Monday, October 27, 2008

Take Three?: Third Time Is Not Yet a Charm Edition

[I put this up a few weeks ago, and then took it down. I don't know why, so now I am putting it back up. Enjoy.]

A couple weeks ago Take Two announced the termination of takeover discussions with all parties, but it seems the “victory" over the would be invaders is Pyrrhic at best. While the company will certainly survive, whether the actions were in the best interest of the shareholders is up to debate. With the decision to remain fiercely independent seeming set in stone, maybe Take Two will finally move to more fiscally responsible plan than “Rockstar makes all the money and 2K spends it” If last quarter’s events taught us nothing else, we learned GTA’s value has always been factored into the stock price. After the smoke cleared, we see the company is worth roughly the same thing as it was the day Strauss Zelnick entered the board room.

I know all the game stocks are down now, but the most recent USD 380 million plus decline in market value happened before any of the current market wide declines. This could be temporary and there is still time for Mr. Zelnick’s hearty rebuff of EA to prove visionary. It is often hard to tell so close to the events. Actard has been on the ropes a few times in its history and now by some measures it is the largest publisher in the business. Much of the industry thought Yves Guillemot was nuts when he committed so strongly to internal development, and now Ubisoft is widely regarded as the best video game production company in the business. I even had someone tell me the other day history will look at George Bush as a visionary for starting the war on terror. History can create some strange heroes.

But wait a second. I am starting the story in the middle. Let’s take a quick look at Mr. Zelnick’s previous forays into the game business. This is actually his third. Mr. Zelnick left 20th Century Fox, as the boy wonder president of production in 1993 to run Crystal Dynamics. Crystal looked like the place to be. New Media was poised to take over the world and this company was not only tied to the promising 3DO platform, but was funded by the blue chip VC behind 3DO, EA and every other company that mattered before and after 1993. 3DO had just successfully completed the first non biotech IPO of a company with no revenue, significant losses and a soaring stock price. While 57% in the first four days is modest compared to the dot com IPO's it was a big deal in the pre-Netscape days. Crystal was a logical jump for an aggressive guy looking to change the world of media. Unfortunately, through no fault of Crystal or Zelnick, the 3DO platform never took off and Mr. Zelnick and others left the company. Crystal expanded its sku plan to include other platforms and successfully created some franchises. Unfortunately it never created a profit. Eidos acquired the company in 1998 for significantly less than the aggregate venture investment.

Mr. Zelnick then joined BMG as president in 1995, ascending to CEO in 1998. Prior to his joining the company, in 1994, BMG started a game publishing division, BMG Interactive. This was not unusual, in fact it was status quo for record companies. Warner and EMI both started game publishers around this time. They all figured games, distributed on the same media, in the same stores, were a logical progression from music. They all found out they were not. The division was run by Gary Dale, who joined Rockstar as Chief Operating Officer in January 2007, after the departure of founder Terry Donovan. BMG Interactive signed a deal with DMA in March of 1995 and in 1998, the Houser brothers moved over from BMG Music and Donovan from Arista, to form Rockstar Games. Rockstar worked with DMA to create the first Grand Theft Auto. It would be a stretch to think the CEO of BMG, a company with 10 figure annual sales had any day to day interaction with the game division which would barely amount to a parasite on the flea on the tail of the dog which was BMG, but the interactive division, along with Rockstar, was shed under his watch. Again, in fairness, all the other record companies shut the divisions down and wrote off losses rather than selling anything. BMG Interactive, in spite of itself, was actually sold. I say in spite of itself, because I received the pitch from Mike Suarez and Don Traeger when they were trying to sell. The two guys came to my office and showed me the portfolio. GTA 2 was in development and was not significant enough to warrant a place in the presentation dominated by a console port of Paperboy, a marginal snow boarding game and a not even marginal basketball game. GTA only came up in a mention along the lines of "we are also doing another version of that top down PC game Grand Theft Auto.” If the guys selling the company couldn't even see the value of the title how could I ascribe knowledge to the CEO 55 levels above them? It is simply an interesting observation of ships passing in the night.

Last year, Mr. Zelnick, through Zelnick Media, walked into Take Two through the side door. He organized the institutional investors to vote him, and a friendly slate of directors onto the board, thereby ousting the man identified as the worst CEO of a public company in America. At the time, the stock was trading around USD 16, up from the sub USD 10 per share where it spent the previous summer. Zelnick had a plan to turn it around. Over the course of the next year he made some tough decisions, not the least of which was delaying GTA IV. The new blood seemed to have an impact on the market value, and it even started trading up for a few months . . . . until the summer, when it moved right back to where it was when he started. In fact, the biggest increase in the company's market value since Mr. Zelnick stepped in occurred with EA's hostile offer.

