. Activision has really done well with that as a franchise. But I think that them killing Guitar Hero is really indicative of the blockbuster mentality. There's no reason to believe that Guitar Hero couldn't have been a nice little profitable thing, but they're not interested in that. They're interested in WoW and CoD. I don't think we're seeing even close to the end of that blockbuster [driven] idea."

Thomas' history includes over 15 years' experience writing about games for an international collection of daily newspapers, magazines and websites. He currently teaches courses that cover the history of digital media, games and learning at the University of Colorado Denver, and has a website that's well worth visiting. He points out that "this is the first time since I've been covering games that there's not a new hardware cycle [on its way]. We're five years in on these systems." He notes that at the most recent Game Developers Conference, held Feb 28-Mar 4 in San Francisco, there was "not a word about the next hardware. I think we're easing into a closer to 10 year [console] cycle." According to Thomas, now that there's no 'next big thing' for publishers to worry about, instead, they've got to "compete on games".

"No offence to Red Dead Redemption," Thomas continues, "but: was that really the most exciting thing you could think of? If you're a developer trying to think two years ahead, what are you going to do? Red Dead Redemption in space? Call of Duty underwater? I mean, really, these guys must be wracking their brains about what's next. Even the Epic tech demo for the next version of the Unreal engine [shown at GDC]; you watch it and think, "yeah, it's better", but you can't for the life of you think of how it's going to make better games. It may be getting more competitive because developers are feeling squeezed in. They're competing on really marginal lines."

A long-time believer in investigative games journalism, Thomas also bemoans that there aren't enough stories on the "financial things inside the games business. [Journalists] don't look underneath the hood enough to realise that lots of people are making money; they're just not making money on cool stuff. They're making money on boring stuff. [Farmville developer] Zynga makes obscene amounts of money, and everybody notices; 'Oh yeah, people do like silly games'."

He also points out that, amid the current climate that seems loaded toward anticipating the next, big, triple-A-scale monster-seller, we tend to forget the past. "We think of Blizzard [Entertainment] now as this gigantic, monolithic company," he says. "But ten years ago, that's not who they were. They were just another little company that made cool games. Once somebody becomes giant, they get bought," he says; in Blizzard's case, by Activision, the world's biggest third party video game publisher.

Blizzard couldn't always take 10 years to make a sequel.

"At the end of the day," Thomas says, "it amounts to: who can afford to be big in the channel? There's only so many stars; so many people that can dominate the retail chain." Yet there's another oft-forgotten truism of global video game development: not everyone has to be a star. "I don't know if this is true or not," he begins, "but I heard that THQ makes decent money on all those crappy kid games they put out; all the Spongebob and Cartoon Network games. Just because – even though we don't think about them, and they never show up on the charts – they don't cost a lot to make, and they can still sell a couple hundred thousand units."

Though such sales won't exactly result in CoD- or WoW-scale earnings, they're enough to keep studios profitable, and thus, developers employed. This thought parallels Thomas' earlier point that, though traditional, 'hardcore' gamers mightn't care much about it, Farmville makes a ton of money. According to Thomas, "there's a couple hundred thousand children out there who need a Dora game."

This is something to keep in mind whenever talk turns to game development budgets in the tens of millions, and earnings in excess of half a billion dollars: though there's more money to be made when pitching toward the triple-A end of town, that doesn't mean there's no room for profitable games that aren't designed to be blockbusters. And we're not just talking about Dora – we're also talking about the mid-budget games that once had pretensions of blockbuster status.

While it feels like they're currently being squeezed out – and publishers like Activision are relegating them to the garbage bin - the games industry is ever-evolving. New platforms, distribution systems and pricing models mean that these games may simply need to find a new place, and leave the old battles behind. We'd like to think gaming won't become a blockbuster or bust industry, but will still scale all the way from the bedroom developers of the indie scene, to the triple-A focus of the Activisions and Bethesdas of the world. The industry may just look a little different.

 

[joshuaboy]

Bethesda Knows Best

Not if he's wearing that shirt. LOL

 

[anduin]

Thats what it is though, the investors saw what big name titles like CoD can do and now are all putting pressure on the dev companies to put out commercialized, blockbuster games or they withdraw their money from the company. This kind of mentality is bullshit and will continue this trend of cutting up games, holding content back to charge more for it as DLC and generally lead to less creativity in the gaming industry. Once it used to be ok to make 100 million in profit and now a billion isn't enough to satisfy them.

Personally I'm buying less games than ever cause I see less and less value in buying at launch. About 5 DLC might come out between launch and 1 year down the line making you spend $100 for the full experience or you can wait that 1 to 1 1/2 year and pickup the goty edition with all the shit for $30. The movie and music industry already been raped by corporations, now it's gaming's turn.