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Issue 118 | The Hound: The Great Games Industry Buyout

on 09.04.2006 at 19:52 User Icon Posted by James Temperton (Mr. T)
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James Temperton :: Issue 118 :: 9th April 2006

Industry analysis with added bite.

This week has been the week of the buyout; both SEGA and Microsoft have made some fairly heft acquisitions to bolster their strength. It didn’t take my mind much a-whirring to come to a pretty bleak realisation about what this could mean for the gaming industry. With the rapid growth and expansion of the gaming industry, the small guy is in great danger of being left behind, and this potential problem is being dealt with in two very different ways. As seems to be the situation more often than not nowadays, it is another case of The Industry vs. Nintendo...

Microsoft buy out one of the PC’s most respected development houses, SEGA buy out a promising San Francisco outfit and one of the UK’s most established gaming companies, Sports Interactive. You can come at this situation from one of two angles from where I am sitting. Either you take it from an antiestablishment perspective; attack it for showing capitalist power once again overcoming creative expression and individuality, or you see it from a totally flipped perspective. Are SEGA and Microsoft simply putting out a helping hand for the struggling small developer and giving them the financial backing and resources to do something extraordinary?

Microsoft Game Studios is an idea based on the back of that sort of philosophy. It takes small, fairly established companies with a lot of potential and a good name and buys them out. What you have to do is consider the output. Rare have done very little since becoming part of Microsoft’s master-plan. Take a look at the happy family:

  • Bungie Studios - Halo series
  • (formerly) Digital Anvil - Freelancer, Brute Force
  • Ensemble Studios - Age of Empires series
  • FASA - Shadowrun, Crimson Skies
  • (formerly) Indie Built - Amped series, Links series, Top Spin series
  • Lionhead Studios - Black & White, Fable, The Movies
  • Rare - Perfect Dark, Kameo, Killer Instinct, Banjo series
  • subLOGIC - Flight Simulator series

    Source: Wikipedia Entry

    Bungie have produced two stunning games, but they are not outputting anything else. The same could be said for Retro at Nintendo. Both companies are (I’m speculating a bit here) contractually obliged to produce games that their parent companies want them to. Is this constrictive or constructive though? They are not able to develop their own IPs and work in a way that they see fit because they have to do what the big guys at Microsoft say. You could argue that Rare have no interest in touching the somewhat suspect looking Viva Pi?, but they are developing it under the guidance of Microsoft.

    Admittedly Microsoft have never had a tradition of developing games, so they have to buy in the talent to produce their own exclusive software. Unlike Nintendo their heritage is in hardware development, whereas the Japanese giant are just as renowned for their software as they are their console projects. Rare’s output under Microsoft is nowhere near as varied as it was ten or even five years ago, Bungie are seemingly destined to work on Halo 3 for the next couple of eons and you can quite easily see Lionhead going from Black & White to Fable for a while. Is this ‘buyout’ philosophy sanitising the gaming industry?



    Well, yes and no. Look at Nintendo; the smaller companies that they strike partnerships with develop very interesting and exciting products. The Brain Training Software, Advance Wars, Smash Brothers are three recent examples of exciting new projects thanks to Nintendo working with and outsourcing development to smaller companies. Second party companies under Nintendo (the equivalent of their ‘Game Studios’ if you like):

  • Brownie Brown (first party)
  • Intelligent Systems (first party)
  • Retro Studios (first party)
  • AlphaDream
  • Camelot Software Planning
  • Creatures, Inc.
  • Fuse Games
  • Game Freak
  • Genius Sonority
  • HAL Laboratory

    A rather motley crew I am sure you will agree, but the important aspect is variety. Out of that selection Nintendo get a lot of very exciting products, but also a lot of new products. Nintendo are investing in the really little guys and letting them free and SEGA are arguably doing a very similar thing. Sports Interactive need the money and the help in order to get their product onto the market and their purchase of Secret Level are bolstering their development credentials in a similar way to Nintendo’s acquisition of Fuse Games. Microsoft are arguably holding the industry back a bit in their attempts to get some much needed credibility in an world that they have very much ‘greened’ their way into.

