Cloud 9

The steamroller rise of independent superstudios has been well–chronicled over the past few years, not least in Develop’s own pages.

In the UK alone, we’ve seen the numbers swell at studios such as Kuju, Climax, Rebellion, Blitz and Sumo, while Traveller’s Tales and Giant last year teamed up for a line-drawing statement of intent.

Outside the British bubble, the cash-rich union between the highly-regarded American studios Bioware and Pandemic – and even the expanse of a British company such as Babel into Montreal – has only helped underline a resurgence in the potency of business in games development.

Independence dead? Hardly, especially for these mega–studios that challenge publishers when it comes to headcount and talent.

This is something Jon Goldman, CEO of Foundation 9, is most aware of.

Founded in early 2005 by bringing together a clutch of otherwise disparate US studios, it’s America’s largest development company and – given a huge $150m investment from US fund San Francisco Partners a few months back – now the most ambitious.

While two months ago the company admitted the funds could be part used in a move outside the US and add perhaps a UK or European studio to its empire (Develop, July) really that’s just one part of the plan. So far, it has built its reputation on putting together a wide portfolio of work that has helped steel its role as an independent – and something Goldman says other studios should take note of if they wish to increase their power, too.

Strong foundations
“We’ve got a pretty diverse development practice,” Goldman explains when talking through the bringing together of the founding companies (see ‘Founding Fathers’ for the full list), admitting that one of the reasons the group came together was safety in numbers. “Particularly for a next–gen deal, where such deals can require a team that’s the same size as just one of our companies, you can be in a tough place. Lose one deal, you go out of business. I can’t emphasise enough the importance of having a portfolio strategy. More opportunities mean more business.”

Obvious, but this approach has paid off so far. Projects in the past year have included GTA for the GBA, Marc Ecko’s Getting Up, Death Jr., plug-and-play TV titles and the Star Wars Episode III console game. Its most high-profile next game is Dirty Harry, with another large ‘day and date’ movie tie-in in the works, produced for almost every platform thanks to the range of talents and tools at all its studios.

But this strategic talk, about maintaining a line–up or looking after a portfolio – that’s the language a publisher uses, isn’t it? Goldman ducks the question when it comes to Foundation 9 choosing to publish its own games in future, but is clear on how 9’s foundation has been structured not to rival or match a publisher, but to “provide some safety and benefits.”

“I see no reason to define ourselves by arbitrary names – publishers and developers, both of them develop and exploit IP,” offers Goldman. “If you’re on a work–for–hire deal then it’s someone else’s IP and it makes sense to have that relationship. But with something like Death Jr. maybe it makes sense for us to co-fund it, or pay for it all the way. I don’t know about paying for inventory, though – remember there are some things publishers do better and know how to do better, so why not focus on doing what we do well, such as driving the IP, and let them focus on marketing and distribution? We’re specialising in taking risk in our area of expertise and they are too – if they can spend more money on the marketing side and take away some risk from the development side I think that’s a good result for us all.”

Keeping ideas alive
Goldman says it makes sense for a developer to be the one taking risks when publishers can’t or won’t.

Death Jr. was the first experimentation the company took to create and, says Goldman, “commercialise” a brand new self-owned IP, by “taking up the challenge” to devise a concept and make it marketable across mediums, all without publisher input.

He explains: “Death Jr. was pretty well-coordinated. We stopped pitching for a long time and worked on the game and built the film treatment and got the consumer product licences and the comic books all rolling in advance.” Signed by Konami and published on PSP – with a sequel in the works – Death Jr. has also spawned comic books and action figures. It hasn’t quite captured attentions in the way it could, says onlookers, but as a first stab in what Goldman says is “the model we’d like to use going forward – thinking about the entire strategy in advance” it’s an important first step.

“Our strategy is to commercialise IP across all relevant areas,” says Goldman, pointing out that this is an important part of devising new IP that studios should note, because “video games are an incredibly important medium for young people, and are also a good starting point for a new idea.”

Certainly, given the number of failed or only-just-decent licensed games that exist (to which some may say Foundation 9 is no stranger, whatever its commercial power) it’s a noble effort, and one that could prove the wider potency of games–dedicated ideas.
Foundation 9 already has another such new-IP-based title in the works, to be unveiled within a year.

Talent hunting
In the meantime, the company continues to search out more ideas through one of its companies, film and TV talent agency Circle of Confusion. “We’re looking at what we call adjacent opportunities – businesses that complement making video games. TV and film is an obvious one – but there’s also comic books and consumer product related opportunities.

“Ultimately we’re working directly with creators to bring ideas out to the fore. One of our biggest clients at Circle is the Wachowski brothers and we’re talking to them about some ideas way before it will get pitched as a movie – but we have very little doubt that if they pitch the movie it will get picked up. And then we’ll be making the game, obviously.”
Goldman’s further sentiments mirror those expressed by London Studio’s Jamie MacDonald elsewhere in this issue (see page 22) – that external talents must be brought in to make better games.

Pushed on this, Goldman admits that it’s certainly necessary to find people with the right skills, but adds that those in other mediums are getting a handle on games as time goes on: “Particularly with young directors and writers, video games are part of their media culture. Other people, like Martin Scorcese or Clint Eastwood just recognise a demographic trend and would like to make their ideas live longer. There are two different types of people: those for whom games are a meaningful part of their lives and those who want to get involved because they think it’s good. But in either case we think we offer a good relationship for them because it’s creator–to–creator rather than simply doing a licensed game.”

Going solo
But, again: brokering the relationships with ‘the talent’, finding the IP, keeping the power in the deals over those properties – all of it looks like strategic steps to undermine or steal away the duties publishers take for granted.

Goldman doesn’t comment, instead pointing out that everything Foundation 9 is doing is designed to help it maintain independence as a developer, and fortify its already large-strong foundations.

And this in turn, he says, is something other studios could learn from, especially when it comes to growing – it’s certainly something he has discovered makes companies attractive to investors.

It also makes the day-to-day business both exciting and sensible, he says. “It makes sense for us to have a large portfolio of projects – some of which will be safe, and some of which will be risky. And some will be handheld and others will be next-gen platforms, or with toy companies or advertising companies,” he explains, adding that such autonomy can help the company then in turn take advantage of new opportunities, such as Xbox Live Arcade. While the company was responsible for the Midway retro titles on the service when it launched, in future “we’re able to fund those entire projects completely, which is the advantage,” he says.

And such avenues, he says, don’t just provide cheaper means for developers to make and distribute games on, they also prove how core developers are to the market, even in the face of consolidation, and why they are proving a big draw to the likes of San Francisco Partners, or Elevation, which bankrolled the Bioware-Pandemic merger (and was at one point thought to be adding Lionhead to that little alliance).

“The Bioware-Pandemic deal is a bit different to our company because they are two large product companies coming together to make a few large products, where as we are portfolio driven,” Goldman points out, adding: “But yes, consolidation is the natural result of maturation of our industry. As the projects get bigger we need to make bigger investment in tools and technology.

“You can’t expect a publisher to fund a game and your entire infrastructure.”
He adds: “Investment companies now feel that the demographic trend of video game playing is not a flash in the pan. There are only a few opportunities for investment in the video game space. A lot of the publically held publishers are fully valued and about to enter a risky period.”

The rule doesn’t apply to just his network of studios, the market valuation of studios is rocketing as publishers are floundering, he says.

“Where developers have been traditionally lowly valued, investors now see us as the optimum opportunity. That, ultimately, is the most important thing that’s happening at the moment.”

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