When EA put the offer on the table, the stock jumped from about USD 16 to a hair under what would become it’s 52 week high and a hair above the USD 26 offer price made by EA. Mr. Zelnick immediately went into defensive mode to stop the deal from going through. All of a sudden it was 1987 all over again and Mr. Zelnick started doing his best RJR Nabisco impression as he reached into his bag of defensive strategies. He fought the offer in the media, inserted poison pill stock grants and a bunch of other stuff. The unanswered question is, why? Who was he protecting? Was he thinking the defensive strategies would increase the price of the company, or did he think the acquisition was not in the best interest of the shareholders? There were a lot of moralistic arguments swirling around the gaming press about how bad it would be for EA to take over the company and I am sure he wanted to protect his employees from what was positioned as an oppressive structure. However, as a CEO, he can’t worry about those things. He has a fiduciary obligation to act in the interest of the shareholders and the company and he was presented with an offer containing a USD 776 million premium over the company’s market value the day before. He had to work to maximize the value of the company and if a sale was the best option, he had to maximize the price of the sale. His response, calling the offer “opportunistic” and saying it “. . . substantially undervalue[d] Take-Two’s robust and enviable stable of game franchises, exceptional creative talent and strong consumer loyalty” make it sound like the he doesn’t think the offer is high enough. Neither did his advisors, Bear Stearns and Lehman Brothers - really. Were they looking at the same slate as the rest of us? Theirs included games like Spec Ops, Red Dead Revolver, Manhunt, are any of these still alive?

Take Two’s product line looks kind of like the theme song from the first season of Gilligan’s Island. I can almost hear the theme song playing him my head as I think about the strong points of the company. There’s GTA, Midnight Club, and the rest. Sure Bioshock is important, but so are the Professor and Maryanne. Bioshock is a rounding error at EA and Actard, and until the sequel, it remains somewhat unproven. Take Two without GTA is Eidos. Take Two without Rockstar is Midway. Go ahead, do the math, you’ll see. The market did. When the initial offer was made by EA, GTA was on the horizon. Even though EA said it would not able to take advantage of the revenue, if the deal was done quickly, the acquirer could book the revenue, at the very least, they would get a hold of the company while the coffers were full. Once GTA is released, not only is the unlimited upside potential crystallized into a certainty, the release represents the last cash windfall for a number of years. But Mr. Zelnick must have seen this. So why did he really stall?

As a simple guy looking from the outside in, but based on the market’s reaction to EA’s decision to withdraw the offer, it looks like Mr. Zelnick was wrong. At the time, the company was not worth more than EA offered, and in fact, it is not even worth as much. If it were, it would be sold. The stalling seemed to be a combination of ego and brinksmanship. While it worked in the Cuban Missile crisis, the outcome here was more Bay of Pigs. The difference between those two events was research. In this case, there seemed to be none.

First, and perhaps most significantly, he should have known he would not get a higher offer out of EA. Looking at John Riccitiello’s history, his first offer is usually his best, and his last. We saw it played out publicly in the case of Eidos, and a few others. With Owen Mahoney backing him up, the offer was based on EA’s determination of Take Two’s value to EA. They will let the deal fall through before they overpay for something. By stalling the negotiation, it doesn’t seem Mr. Zelnick knew this.

Mr. Zelnick stalled the process while he generated interest from others in the wings. This could be considered the responsibility of the CEO. It appears he thought the EA offer would establish a minimum value for him to use in discussions with other suitors. Unfortunately, he did not realize the company had unique value to EA at a specific point in time. He found other suitors in fact, these discussions were on-going on August 19th when EA agreed to drop its hostile bid and enter into negotiations with the company. I believe in Mr. Zelnick’s mind, he thought the EA meeting would go something like this:

“Nice to see you John” with a firm handshake.
“Strauss” Riccitiello replies.
“How’s the family?”
“Doing well, yours?”
“Great thanks. Now that we have the NDA in place, I can tell you, we have offers of USD 30, USD 35 and USD 40 per share for the company. If you are interested in matching those, we’d love to hear it. Otherwise, nice to see you.”
“Of course we are. We’ll give you USD 45.”

Unfortunately, it didn’t really happen quite that way. The other offers never materialized. There were just discussions. I wish I was a fly on the wall, but after the long diligence session, and in the midst of other discussions which were not generating significant enough offers to do a deal, it probably went something like this:

“Nice to see you John” with a firm handshake.
“Strauss” Riccitiello replies.
“Strauss, we’ve looked at the books and analyzed your products, your production pipeline and your distribution reach. We’d like to revise our offer. . . “
“Great!” looking up at John
“We can’t justify the offer any more.”

and the stalking horse left the room. . . In fact, the stalking horse left the whole farm. The value to EA came and went. It moved from a “have to have” to “nice to have.” Nice to have’s aren’t worth as much. EA announced its termination of discussions, and we learned the increase in value over the previous months was not attributable to anything undertaken by Take Two when the market value returned but to just below the trading price on the day before the first EA announcement was made. The decline made Mr. Zelnick’s earlier statement of being vindicated by the sales of GTA IV look a lot like President Bush’s Mission Accomplished speech on the deck of the carrier.

Now we can use the hindsight which was unavailable to Mr. Zelnick during the discussions to determine whether this was the right idea. Can Take Two survive as a separate entity? Of course. It is still a USD billion company. Is it going to be a lot harder for them to survive, of course. The company grew when games cost between USD 1 and USD 5 million and today games cost significantly more. The higher cost of games makes it harder for the company to compete against the bigger players. Moreover, the smaller slate makes it more difficult to secure and maintain shelf space in a highly competitive market. Is the shareholder value going to be maintained – not so certain. The real world has always placed a higher multiple on EA and recently extended the treatment to Actard. In the eyes of Wall Street, there is EA, Actard and some other publishers. As we move forward, this credibility gap will likely grow. Stock prices are not only driven by revenue, but by the impressions of institutional investors. They like steady and predictable slates. The only prediction Take Two can make is GTA will sell a lot. Compare that to a "Madden," "Guitar Hero" and "Call of Duty" every year. Not to mention so WOW revenue. The market value is important because it is the measure of the cost of capital. The company's life blood in the cold war of ever increasing budgets we call game development today. EA may not have been the best choice in the long run, but it definitely had the deepest pockets.

