Tuesday, July 8, 2008

Ken Levine Needs a Plumber: Information Leaks Edition


Ken Levine is a talented guy. He is a key visionary behind Bioshock, one of the recent games to rock the industry. For some untold reason, I like to think he is not behind it, news keeps leaking about his contract negotiations. Negotiations, which are taking place months after the production of Bioshock 2 was moved several thousand miles away from him. These leaks are beyond rare in the game business and I don't entirely understand who benefits from the leaks. I never hear about Miyamoto renegotiating. Jason Rubin just went on with his business and addressed it by successfully selling Flektor. Mark Cerny, well, you never hear anything about him, other than a name in the credits of most games I like to play. Will Wright, nah, Neil Young, announcement after the fact. Okomoto, announced the new venture after it happened. Terry Donovan, co-founder of Rockstar, just announced his departure after the fact. Yu Suzuki, never heard a thing. Sam Houser, Dan Houser, Leslie Benzies, nothing. I don't think these guys are operating under the contracts they started with. I also think they, and their representatives chose to act as gentlemen and negotiate in good faith directly with each other, rather than the press. They understand their relationship with their employer is not an adversarial one and a great product is the result of the joint effort of the developer and the publisher. Or, perhaps Mr. Levine's representatives are forgetting the extra money and schedule indulgence Take Two afforded to ensure Bioshock would be great.

The story of Mr. Levine's negotiations first broke in Variety, yesterday afternoon, it came out, in the New York Post. At first blush this may seem like an odd place for a game story to break, but after a bit of thought. . . not really. The other major point disclosed in the "leaked" story was CAA's role as Levine's representative. CAA’s involvement may explain why the stories leaked onto the clothes lines which bear much of Hollywood’s dirty laundry. Variety does have a game reporter, but he is hardly called “Scoop” by his peers in game journalism. Variety is the place stories like this are printed on a regular basis. When Toby Maguire was having "back problems" which may have precluded him from appearing in Spiderman 2, it "leaked" to Variety. When The Simpsons voice actors held out for more money, it leaked to Variety. James Gandolfini wanted more money to return to The Sopranos, it "leaked" to Variety. Press leaks regarding negotiations are part of the Hollywood culture. It is part of how the game is played. Other parts of how the game is played include the purchase of congratulatory ads in the trade paper, contracts with unions, and revenue defined in such a convoluted way, participants never seem to earn out. Fortunately, most of these things have not made their way to the game business. It would be nice to keep them out.

The poorly reported New York Post article about Mr. Levine's contract made me feel sorry for him. I can't imagine what he thinks he has to gain from this publicity and I can't imagine who in the world would guide him to these types of disclosures. It is also more than a bit annoying to see a complete lack of research undertaken by the reporter in drafting the story. We have so little ink as an industry, it kind of sucks to have misinformation be the stuff people see.

Peter Lauria starts the article by saying Mr. Levine's signing is important for Take Two to help it prove it is worth more than the USD 25.74 tender offer by EA. I may be naive, but I think the US 500 million in GTA sales may help out with the argument. The value may also be helped when the company points out Bioshock is owned by Take Two and the development is proceeding with or without Mr. Levine. Mr. Lauria, and Evan Wilson of Pacific Crest Securities, may also have looked at the BBC interview with John Riccitiello in which John explains, individual talent is nice, but the developer is more important than the individual. Mr. Riccitiello will see much more value in the Bioshock 2 production in Marin, California than what he would characterize as a high priced employee in Boston. Mr. Wilson should also see how silly it is to be quoted as saying Take Two is trying to extract a higher price. The company simply does not want to sell.

He goes on to point out Mr. Levine will be receiving creative control and points on his games. If I were the reporter, I would replace this line with, "Mr. Levine will receive the deal enjoyed by every other producer/creator in the business who has made a hit game." Mr. Levine’s deal would be unique, only if he chooses to keep all of the money. Individuals are not always recognized as the recipients of these bonuses, because they are generally distributed to the members of the entire team responsible for the game. This practice goes back years and years. Royalties for Tomb Raider were paid to wholly owned Core Design, and distributed by Jeremy Heath-Smith. Jeremy built Core with his brother Adrian, and Lara Croft was designed by Toby Gard. Toby received royalties until the day he was no longer an employee of Core.

The concept of team effort seems to elude either Mr. Lauria, Mr. Levine, or Mr. Levine's representatives when they say his compensation won't rise to the level of the Grand Theft Auto creators. Forget the leap of logic so large Evel Knievel would not attempt a jump in a rocket car to say Mr. Levine's performance puts him in a class with Rockstar management. Comparing Mr. Levine's track record of critically acclaimed, average selling games and one breakout hit on a single platform to Rockstar's track record of multi-million unit sellers and six installments in the Grand Theft Auto series, across all platforms, arguably the most valuable franchise in all of entertainment, is kind of like comparing M. Night Shyamalan to Steven Spielberg after the Sixth Sense. I say forget the leap because the single sentence is so riddled with misstatement, it is a wonder it does not fall off the page, and land in heap of ink at the bottom.

Those concessions are meant to atone for the fact that Levine's salary and bonus won't rise to the level of the two creators of "Grand Theft Auto" at Rockstar Games.


The sentence refers to the "two creators" of Grand Theft Auto. Sam Houser is credited, along with his brother Dan and Leslie Benzies with the creative vision for the title - that is three right there - but none of them have ever spoken of the titles production without placing credit with the entire team. If you ask them, as many reporters have, there is no sole or duo of creators of the title. You cannot find an interview in which they take credit for the game. In the case of the last installment, credit goes to a team of somewhere between 800 and 1000 people. Which brings us to the next point.

To say he is not getting the game compensation as the Rockstar guys is an unsupportable statement. Other than the Rockstar guys, no one knows what they take home, and I would venture to guess, the information was not shared with Mr. Levine or his representatives. While a lot of analysts like to play the guess Sam and Dan's take home pay parlor game, their annual compensation and/or bonuses have never been publicly disclosed. Public reports do disclose the inter-company royalty payments made to Rockstar, and some analysts and weak minded, lazy reporters assign these numbers to one or more individuals, but these payments are allocated across the entire team responsible for the game. In the case of GTA IV, 800 to 1000 people. Aside from the opportunity to work on one of the most exciting franchises in entertainment, this is why the team stays in place form installment to installment. Their value is recognized. This compensation model is exactly the same one employed by every publisher in the business. Of course, in my opinion, whatever they are paying the key members of the Rockstar team, it is not enough, but no one asked me. Have you seen the performance of 2k sports relative to Rockstar's games? Did anyone complain when Spielberg was given a piece of the gate at Universal theme parks? Does anyone think M. Night Shyamalan should get the same?

I don't think Mr. Levine really went in and demanded the same terms as Rockstar management, it sounds too much like a Hollywood move. It would also not be a wise one after he lost the leverage associated with defacto control of Bioshock 2. Based on the performance of his title, Mr. Levine does deserve to participate in the success of his next title, and Take Two, as all publishers, record labels, movies studios and television networks do, will cover the downside risk of the title and undertake marketing. Unlike these other businesses, and as evidenced by public filings, Take Two will make the payments owing when due. If Mr. Levine and crew's new titles sells on a par with any installment of GTA since the third, I am confident, he will be richly rewarded, and quite possibly, on a par with the members of the team responsible for GTA. But if he really wants to be treated like them, he should take a lesson from them, and instruct his representatives to just keep it to themselves.



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