18 Feb Real computer gamers: Interactive entertainment, Wisconsin style
Milwaukee, Wis. – The future of Wisconsin’s small but active computer game industry looks promising, and it’s a future that will increasingly include downloadable computer games for computers and consoles, according to game executives.
Given the ease of having their games downloaded directly to a PC, they couldn’t be happier about that. The interactive entertainment industry took in $9.5 billion in 2007, according to the Entertainment Software Association, but thanks to downloadable games, the time looks right for an even more another prosperous cycle.
Tim Gerritsen, owner and executive director of Big Rooster, LLC, which he established early in 2007 after leaving another Wisconsin game company, the Milwaukee-based Human Head, is ready for it. “One of the reasons we founded Big Rooster was to experiment with new business models and go into different directions than just the old, static develop it, stick-it-on-a-retail-shelf model that is really showing its age,” Gerritsen said. “We’re looking into and creating products for downloadable markets right now.”
Gerritsen and Keith Fuller, a producer at the more established Raven Software, both headquartered in Greater Madison, were the guest speakers at a recent meeting of the Wisconsin Innovation Network. Amid students (prospective employees) from a variety of institutions, including the Milwaukee School of Engineering, Milwaukee Area Technical College, and the Milwaukee Institute of Art and Design, they talked optimistically about the future of the computer game industry in Wisconsin.
Platform entertainment
Computer game developers now benefit from the diversity of formats for computer games that has emerged in the past several years, and the popularity of the Nintendo Wii console was the subject of some conversation at the WIN Luncheon. In the past four years, computer game formats have expanded beyond the dominant console of the day, yet all are moneymaking propositions for independent game developers. At the moment, there are three prominent consoles – PlayStation 3, the Xbox 360, and the Nintendo Wii. Game developers can ship a title on all three platforms and make money, so they have plenty of incentive to develop games for them, Gerritsen said.
In addition, handhelds like the Nintendo DS and the Sony PSP have taken off. Both are extremely viable platforms, Gerritsen said, but making games for them is expensive, so developers have to weigh cost versus potential income.
Downloadable games have taken off on all platforms for computers and consoles, and game developers can sell PC downloadables directly to the customer. That’s something game developers have wanted to do for years, but are now able to do for the first time – and make money in the process.
There is one potential downside, however. Downloadable games are an area where sales aren’t tracked very well.
“If you look at the public figures available from the various data services, they track retail sales only,” Gerritsen said. “If you look at companies like Valve, which owns a downloadable model like Steam, they are selling quite a few units directly. There is Game Tap, which is actually owed by the Turner Broadcasting Co., and they make quite a bit of money from direct distribution.
“Then there is selling direct to your customers off of your own website with your own e-solution. So that’s a really diverse nature, and it’s really difficult to track those numbers, but companies are really starting to make money there.”
Fuller said Raven Software, a predominantly multi-platform developer whose work is focused on the PC, Xbox 360, and PlayStation 3, agreed that in the industry, “we’ve definitely seen a rise in recent years of downloadable games, and certainly downloadable content via methods like the Xbox 360 Live.”
Wisconsin’s got game
Downloadable destiny or not, it’s still an open question as to whether Wisconsin can grow a cluster of computer game companies that rivals the biotech cluster, but the state has several established players.
Raven Software, established by brothers Brian and Steve Raffel in 1990, is a wholly owned subsidiary of Activision, a worldwide game publisher based in Santa Monica, Calif. In terms of Raven titles, the Marvel Ultimate Alliance has become the company’s top seller since its release several years ago. Among Activision titles, the recently released Call of Duty 4 quickly has been recognized as the top selling title globally across all major platforms – Xbox 360, Play Station 3, and PCs.
Since Raven has been a subsidiary of Activision for the past 10 years, the methods by which the Middleton company’s games are distributed are largely out of its hands. Raven produces games locally with its staff of programmers, animators, and even actors affixed with sensors to simulate human actions, and then sends the final copy electronically to Activision.
“Then it’s kind of a black box to us,” Fuller said. “They will distribute that and market it and do the whole global campaign for that.”
Game development is not solely a function of taking marching orders from Activision; there is some back-and-forth between subsidiary and parent. For some studios that have a relationship with a publisher, “they get those decisions handed to them,” Fuller said, “but Raven has such a history with Activision, and we’ve proven ourselves over so many years, that they definitely allow us much more leeway in terms of the creative input than some other companies might have.”
Strutting bird
Since Big Rooster is only one year old, it still is developing games that are either going to be out this Christmas, or in other realms like television. The company also is working on “gun-slinging,” an industry term that essentially means it is assisting other developers who don’t have the expertise to complete projects they have taken on.