From a creative perspective I have to admire the commitment to stay independent, but the institutional investors who installed Mr. Zelnick did not bring him in to establish a new high point in creative game making. From a business perspective, I have wonder whether it was right to walk away from a sale at roughly USD 760 million profit for the shareholders in just over a year‘s presence in the board room. I wish him, and the company the best of luck. In this business, he is only a few hits away from making a hostile offer to acquire EA. Then I will eat my words.

Wednesday, October 15, 2008

Check it Out: Stuff You Didn't Know About Lego and Gummy Bears Edition

In between posts about the new Macs Gizmodo posted these very cool Jason Freeny posters.

You can buy high quality prints of these and more at this link. (I don't get paid for selling these things, I just think their cool.)

Nothing more to say. . . .

Tuesday, October 14, 2008

Greenlight Process: Guest Blog Edition

A while back put a sidebar up asking for submissions, here is the first. A developer who, in the interest of protecting future business chooses to remain anonymous, submitted the following report from the front. Enjoy:

Production Green Light Process

A friend at a developer pointed out a recent article titled ARRESTED DEVELOPMENT by Matthew Wasteland in this month's Game Developer Magazine.

In a humorous manner the article details a series of comments made by a Publisher to a Developer through the course of their production. The associated timeline indicates to anyone on this forum the (expected) absurdity of some of the remarks.

However, it did highlight the relative value to production of certain comments and how - as far as successful production is concerned - not all roles should have an equal voice in the oversight or direction of the development process.

For example, at the beginning of game production, the development team is focused on creating R&D based prototypes that usually visually have little resemblance to the final product. During this time, the QA, Technical and Creative Production leads should have, in weighted voting, the largest decision making power over the general direction and value of the game.

At vertical slice - when the game has a more refined demonstration of core experience value - all voices (from production, sales, marketing, QA, executive, etc) would be more or less equal as the goal is to objectively determine a P&L's overall viability relative to game value, market projections and costs. If there isn't a unified vision for success with the game at this point: change it, kill it, or accept the likely consequences (hello: Quasimodo!).

At the end, the only voice that matters to production is QA which tells the group what has to be done to be done. Because "done" can at times become somewhat subjective and depend on available time and money - Marketing and Sales should also have a strong voice in determining what *must* be fixed to successfully ship and meet plan.

However, it seems to me that at many Publishers the "Greenlight Review" meeting, in an effort to have all departments 'on board' and involved in the decision making process, has become more of a equal voting forum where expertise is not always valued according to the relative needs and benefits to the production and resulting business P&L.

It could be worth considering having a weighted value assigned to different groups that would vary according on the stage of product development.

What do you think about your Greenlight Process? Working great or needs improvement?

Did EA Endorse Obama?: In Game Politicizing Edition

According to this post, wholly stolen from Jalopnik, pro Obama ads appeared in Burn Out.

Barack Obama has begun advertising on billboards within the virtual world of an online video game in what appears to be a first for a presidential campaign. Players of the online racing video game Burnout Paradise on the Xbox 360 Live network noticed billboards promoting Barack Obama and the website, which helps people determine how to register to vote and where to vote. This was later confirmed by a representative for the game's publisher, Electronic Arts, who said:

"Like most television, radio and print outlets, we accept advertising from credible political candidates. Like political spots on the television networks, these ads do not reflect the political policies of EA or the opinions of its development teams.”

We Should All Want Brash to Work: They Can't Help Themselves Edition

Writing this blog makes me a nicer person in business meetings. It is cathartic. Before the blog, something like Mitch Davis' interview with Gamedaily would set me off and dominate the first 10 minutes of the next meeting I had. Now, I can write it, get it out, and move on. Thank you dear reader for your help and indulgence. It also explains why the post is a bit on the snarky side. The whole thing could be avoided if Mr. Davis, the CEO of the company, took responsibility for the company's actions rather than shirking responsibility and holding tight to plans the market has already rejected.

I want Brash to work. We should all want Brash to work. With coverage in the New York Times and Wall Street Journal, everyone who would ever think about putting significant amounts of money into the game business saw their story. Never has a company name been so appropriate as theirs in describing their securing of capital and approach to the game business. If Brash make it, we would be lining our pockets with the lucre of Brash's success as others invest in the video game business. With Eidos, Charles Cornwall, Jeremy Heath-Smith and a handfull of others proved big war chests and great game making leads to industry domination. He took the company from nowhere, to number two publisher with the number one title in 18 months. After Charles and Jeremy's departure, Eidos showed big war chests with bad game making will lead to big losses. If Brash fails, our hats will be back in our hands as we inevitably face the question in every meeting "How is this different than Brash?" In anticipation of these meetings, and before I address the Mitch Davis interview that triggered this post, let me give you your first response to the question.

You look the potential investor in the eye and say "I won't ever say this:

But [Bert] Ellis says video games that are co-branded or licensed with major movies are a much safer investment. Even a bad video game, paired with a good movie, can be very profitable, he says.

"The safest, most lucrative way to sell a video game is in tandem with some kind of movie that is already heavily marketed," Ellis said. "Your downside is protected by the co-marketing."

