Game studios closing in current economic climate.

Posted by jimi on January 18th, 2009 filed in Games Industry

So it looks like the Pandemic Brisbane studio is getting let go by EA, and while they will still get to hold onto their current IP and remain as an Indie studio, they have no publisher, and therefore not a whole lot of funds to keep going.  A lot of people have been let go, including industry veteran Tony Albrecht.  Now I think it’s great that the studio isn’t being dissolved, but they are still going to be relying on a publisher to get involved so they can fund further production.So many (if not all) studios rely on publishers to provide money to make games.  It’s a model that has worked for quite a while, but is it the only way?  Publishers are laying off employees in droves.  It’s this reliance on publishers that seems to be half the problem.  That and the rising cost of development.  A “triple A” title costs literally millions of dollars to develop these days.

Studios are setup with people that know video game development, and probably some business sense as well.  The focus is on making games mostly, but they need to make money so they can continue to make games.  Now if there was more than one revenue stream for the company (other than a publisher), they would have more autonomy as far as what they want to make, and would only be relying on the publisher to distribute their releases, rather than relying on them to stay afloat.  If other revenue streams were successful enough, the company could be completely separate and publish their own games.

So what would be some good revenue streams for game studios to consider?  Probably the best example is Valve, and their Steam platform.  It was originally launched along with the beta of Counter-Strike 1.6, but really made it’s mark with the launch of Half Life 2, to much anger at the time.  It was an imposing piece of software originally designed to combat piracy.  It required an Internet connection to be active for authentication of the game upon installation.  Updates to the game were also delivered through the service, so patching the game would become automatic.  There was a fair amount of resistance to the service at the time, but it was Half Life 2, so a lot of people just put up with it so they could play this amazing game.

Over time, the Steam platform evolved into a service where you could purchase games online and simply download them.  This is generally cheaper than buying a retail copy of the game, and has become one of the top digital distribution methods.  I personally buy a fair few games on there, as there is one distinct advantage of buying them on this service.  All games purchased through Steam are tied to your account.  This account can be logged into on any computer with Steam installed, and the games can be installed/played from said computer.  This means that you will always be able to access your games as long as there is an Internet connection available.  It also makes it easier to manage your games, as no disc can ever get scratched and no CD-key ever lost.

Over time other developers have adopted Steam as a distribution method, which I’m sure makes Valve a hefty chunk of cash.  This service obviously then provides their development teams the freedom to work on games as they see fit, not answering to any publisher but themselves.

Having this kind of autonomy is a rarity in the video game development world.  Other studios could learn from Valve by building a business, not just a studio.  It does require more work in the long run, but the freedom to work on your project, at your pace,  without anyone else calling the shots would surely be worth the extra effort.

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