The good news: how studios avoid closures and layoffs while attracting the best talent
We’ve already discussed the perils of game development, but it’s not all bad news. There are things studios can do to try to mitigate the risks of game development, although it’s always going to be a tricky business. I asked Keith Fuller, a 12-year veteran of the industry, if it’s possible to create a business insulated from these risks. “Is there a place in the continental United States where you can build a 100% safe above ground structure?” he replied. “There are landslides in certain places, hail, tornadoes, wildfires… is there are any place to build a safe structure? Are there places that are much safer than others? Yes.” He described a sort of “heat map” of natural disasters, and said to build in the places that are far from faults, tornadoes, and floodwater. Studios are the same way. There may not be any place that's 100% safe, but you can find places where the risks of lay-off or closure are much lower. These are the places you want to work.
Naughty Dog is always in production
I had spoken with Amy Hennig, the game director and writer behind the Uncharted series at Naughty Dog, soon after the release of Uncharted 3. She was able to offer a few thoughts on how they avoid the cycle of building up the studio only to lay off workers doing post-production. The answer is both obvious and a little scary: They are always in full production. “We don’t really have the luxury of a true pre-production period or even a true post-production period. We are in production the entire time, and that means as soon as we have taken a breath and had a little bit of a rest we’re right back at it. You’ve got a hundred people sitting there at a desk ready to work and earning a salary and you have to keep them busy,” she explained. This creates challenges for her as a writer. Naughty Dog is constantly working on set pieces, action scenes, and ideas for future games, and she writes the stories for the Uncharted series around those scenes and encounters. “So that means you make leaps of faith and you say ‘yes, let’s go to the desert and I’ll figure out why, and let’s have a cruise ship and let’s have a cargo plane and let’s just get working on those things’ and you make enough decisions that you have enough faith that you could stick a pin in them and put them on a board and say ‘I commit to writing around these’. And not just writing around them but writing them in in a way that’s meaningful,” she said. Hennig pointed out there was an early video from the days of the first Uncharted game where she spotted concept art from a scene that would later show up in Uncharted 3. Without the pre-production period and post-production period games are written as they're made, and this means a steady flow of ideas, creation, and concept work is being done. This puts strain on the writers and directors who have to deal with a fluid situation during development, but it also means that everyone always has something to do. No one is sitting at a desk waiting for an assignment, making them targets for lay-offs in order to keep costs down. It’s a unique way to do things, but it also allows for a degree of stability that’s very rare in the business of game development.
5TH Cell hires for life, and staggers development
5TH Cell described their hiring process in a wonderful presentation at the 2011 D.I.C.E. Summit. “We have an interesting model at 5TH Cell, we don’t do the hire/fire thing. When we hire someone, we hire them for life, and we say ‘look, we need to make sure our business is going to support you. Not just now with this project, but going forward for all projects,'” Joseph Tringali, General Manager & COO at 5TH Cell, explained. 5TH Cell keeps two games in development and stagger their timing so there is always a game in production. When one project needs more people, they shift employees from the game that may need a smaller team in the post-production period. Employees also have freedom to work in a “sandbox” atmosphere that sounds very similar to the innovative structure at Valve.
It’s worth your time to watch the entire D.I.C.E. presentation, but it’s hard to argue that all studios can strike such open deals with their publishers. 5TH Cell rejects milestones, and they work to build a sense of trust both within the studio and between the studio and its publisher. It doesn’t hurt that 5TH Cell has seen a number of hits including Scribblenauts and Drawn to Life. They create original IP and bring in their own money that isn't dependent on hitting arbitrary milestones. This allows them to weather dry spells that may have caused other studios to downsize. The return on investment is almost surreal: Scribblenauts was created by 12 people over 13 months, and the franchise has sold over 2.5M copies. Drawn to Life was likewise created by a dozen employees over only 11 months, and sold 3.5M units. Small teams, innovative products, loyal employees, and a holistic approach to development has allowed 5TH Cell to become a stable developer in a sea of blood. In March they were able to advertise open positions after THQ suffered layoffs.
Have a large team, work on multiple projects. Works for Ubisoft Montreal!
Raphael van Lierop has 12 years of experience in the video game industry, having worked on games such as Company of Heroes, Space Marine, and Far Cry. He’s worked as a creative director, writer, designer, and producer. When we spoke, he pointed to Ubisoft Montreal as a studio that has also been able to provide a stable environment for employees. “Having a large pool of content-creators and developers that can be moved from project to project means that, ideally, you can give dev teams the time and space they need to carry out pre-production with a small team, and then when they are ready, sort of point the ‘staffing cannon’ at the project and ramp up the production team,” he explained. “It means that pre-production is a ‘state’ of the project that can be maintained for a relatively long period of time, the majority of the project's timeline actually, with a sudden spike in team size and a burst of productivity during a short production phase. This is far from a perfect system but it is definitely one way to manage this type of curve, and it seems to work for Ubisoft.” You need both a large pool of talent and a large number of projects to work on for this strategy to work, which puts this approach out of the reach of most independent studios.