Brash vehemently denied this philosophy after it's co-founder said this in the first interview about the company. Unfortunately, their first games betrayed their denials. Their first publicly released game (rumors circulated of an earlier film based game intended for release prior to Alvin being bounced by the consoles for poor quality) based on the Alvin and the Chipmunks film so bad it led reviewers to write "friends don't let friends play games like this," but it actually sold through. This seemed to confirm the business plan and the thesis. Unfortunately, consumers were not so forgiving of Jumper and Space Chimps. It seems you can only really get away with trying to sell a doody in a box once.

What the company fails to acknowledge in their adherence to a plan abandoned even by companies built on IP licensing is when dealing with a new film IP rather than mitigating your risk, you are exponentially increasing your risk by assuming the risk of the film's performance as well as the game's performance. A good game paired with a breakout hit film will lead to great game sales. A great game with an underperforming film will sell like a new game IP. Chronicles of Riddick is the best example. A marginal game with a bad film, nothing. In other words, the publishers run the significant risk of investing the same amount of money as they would in an original IP, plus payments to licensor, and only getting the same sales as the original they gave up to make the license. They are renting an IP and building a game presence for someone else. This is why every other publisher in the business is moving away from all but a precious few proven film licenses, and into original IP, making the good ones more expensive, and the undesirable ones, virtually worthless. I learned this when I was pitching Peter Jackson's King Kong to one of the publishers on the leading edge of this migration.

"This is exactly the kind of things you said you are looking for. You have two and a half years until the release of the film, the budget is fixed and large and the promotion will be huge." I said describing what I thought was a lay up.
"Doesn't sound like us. We need big franchises." replied the bizbot.
"What's bigger than Kong with the director coming off Lord of the Rings?"
"Something with a fixed release 2 years out, guaranteed marketing budget in excess of USD 80 million and guaranteed sequels."
"Wow, that's a tall order. King Kong is kind of unusual though, is it worth an exception."
"No, can't commit. The monkey dies."

The property was ultimately acquired by Ubisoft who did exceedingly well with the game, but without a follow up film, it was hard to justify a sequel. These guys knew early on what THQ and others are learning today. The license business worked for a wide range of films when game cost was lower. Cartridge games at sub USD 500k were great, PS One at sub USD 1 million were still great because the inventory became just in time. PS2 games at sub USD 3 million started to test the equation. PS3 and 360 games at USD 10 million and more dramatically change the equation. Current gen games work best when you can amortize development cost of the course over multiple titles. Ubisoft builds two Clancys on common technology before they build new tech and they are not the only ones. Most publishers are following the same course. When it comes to licenses, there is no opportunity for the second title. The games will sell well when the are released against a film, but sales fall to a fraction of original sales when sequels are released without a film. Unless there are guaranteed sequels, there is no opportunity for amortization. The publishers also take a major hit when someone like Pixar chooses not to renew. Accordingly, the number of high profile orphan film licenses is increasing on an annual basis.

The only significant dent in the license pool came when Brash picked up a bunch of licenses other publishers did not want. Titles like Saw and Jumper were floating around for years before Brash picked them up. Rumored titles like Where the Wild Things Are, and Clash of the Titans seem to defy current business logic and the rumored 300, has no film support. The resources allocated to these games would be served on original IP, where Brash would have more control over its destiny. The one bright spot in their slate is Night at the Museum which is poised to well as a film, but Brash would still have to break from prior practice and release a strong game against the film. Even if they do, it is a stretch to think this will counterbalance the threat of high risk licenses. They could be vindicated and proven to be the only one to see the true value in these licenses . . . and monkeys may fly out my ass before you finish reading this post.

Rather than looking to the flawed premise or poor execution and completely avoiding Michael Jackson's sage advice to look at the man in the mirror, Mr. Davis took the opportunity in Gamedaily to blame everyone around him and renew his commitment to the original plan. ". . . other than that, how'd you like play Mrs. Lincoln?" Don't build assets, don't build proprietary technology, don't build proprietary IP, just build value for others because they co-market.

In the first question, contrary to other media reports, he indicates Thomas Tull's departure had nothing to do with the way the company was being operated:

Thomas is Chairman and CEO of Legendary Pictures, and co-founder of Brash. Although, he has resigned from our board due to a conflict of interest he remains an investor and a close advisor to the company.

This is a stark contrast and much less believable than Ben Fritz' report:

Tull is believed to have been disappointed with the quality of Brash's games, as well as the company's strategic direction. He wasn't available to comment. A Brash rep declined to comment.

It's not clear exactly what changes Tull wanted at the publisher, though possibilities include a stronger focus on quality, even if that meant delaying releases, and abandoning its exclusive focus on licenses.

Call me nutty, but it seems odd for a founder/investor/board member to wake up one morning after being involved with a company for over a year and determine he has a conflict of interest. Especially since Mitch indicates business will continue as usual. Judging from the upward trajectory of Brash in the film business, financier of last year's Batman film, among others and the downward trajectory of Brash based on poorly regarded film based games, the latter would support a decision by an executive to not shit where he eats. If Ben's supposition is true, it makes it kind of hard to believe Mr. Davis is really taking the company in the direction of higher quality games.

Mr. Davis explained:
Good games take time, and it's fair to say that we were overly ambitious in putting out three games in our first year of business. We certainly took our lumps on those titles, and for that reason we have made several changes.

First and foremost, we've put an end to short-cycle games. In fact, as I mentioned earlier, some of our games will benefit from up to three years of development.