    Fact is, all this talk of buyouts is indicative of an industry in which it is very difficult to survive. Just take a look at Peter Molyneux’s comments from this week’s press release: “This acquisition gives Lionhead the stability and opportunity to focus on creating world-class next-generation titles.” Indeed, it is all about the money. Lionhead’s recent exploits (I’m looking at The Movies here) were the result of year’s of investment and development, in the market this game flopped. The financial implications of this lead to Microsoft stepping in with the helping hand. It is indeed a sad sight to see.



    I’ll compare the situation to football/soccer/best game in the world combining ball and foot. When Leeds United were relegated from the English Premiership in 2004 they were robbed of a lot of their best talent for very little money. The same could be said for West Ham, the ‘big boys’ stepped in to ‘lend them a helping hand’, when in essence they were exploiting their impossible situation to make a personal gain. There are no favours in the world of business; everything is done for a personal reason. Microsoft know that with their financial clout they can go about picking and choosing troubled developers on a whim and instantly strengthen their ‘Ultimate Game Studios of Magnificence’.

    The big boys need to be very careful when they go buying out the small guys in this industry. The danger is of course that all the best talent out there gets snapped up and put under one rather large corporate umbrella of doom, the flipside is that the investment allows them to really express themselves and find success in an industry which struggles to support the little people. If only things could be made simpler so they could compete, eh? Things may be about to change, with the introduction of Nintendo’s Virtual Console (said to be supporting independently developed games, cutting down the need for a publisher and the need for distribution and suchlike), this could be the new life needed for smaller developers to get their breaks. I’ll admit it, I don’t like buyouts one bit, but I can see the advantages of them. I will say this though, the behemoths of the gaming industry have a huge obligation to do right by their acquisitioned gems.

    Hound: "One Man and his dog went to a meadow, the dog got bored, ran back home and became a journo."

    >> Hound Archive: Do the timewarp on previous issues of this column.
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    1

    RedShed Reply Quote #1 

    RedShed

     L13 Spore Spawn
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    Very nice article liked the well oiled feel and flow and also the helping hand analogy really helped me.
    on 09.04.2006 at 20:06 Games | Blog | Wii Codes | Message Me

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    TAG Reply Quote #2 

    TAG

     L85 Final Ganon
    Number of comments 08.07.2004
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    Cheese please.

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    Good read. It's so hard in the business world to start up something new and with you in complete control. Nowadays, the only to have complete control is to have loads of money, and that's something you don't have when you just start out.
    Hopefully with the Revolution and the LIVE arcade* that will give indie's a little more money to start moving up in the world without too much risk.

    *the arcade supports indie games, don't they? Not sure about that. They could anyways.
    on 09.04.2006 at 20:11 Games | Blog | Wii Codes | Message Me

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    Flynnie Reply Quote #3 

    Flynnie

     L72 Samus
    Number of comments 27.04.2005
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    Online!

    You are right the big umbrella of doom will decend and spread the T-virus everywhere hahahaha

    Well as the Industry progresses to better graphics and more techcy production costs are gunna go up, so the whole VC idea in the Revo could be the saviour that we are looking for

    As for many studios developing one game series, is that all that bad. I mean perhaps after Prime 3, Retro could try something else, but would you say that HAL should try something else other than Kirby and Smash Bros?
    on 09.04.2006 at 20:18 Games | Blog | Wii Codes | Message Me

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    nin10do Reply Quote #4 

    nin10do

     L100 Eternal Master
    Number of comments 25.12.2003
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    Indeed

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    I’ll admit it, I don’t like buyouts one bit, but I can see the advantages of them.


    Smashing article, the above quote sums things up for me pretty much. I do prefer to see more trust based partnerships, but sadly it's a way many don't have the time / patience for in this industry...
    on 09.04.2006 at 20:21 Games | Blog | Wii Codes | Message Me

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    RedShed Reply Quote #5 

    RedShed

     L13 Spore Spawn
    Number of comments 31.05.2005
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    Not all buy-outs are bad I've got to think - another recent SEGA buyout Creative Assembley (CA) has only helped then with more resources and a dedicated publisher- of course I could be wrong.
    on 09.04.2006 at 20:31 Games | Blog | Wii Codes | Message Me

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    Darkflame Reply Quote #6 

    Darkflame

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    The problem with buyouts is as time goes on, the number of games independant companys reduce.