Don’t lay off your talent, put them to work on DLC
“DLC gives a place for people to go when the next project is only 10 to 20 people, and DLC has a high return on investment versus a game,” Bioware’s Manveer Heir told me over Twitter after the last story was published. This is ideal for a number of reasons: You don’t have to lay off your talent, and the team is creating something that hopefully creates new value and profits for your game and studio. This strategy also shoots the “content being held back” conspiracy theory that you often hear about DLC that’s released near the game’s launch. In some cases, it could be that content was simply in production during the game’s final days, and was finished near the game’s launch. It wasn’t held back, it was simply created by the game’s developers during a team when the core production needed fewer hands, and it resulted in fewer studio layoffs, and more content for the game. This is a win for both the audience and the developers if the content is solid and adds to the game experience.
Epic Games, the company that acts like adults
Kevin Dent has worked in the industry for 13 years, and now mentors studios and helps them find funding for their titles. He’s a very outspoken voice in the industry, and when we spoke on this subject he honed right in on one of this favorite companies: Epic Games. “The best run firm in video games today is Epic Games,” he said. “When they hit home runs they smile, when they hit doubles and singles they smile. They are always smiling.” He claimed they have a knack for “acting like adults.” The company is also incredibly savvy when it comes to dealing with talent, and Dent was able to provide several examples of Epic’s smart moves in this area. “Bulletstorm as an example did alright, nothing amazing. Did Epic shutter the studio People Can Fly? Hell no, they just put them to work on Gears of War: Judgment,” Dent said. “This was completely logical for a number of reasons, the biggest one being that Bulletstorm was not a failure, it was certainly not a home run, let’s call it a double, but the studio delivered a solid game.” Dent also pointed to the mass hiring of the talent from 38 Studios and Big Huge Games to create Epic Baltimore. “Big Huge was a world class studio, their Kingdom of Amalur title has sold around 1.5M units to date and the studio itself is considered stellar,” he explained. “Epic did not have an RPG studio in the Console/PC space, I consider Chair to be a mobile RPG studio, and they basically picked the guys up for free. I like their GM Sean Dunn a lot and I know that his team are now very, very happy.” A team that has already created a solid game that sold well has been kept intact, Epic now has talent in the RPG space, and a mass lay-off was turned into a long term work opportunity for the developers. This is the rare move that’s a home run from every perspective. “The other approach that Epic does right is they have the happiest employees in the industry, the Epic parking lot is a car enthusiasts wet dream. The reason for this is that at Epic Games you eat what you kill,” Dent explained. “Their salaries are on the average end, however their bonuses are gigantic when their titles sell well. Sharing the wealth around is the cornerstone of maintaining a high performance studio and attracting the industry’s best talent.” I reached out to Epic to try to have this verified. “Salary is determined based on experience, and our bonus system is a profit-driven plan based on performance, which gets everyone moving in the same direction and allows everyone to benefit from our successes,” Tim Johnson, Epic Games' Recruitment Manager said. “We also cover 100% of all benefits for employees and have a generous 401k match.” Epic Games is also working on two projects that came from its teams. “Specifically, we had a company-wide game jam and from that, have two projects in development. This gives people the ability to work on projects in which they are most interested and also keeps them challenged creatively and technically.” Johnson stated that one of the core values of the company is that “people matter most.” Keeping a series of diverse investments also helps to keep Epic Games nimble. “They recently took on a minority shareholder in the form of the Chinese publisher Tencent, no external people know the actual amount of equity that they sold, a minority stake can be anything from 1 to 49 percent, which gets them fantastic distribution into Asia,” Dent said. “Keep in mind that Tencent is currently valued at $49 Billion dollars.”
These stories are hard to emulate, but point the way forward
It’s hard to read these stories and take notes about how to create a stable studio in the future. Valve had the advantage of a founder that was already wealthy due to his work at Microsoft, and didn’t have to bring in outside investors. Epic Games enjoys the lucrative business of licensing the Unreal Engine as well as creating games. Ubisoft Montreal has the advantage of being both filled with talent and flooded with new projects. “In all cases, talent retention is a constant concern for studios. Even though the industry is tumultuous as a whole, with layoffs and studio closures being a regular occurrence, competition for top-shelf talent is as fierce as it's ever been,” van Lierop told the Penny Arcade Report. “The best studios understand that what drives employees more than anything is the chance to work on great games with talented people, and to produce work they can be proud of. This is a big part of the reason why you see developers abandoning the 'grind' of studio development to start their own small projects, they would rather face the risks of going solo and dealing with all the myriad challenges inherent to that, than sacrifice personal job satisfaction for a steady paycheck, which we're increasingly seeing is often not really steady at all.” This is a problem. Good games are made by passionate people at studios where they're allowed to have careers, not jobs. The longer you work with the people around you, the better you will all be able to work together. If you're allowed to share in the success of your games, instead of only being punished for perceived failures or funding shortfalls, you'll work harder to create a higher quality product. The few studios who have successfully fought against the culture of fear and uncertainty in game development are worth celebrating.