Second, we're working with better development studios. We've got more than a dozen film-based games in varying stages of development with such great developers as Factor 5, Game Republic, Pipeworks, BottleRocket, Zombie and Amaze Entertainment.

We've re-organized. We've made some changes within our management and our production team that position us to make better decisions for our business. I believe that Variety mentioned the departures of a few executives and lower level staffers, including Larry Shapiro. This is certainly true. After our first few games did not meet expectation we decided that we needed to upgrade our staff and realign our business in a way that allowed us to better meet our goals of great games based on exciting IP. Most recently, we hired industry veteran Lori Plager as Senior Vice President, Intellectual Property Acquisitions to fulfill Larry's former responsibilities. Lori—who spent more than 6 years securing licenses for Activision—was a great addition because in addition to having great relationships with all the Hollywood studios, she has direct experience working within a large publisher and a solid understanding of the development process.

Translated into English this could be explained as "making games is hard." Brash initially hit the ground running and quickly signed developers who eagerly committed to aggressive time lines and insufficient budgets. It was clear the games could not be delivered on time and on budget. Unfortunately the people on staff either did not know, or did not want to tell the emperor he had no clothes. Either way, bad commitments led to bad games. Increasing development time alone will not make the games better, talking about it will not change anyone's opinion.

Mr. Davis defies a promise made by the company after the Bert Ellis interview. They said they were going to show things, not talk about them. If he really wants to change the perspective on the company, he should show great things, not talk about them. The prior games already removed any vestige of credibility. He could have said "The stuff in development is great, and I can't wait to show you." He didn't. Words alone only provide fodder to a pessimistic gaming press who can say "he says the list of developers is great, but with the exception of Bottle Rocket's work on the seminal "Mark of Kri" their collective average Metacritic ratings makes a better golf score than testament to great game making. Three years development is good, but a well polished turd remains forever, a turd." (I know I consistently question the validity of Metacritic, but it is the only thing we have and it is the thing publishers use to judge a developer.) Writers may look beyond Metacritic to find the break out hit. This would lead to a comment like "If you would rather look at units sold, a much more relevant measure, find the break out hit in the group beyond Amaze's work on Harry Potter." I see what these guys write. They are not forgiving. They will not change their perspective until you put something in their hands. They have been lied to too many times. From my perspective, while these developers have the potential for greatness, and Okomoto-san of Game Republic and Bottle Rocket have shown it in the past, and Factor 5 moved a lot of Star Wars units it was through the support of companies like Capcom, Sony and Lucasarts coupled with Nintendo. A great title is the result of a collaboration of a publisher and a developer. Mr. Davis hung these guys out to dry by spending their political capital to elevate the status of his company, when in fact, the publisher should elevate the status of the developer. Without contribution from both, the title will not be great. Where is the greatness on the Brash side?

Mr. Davis tells management is changing. I heard rumors many fled on their own when they could not implement the changes they felt were necessary, but this is really splitting hairs. The point is the announcement mentioned one executive. Lori Plager is a wonderful person. Her hiring is truly a coup for Brash, but she does not fill the vacuum on the production side. He says they are sitting on a pile of licenses, it is great Lori is there to manage them, but who is going to build them? If they had someone, wouldn't he say. Rumors are circulating of another Activision exec who will fill the void. If he is on board this would have been a great time to talk about it. You can come to your own conclusion while we wait for the announcement. I hope one comes soon.

The next response shows a Clintonesque ability to compartmentalize:

BIZ: Reporter Ben Fritz described Brash as a company "in turmoil." How would you describe the Brash business to this point?

MD: In a little more than a year, Brash was able to achieve amazing things. We secured financing, we signed multiple licenses, we hired more than 70 people and set up three offices, we put out three games in our first year and have more than a dozen in various phases of development. Now, we are at a point where we can reassess. We have systems in place, and feedback on what has and hasn't worked. We're making changes to refine our business so that we can meet our goals.

Indeed they have done a lot, but what they didn't do is the one thing they were supposed to do. They are a game publisher. Game publishers make games. They did not make a decent game. I am not privy to their inner workings, or the goals established by the founders, but somehow I doubt the goals included any of the above. While they may have been shooting for three games in the first year, I am confident, a return on the investment in the games was at least an unspoken assumption. In the preceding response he acknowledged management was leaving, either by choice or corporate decision. Two of the departures were two of the three company founders, the rest were senior management and no one has been announced to replace them. While this may not be turmoil to you Captain Smith, it may be indication there is a large gaping hole in the hull.

Like I said in the beginning, I hope Brash makes it. I also hope this is the last Mitch Davis interview until a high quality product comes out from the company. Freedom from finger pointing and promises in favor of high quality product would be an industry leading event we would all admire. He may have "felt" he had to respond to reports in the press, but it is only a feeling, not a requirement. Brash is not a public company and has no obligation to issue press releases, or tell anyone what they are doing. This is a privilege they should embrace and enjoy. I look forward to them proving me wrong.

Sunday, October 5, 2008

Are Critics Gamers?: I think Not Edition

Yes, I am still ranting about critics. The tension between creators and critics is as old as narrative itself. I'm confident Plato's critics were late comers to the process. But as we enter the season for release of highly anticipated, high production value, very expensive games the critics seem to be in a bad mood - or, the industry is releasing a string of the worst games in history. I don't think it's the latter because the games seem to be selling very well. Brothers in Arms is getting an equal number of scores 50s and 60s to its 90s. Fracture and Mercenaries 2 are faring even less well and I already talked about The Force Unleashed. The first reaction is to grab the critics by the lapels and scream "Have you ever tried to make a game?" I guess it's a common refrain across all creative media. Even though it would feel really good, let's take a look at the issue. There seems be a growing divide between what the critics are looking for and what the game business is building.