    Given long enough, extrapolateing out, there could only me one multimedia company by the end of the century.
    I find that scary, and can only hope the trend is reversed soon.
    on 09.04.2006 at 20:35 Games | Blog | Wii Codes | Message Me

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    RobTheBuilder Reply Quote #7 

    RobTheBuilder

     L82 Twinrova
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    Good one.

    I must again point out about the excellent work that Sumo have done converting and creating a full console game out of Sega's arcade IPs.
    on 09.04.2006 at 20:43 Games | Blog | Wii Codes | Message Me

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    Slydevil Reply Quote #8 

    Slydevil

     C3 Mod
    Number of comments 09.04.2006
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    UNDeRSTang meh

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    Yes great article. I dont like it one bit either. The difference between Microsoft and Nintendo is Nintendo gives companies the benefit of their great talent. Whereas Microsoft just throws money at them.

    This link really displays this. Its about how the development of Metroid Prime went. It really proves how great Nintendo's contribution is to its developers.

    www.escapistmagazine.com/issue/39/11

    It also shows how truly amazingly dedicated Shigsy is.
    Check it OUT!

    ( Edited on 16.07.2006 21:50 by Slydevil )

    on 09.04.2006 at 20:46 Games | Blog | Wii Codes | Message Me

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    Smells like moon cheese Reply Quote #9 

    Smells like moon cheese

     L98 Forum Elite
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    A star or two would be nice, for anyone reading this ;-)

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    How you find interesting stuff to talk about every week is beyond me, but you do it very well! Smilie

    Great stuff, agree with everything!
    on 09.04.2006 at 21:39 Games | Blog | Wii Codes | Message Me

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    Blizzard224 Reply Quote #10 

    Blizzard224

     L100 Eternal Master
    Number of comments 02.02.2003
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    It's not for you.

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    I can't belive Microsoft actually bought lionhead. I'd sooner pay to get rid of them.
    on 09.04.2006 at 22:26 Games | Blog | Wii Codes | Message Me

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    knighty Reply Quote #11 

    knighty

     L100 Eternal Master
    Number of comments 02.03.2005
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    pwning n00bs since 2002

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    but lionhead are awesome...anyway, good job james as always.
    on 09.04.2006 at 22:44 Games | Blog | Wii Codes | Message Me

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    Darkflame Reply Quote #12 

    Darkflame

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    Its odd that Jeff Mintier was working on "Unity" at Lionhead.
    Then Unity got canned and most of the code was used to make the (super cool) Visualizations for the Xbox360.

    Now Lionhead is owned by microsoft, yet Jeff Minter still works independently.
    on 10.04.2006 at 08:02 Games | Blog | Wii Codes | Message Me

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    TimoteiWest Reply Quote #13 

    TimoteiWest

     L9 Peahat Larva
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    Good read, I agree with most of the points in there.

    A little something I thought of though is how buyouts actually affect the studio's working environment the second they get bought, many staff "jump ship" at the mention of the term buyout! Poor Rare, they really are a shadow of their former selves. I don't know how it went for other members of development houses but I would imagine being restricted to certain titles would really crush a staff member's creative aspirations and force them to move onto smaller developers, or produce mediocre, passionless products.

    I know it would bother me if I had spent time creating an awesome idea, characters, game mechanic etc, only to have some suit tell me I had to make it appeal to a wider demographic and have another suit say "But how do we market this for today's gamer..?" etc. It would seriously force me to look elsewhere for employment.
    on 10.04.2006 at 09:29 Games | Blog | Wii Codes | Message Me

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    Darkflame Reply Quote #14 

    Darkflame

     L47 Hylian Soldier
    Number of comments 07.12.2004
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    Indeed.
    Only in some places (eg, UK) there is no "elsewhere".
    on 10.04.2006 at 13:30 Games | Blog | Wii Codes | Message Me

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