Gerritsen compared the company’s distribution model to how a book author or a rock band would work. As an independent developer, Big Rooster will go to publishers worldwide, either taking games that have been internally developed or developing games that publishers bring to them.
“They sell the games worldwide and we make the games, so they give us advances on royalties to create the products that we create,” Gerritsen explained. “We develop them over time, and when they are ready to sell, we hand them over and they package and distribute them.”
Big Rooster now employs 12 people but expects to quickly grow its staff. Within a month, the company expects to be up to 20 employees and at least double that by the end of 2008.
They will be needed because Big Rooster has agreed to work with Blockade Entertainment, an animation studio based in Hollywood, to create new animated game assets. Big Rooster will work with Blockade to develop game assets and convert them to animation for film and television.
Such collaborations bring the prospect for growth, and Gerritsen knows that every independent studio that grows to a certain size is an acquisition target. However, that’s not in Big Rooster’s immediate plans. “We want to be one of the companies that helps drive the industry, and so right now we’re in the mode where we want to build our company and develop what we have internally,” he said.
While Gerritsen was at Human Head, the company developed the video game Prey, which sold a million units for Xbox 360 and PC. Other notable Wisconsin gamers include Frozen Codebase Productions in Green Bay, which has received some venture capital for the development of arcade games like Marble Blast and Elements of Destruction, and Milwaukee’s Guild Software, whose flagship product is Vendetta Online, a massively multiplayer online role-playing game featuring 3D space combat.
That’s not to say strategic partnerships abound between Wisconsin gamers, which Gerritsen has identified as a roadblock to building Wisconsin as a game development community, but there is some measure of collaboration. “There has become a growing sense of cooperation between these groups to help develop the economic climate for game development in Wisconsin,” he said.
State government has established some incentives for industry growth. The same law that established tax credits for the production of motion pictures in Wisconsin – a measure that helped attract work on the film Public Enemies starring Johnny Depp – provides the same kind of credits to the production of computer games. A 25 percent sales-and-use credit is applied when computer game companies hire talent or create production expenses, according to State Sen. Ted Kanavas, R-Brookfield, and eligible expenses are approved by the Wisconsin Department of Commerce.
Kanavas says the credits applied to these expenses reduce the total cost of their ownership of their productions. “As was explained by the gamers, the people that are creating them, these are expensive games,” Kanavas said, “and it’s a hit-driven industry where if we can do something to take the edge off of the risk that goes into creating these games, it creates more velocity for all the products they would be offering. That helps expand the industry in the state.”
Skills for the game
Raven, which employs upwards of 150 people, was at about 50 workers when Fuller started. He believes the Wisconsin workforce has the skill sets to accommodate growth in the computer game industry. The company has found talent in local schools, and not just the University of Wisconsin-Madison. Fuller is a graduate of UW-Milwaukee, and noted the company attracts a number of applicants from metropolitan Milwaukee.
Gerritsen, however, said Big Rooster has to look worldwide for employees. The company has hired people from Canada and Europe – and will search wherever talent exists.
While Wisconsin appeals to people who have started their careers in places with a more active night life and want to relocate to a more affordable place to raise a family, both game executives agree the state has to do a better job marketing itself. The perception of Wisconsin as a year-round igloo, reinforced by snowy and frigid January football games, has to be put in context.
Gerritsen, a native of Oshkosh who worked for game development companies in several states – including Sega of America – returned to Wisconsin in the late 1990s to help develop the game industry here. The image of Wisconsin as Siberia does not help, he said, but there also is the hayseed label attached by people in California that are astonished that Wisconsinites can grasp complex concepts.
Changing these images “would be at the top of my wish list,” Gerritsen stated.
Maturing industry
While the state could use some positive marketing, perceptions of the interactive entertainment industry already have changed, Fuller said. The value of computer games in education has been the focus of academic organizations like UW-Madison’s Academic Advanced Distributed Learning Co-Lab, and research organizations like Gartner project the business value of collaborating through games and virtual environments will strongly increase in the final years of this decade. That would take them well beyond the leisure application, but even with their “downtime” reputation, computer games have become big business.
“Looking at it from the perspective of someone who has been in the industry for about 10 years total, it seems to me as though it has really taken off in the past five or six years from being something that’s kind of on the periphery to something that’s really much more of a mainstream industry,” Fuller said. “There are more people playing video games and more people recognizing that it’s a legitimate business.
“It’s not just guys in a garage anymore, or some pack of nerds from MIT.”
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