Ironically, unlike critics in any other industry who scorn pop oriented content, game critics embrace it. Film critics look down their noses upon the multi hundred million dollar grossing summer tentpoles in favor of the black and white story of the mentally challenged lesbian in a world of men. Literary critics scoff and James Patterson's tens of million unit sellers in favor of the starving, under-appreciated literary marvel who drafted his manuscript on leaves while living under a bridge in central park. And, multimillion unit selling, chart topping music is derisively called "pop." "Pop" in all media is easily accessible. It garners huge audiences because it entertains and does not challenge. Sometimes, like Shakespeare, it endures, others, like music of anyone's generation other than your own, does not. Our critics, unlike the rest, seem to be embracing the quick fix, pick up and play "pop" games and rejecting the game equivalents of the latest Pynchon novel.

In looking at recent scores, I developed a few hypotheses. Some may be rectified, one, sadly not. The first, I call "The Passover Theory." According to the Torah, and Cecille B DeMille's Easter perennial film, The Ten Commandments, when G-d led the Israelites out of slavery in Egypt he led them through the desert for two generations because the former slaves did not know how to live as free men. The console cycle has moved so quickly, the critics do not know how to migrate between platforms.

I believe people are hardwired when it comes to entertainment. Our earliest experiences imprint upon us. The leading edge on the gaming age plane grew up in a world where we could not control the CRT. There were a limited number of television channels and we watched what was on when it was fed to us. Cartoons were only on Saturday. Time shifting happened with the VCR, but there was still no real control, no home computers with any sort of video to replace the CRT and games were crude graphics. My soon to be thirteen year old son, only knows a world where the CRT is completely under his control. Where our suspension of disbelief is broken when we move from passive to active, my son moves seamlessly, and even expects a level of interactivity in his linear entertainment. Not multitasking bullshit, but the ability to focus on things he wants. Whether it is pushing the rewind button the DVR to replay an explosion in Mythbusters, or button mashing in a game, he expects to be in control. His entertainment exists on a continuum of interactivity. Ours is broken into passive television watching, and interactive gaming. We can even see the difference when it comes to cut scenes. He watches them and gains from the seamless migration from cut scene to game play. We button through them. His ability to move from lean forward to lean back without breaking the suspension of disbelief drives him to look for content tailored to the skill. He wants a game where the story and characters are compelling and make sense. The game play should be fun, but it does not have to be a pop hook. Just something fun and logically integrated to advance the story. Asking him to play anything less is like asking us to listen to serials on the radio after we grew up watching television. We, like him with a single hook game, will be entertained for a short time, but then put it down. We may pick it up again, but the interaction is dramatically different than with an epic.

The critics have been playing games for years and years. Many have been through at least two consoles cycles, and some many more than that. They love retro games and wax nostalgic about the greatness of the Amiga. They cut their teeth on the single hook game. They are hardwired to the "pick up and playability" of the great old games. The games had to have a hook, because the technology would not support story, depth or compelling graphics. None of these can replace great game hooks, but they can work together to meld a number of hooks into a single deeper game. These games meld what used to be multiple genres into a single title. We can tell a story, fight, shoot and drive, all in the same game. The cost is emotional commitment. There is a time commitment and learning curve as well, but this investment bonds the person within the game. It is definitely possible to make a game too hard for the audience, and as Raph Koster and Nolan Bushnell tell us, games have been getting harder for years. But you know what, so is every other form of media. Have you looked at CNN lately? There are people talking, screen crawls on the bottom of the screen, graphics on the top, words on the side. . . If you broadcast this screen in the sixties people would have thrown up and gone into epileptic seizures. Like people willing to read a Neil Stephenson book -the ones after Diamond Age- there is an audience, who want to invest and be challenged. Sure these games are not going to reach into mass, and my wife is never going to pick it up, but my wife is not the target audience. These are games for gamers.

These games strive to engage and make you care about the characters, and it works, at least according to this gamedaily review:

Few World War II video games are as gripping and brutal as Brothers in Arms: Hell's Highway. Expert storytelling merged with bloody and intense first person shooting keeps you pushing through the narrative and empathizing with its grizzled soldiers, who repeatedly trudge through the Nazi war machine armed with such weapons as the M1 Garand and M9 Bazooka. Commanding squads adds depth to the action, and the impressive graphics, which include gorgeous fire effects, sprawling environments and an action cam that highlights the gore, further immerses you within the game's war torn world. . . .
Simply put, this game succeeds because its developer, Gearbox Software, went where no video game company has gone, delivering a horrific slice of WWII usually reserved for movies and documentaries. A character plunges his combat knife through an enemy's throat, blood splatters against walls, charred bodies sail through the air and victims get torn apart. Meanwhile, Americans and Germans scream in their native tongues, planes crash into buildings and ceilings collapse. You'll score nasty looking headshots, watch rockets rip through buildings and strap explosive charges on tanks.

