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.