This is what a gamer who never knew a world without a game console is looking for. Someone born post 1985, or most of the hardcore gamers. Metacritic decided the review quoted above equated to a 70 based on the rest of the analysis. The critics are hardwired for the short arcady experience and the world is passing them by. This truth is played out in the most recent ratings. If we look at the most recent scores, everything above an 80 on Metacrtic (yes I know I said it sucks, but what else do I have to support my point?) is a "pick up and play. 80 plus titles include full priced FIFA, NHL Live, Pure, Rock Band 2, Viva Pinata, Tiger Woods and Madden. Each is a single hook game, to be enjoyed without emotional connection. The higher echelon of the charts is dominated by XBLA games, including Braid, Bionic Commando, Geometry Wars, Castle Crashers, Duke Nukem and Mega Man. The common underlying factors are fun, superficial game play and no emotional engagement. Fellas, aren't those the very thing you were complaining about in the last gen? I agree, a great game is a great game, is a great game, and Duke Nukem is just as fun to play on the 360 as it was on my Pentium 1, 133, but new games have a lot to offer as well. Is it possible the critics hard wiring is precluding them from seeing the quality in the new games? Is it possible it is putting them out of touch with the consumers whose purchasing is closing in on 2 million copies of The Force Unleashed, a title the critics collectively gave a "C."

The other possibility is the critics don't have enough time. I won't dwell on this one because I've talked about it a number of times before. Maybe the critics are not hardwired and do have the best of intentions, but don't have enough time to get into a game. Another common element of those high scoring games is the ability to play for 15 minutes to half an hour, in some cases significantly less, and no exactly what you will be doing for the rest of the game. Other games like Brothers in Arms, Mercenaries, Dark Sector, or just about any RPG start slowly and develop over time. The consumer is expecting a deep experience for their USD 60 and don't want it to be over in the first 20 minutes. The critics on the other hand do want to get a handle on the game in 20 minutes so they can make a dent in the pile on their desks. Wait you say, Oblivion scored a ninety. Yes it did, but how many games were on the market at the time? The more crowded the market become, the lower the scores of the deeper games. This is odd since the second gen games of the cycle should be getting better. Movie and television critics are not necessarily any more aligned with their audiences than game critics, but at least they can experience the entire product before providing an "expert opinion." Very few critics, if any, play through an entire game, as it is meant to be played, before writing about it.

Finally, there may just be unrealistic expectations. After spending so much time in multiplayer Halo, Call of Duty, Guitar Hero, Rock Band and others, the critics forget the shortcomings of computer AI. Let me fill you guys in on a secret, the singularity is not here. Computers are not as smart as people. Especially computers using most of their power to throw lots of polygons on the screen while reloading the next set of polygons and calculating the trajectory of your shot. The critics seem to be so conditioned to real people's reactions, they forget how NPC's really behave, leading to comments like this for Brothers in Arms from IGN:

Unfortunately, your teams are sometimes stupid when it comes to responding to commands maneuvering them to safety, which is one of the core gameplay mechanics. For example, you'll tell soldiers to run over in cover and dig in behind a low rock wall, intentionally placing the command ring behind the middle of the structure to ensure the safety of your troops. Unfortunately, instead of running under cover and crouching, your soldiers will sometimes run directly in front of enemy positions and leap over the wall, frequently getting turned into Swiss cheese. Even worse are the moments where you clearly direct them behind a wall and instead of digging in behind the wall, they dig in on the side of the wall, again leaving themselves open to fire. This is a problem that has always existed within previous Brothers In Arms games, but you'd think that it would have been fixed by now.

They gave the game a 76, or a C, where I went to school. But when they encountered the same issues in Halo 3, before the multiplayer callous formed, this comment from the same publication led to a 95 review score?

The enemy AI is generally solid, but the same can't be said for your teammates. It's been said that the world would be doomed without Master Chief. After seeing the other marines in action, that makes a lot of sense. The AI drivers are less like marines and more like Mr. Magoo; support troops are just fodder for the Brutes; and the Arbiter makes me question why the Elites were ever feared in the original Halo. Let's get the Arbiter clear. He's the bad ass "Chief" of the Elites. He should be able to handle his own. In the campaign, the Arbiter and Master Chief are BFF. If you play alone, the AI takes control of the Arbiter and allows him to tag along. Enjoy watching your supposed equal getting shot in the face repeatedly and generally making himself utterly useless. What is the point of sticking you with an AI compatriot if all he's good at is respawning?

This is not an attempt to say Brothers is Halo 3. I am saying it is more fun to play with other people than with yourself. Read whatever you want into the previous sentence. Other players think better, respond better and collaborate better than the CPU in the console. But Mr. Critic, please don't let it color your review. Cleanse your palate with a little bit of alone time in your favorite game before diving into your test run of these new games.

Whatever the reason, these guys are out of touch with the consumer. Hopefully the consumer starts to see it as well.

I was looking around for a pithy quote about critics to lead into this post, but instead, I found this from Jean de la Bruyere who lived from 1645 to 1696 and it sums up the thought better than I could:

Criticism is often not a science; it is a craft, requiring more good health than wit, more hard work than talent, more habit than native genius. In the hands of a man who has read widely but lacks judgment, applied to certain subjects it can corrupt both its readers and the writer himself.

Saturday, October 4, 2008

Larry Probst: Shattering the Glass Ceiling Edition

While the world is focused on our presidential slates poised to shatter glass ceilings over race or gender, Larry Probst just crashed through the one cantilevered over video game executives. It's not as historic as Jackie Robinson, or Dick Parsons, but it is a major leap for our industry. I wrote about mainstream perceptions of our industry in a post about similarities between porn and games in a post heavily edited and improved by N'Gai Croal. I left out the part about executives. Until yesterday's announcement of Larry Probst's new position as Chairman of the Board of the United States Olympic Committee, game executives were mentioned in the same breadth as "real executives." Yesterday, Larry Probst's announcement treated him as the veteran executive he is.

"There wasn't any debate at the board meeting," Ueberroth said of the unanimous vote that ended in Probst getting a four-year term.

The 58-year-old Probst will be involved in the bid, but also was tabbed because of his business acumen. He has worked at Electronic Arts, a company that includes EA Sports, since 1984. Annual revenues at the company grew from $175 million to $3 billion over the 16 years during which he served as CEO. Last year, he retired that post and became chairman of the board.
"The EA Sports brand is one of the most recognized brands in the video games industry," Probst said. "I've been doing that for 15-plus years. As a consequence of that, I've had a lot of exposure to commissioners, leaders in sports."

This is great news for everyone on the business side of the business. In the real world, executives move among companies all the time. Games are a black hole. The CEO of a video game publisher has fewer career options than the junior manager of Tampax marketing at Proctor and Gamble. When executive searches are conducted, "real companies" look for the P&G guy or the Unilever woman. Clorox, Pepsi, Coke, all good. Games, don't even think about it. Each inter company move leads to a promotion and a raise. The door to the world of executive opportunity has traditionally been closed to game executives. Let's hope the guy who oversaw the growth and retention of the lion's share of the video game business kicks some ass on the USOC and teaches the world what we have to offer.

Congratulations Larry.

Friday, October 3, 2008

Check it out: Silobreaker Edition

I may be late to the party, and everyone in the world may already know about it, but just in case, The site gives you a 360 degree of the news and searches not only the story, but the connections and the stuff around the story. It is kind of a removal of media bias through a visual presentation of the google algorithm.

What are you still doing here? go look, there's nothing more to see here.

Wednesday, October 1, 2008

You Are Not Alone: Empathy and Inspiration Edition

A little while ago I wrote about our industry's lack of respect for the final product. Sure, we are a business, but we are also making an entertainment product which must entertain. Unfortunately, entertainment in any media doesn't always come out on exactly the date we planned. When the breakdown is caused by the developer or director, they should suffer the consequences and bear the burden of the missed date. But, often, it is not the fault of the person, or persons making the thing. Sometimes, like in the case of the film "The Reader," as described in a lot more depth, and exclusively, by the most astute and outspoken of all entertainment industry journalists, Nikki Finke no one can anticipate or do anything about the delay. The film was delayed by Nicole Kidman's pregnancy and a minor's lack of age.

The film is currently at what we would call alpha. If the alpha period is not compressed and beta virtually eliminated, the film will be released too late to qualify for the awards season, or what we would call 4th quarter. Like game publishers who believe games should only be released in the 4th quarter, film distributors believe only things released in the 4th quarter enjoy awards consideration and the accompanying box office rise. The distributor/ financier - publisher - would like the film to be released in their 4th quarter and is doing everything he can to get the film out, regardless of quality. The irony eluding the distributor is the same one which often eludes publishers. If the production time is cut short and the film released "on time" it will not be good enough to win an award - or in the case of games, sell well. Unfortunately for the distributor, the director, Stephen Daldry, did well enough with his last films to secure a precious right called "final cut." In games, we call this a game from Blizzard or id. It means no one can release the film until he is happy with the final version.

Well, as many of us know from personal experience, film distributors/publishers can be a stubborn lot. While they may suffer some financial harm from their short term focus and the release of a less than perfect film/game, it is the developer/director who suffers the real harm. If the game/film comes out poorly, people point at the creator, not the distributer/publisher. They won't be able to get another job. You can fill in the blank to support this one. Unfortunately, most game developers don't have the ability to stand up and assert their right to not put their name on a piece of shit, or demand enough time to properly finish the game they were engaged to build. This distributor continued to push. Fortunately for Mr. Daldry, his producer stood behind him, and his assertion of his contractual right. In the end, he prevailed.

For this reason, I give you this excerpt from Daldry's email to the distributor, the email many of us would like to have written and an example of triumph of the little guy and the reason for my nomination of Stephen Daldry as hero of the day:

"I am unable to deliver the film for release this year...

"I simply cannot -- and will not -- do that work in the very short time that remains. You are asking me to cram months of work into perhaps 24 hours of editing time. It can't happen. It won't happen. I will not be able to work with the composer. I will not be present at the recording of the score. I will not be able to mix the film. This work is my job...

"I cannot be party to a process that strips me of my ability to make my work good. That is not something you can require of me. I am desperately committed to finishing this movie well so that it is worth the pain that this process has been for all of us. Believe me, nothing would make me happier than to fulfill the obligation I made to you -- and done with the anguish that this release date has put us squarely in the middle of. But I cannot work this way. I need time with the movie -- concentrated tome, I need momentum and a clear head. I have neither.

...I have to call a halt to this process, this arguing over a date, and simply say that there is a line I will not cross, and this is it. We have reached it. I am not able to continue in this process this way. I cannot make this date -- and it's not for a lack of desire or a lack of effort. It's for a simple finite, irrefutable lack of hours -- and a dangerous lack of self-possessoom. Nobody but me knows what my personal limits are but I will -- in fact, I must -- tell you that I am perilously close to mine. That's bad for me but it is a disaster for the movie...."

Thank you Mr. Daldry.