Monday, July 31, 2006

The Busted Flush

I'm now going to make a prediction, so get your laugh hats on.

If you've worked in the trenches of game development in the UK and elsewhere, you know that the last few years have been a case of feast or famine when it came to employment. For a period between 5 and 3 years ago, it was jobs galore in the industry. That's where any old chancer could wander in fresh from the world of amateur roleplaying game design and call themselves a game designer (like my good self, for instance). Then, 3 years ago, the party ended with a bang and closures became the order of the day. For the following year and a half leading on from that, it was hell for leather trying to get reliable work in the industry. Lots of companies died, publishers hunkered down, it was a bad time.

Then, eighteen months ago, the ice started to melt. At first it was publishers setting up campus studios that hoovered up a lot of excess people. Then came the star studio buyouts, the expansion packs of studios opening in different locations (like Rockstar London etc), even new studios started organising deals and hiring plans (such as Ninja Theory) and suddenly everything became ok again. Apparently right now it is a good time to be looking for work again, across all disciplines. Let the good times roll.

Only they won't roll for very long.
My prediction is simply that it's all going to go south. Here's why.

It's all to do with lessons not being learned and attitudes not really changing. The basic reason why contractions and collapses happen to game developers is a lack of flexibility.

Stuck With the Bill
When a game starts being developed in pre-production etc, it has only a few people working on it over time. This few slowly grows as more people are needed to take on ever growing numbers of tasks and, because the industry is pretty hit based, in most cases this then leads to a ramp-up of people. This team of people needs management, organisation and so the team grows ever larger. Add QA requirements, add full production costs and the small team can become quite large, almost anywhere from 40-100 people on modern projects.

The problem occurs when, at the end of the project, the company has a gap in its schedule. It has up to 100 excess staff, and so it either needs to have some other projects already well on the go to move those people into, or it can eat the cost of them while a new project does emerge, or it can let them go. Which option they take usually depends on the volume of work that's available, and that volume of work shifts a lot, often in relation to the console cycle. So the reason that companies are taking in a lot of staff lately is because they're all trying to get their big next gen game going.

What invariably happens after the honeymoon period of the next gen scramble is of course that quite a lot of these next gen games do not perform amazingly at the box office. This leads to the companies acquiring a less than stellar reputation, no real demand for a sequel to their game (if it made it to release even) and also a general downturn as the market for the consoles becomes split between new releases and re-releases (platinum editions etc). So far so capitalist.

The Wiseguys
What happens next is that studios close, get bought, shrink, whatever, and the employment situation changes. Big names in development like Jez San find themselves out on their ear or leave before the ship sinks or whatever. And they start up again, find new funding and they're off.

From the perspective of these made guys, that's just the way things go. They made their games, they try to make their new ones, and they did pretty well out of it. Who couldn't fault them for wanting another go on the merry go round. It's also great CV material. As for the great unwashed, well that's too bad for a bit, but they figure something out, go out of the industry, find another job eventually, whatever.

Like all cycles, however, this one isn't eternal. The ground can and does indeed change, and that's where things are going to Antarctica. Because the breaking point in all this is the amount of money that it takes to set up.

Every made guy has probably done quite well out of the industry so that they can fund their new studio up to the point of a couple of attractive demos. That is, after all, how the industry works. You put the demo together, you sell it around at the right time, incorporating the latest technology, the latest graphics, yada yada yada and you get a deal. That's how the business works if you're a made guy.

This means that the cost of demos keeps rising. Since publishers expect a full fledged demo before they'll commit serious coin, serious money has to be spent on securing these deals. So 5 years ago you were looking at a personal investment of a quarter of a million for a high caliber demo. Now, you could be looking at a mil easily. Five years from now, you could be talking 3-4 mil. For a demo. The industry's development costs have a habit of going geometric like that.

Temporary Solutions
So the solutions to date that have been settled upon are temporary contracts, outsourcing and middleware. Temporary contracts because that means you don't have to pay a lot of severance once the project ends, outsourcers because India, China and the Czech Republic are cheaper than here and middleware is a solution to the problem of ramping up technology. None of these solutions work well.

Temporary contractors (as distinct from consultants or freelancers) are tied into employment contracts that essentially are regular jobs with regular taxes and so on, and every single one of the people on those contracts are looking in reality for a permanent position. This makes them fairly disloyal if the company is not offering permanency. The reason that they want a permanent deal is because of locations.

Outsourcing, on the other hand, is a fast growing industry that is absolutely full of companies of low morals who are expert at blagging other peoples' money in exchange for the promise of something great, but who then under-deliver. This is because outsourcers, like web design agencies, always operate from a position of having too much work on and do just enough to retain contracts but not actually get the job done. A few outsourcers are professional, but guess what? They tend to be the expensive ones. As a result, a lot of out-sourced artwork has to be re-done.

Middleware is also fraught with all sorts of problems because as any good coder knows, it never does the best job for the project, it always does an adequate job. Middleware needs to be generalist to be applicable to a wide variety of problems, whereas game engines often need to be specialist to handle the unique requirements of their games. Coders always end up re-writing a bunch of middleware, which causes delays (the same applies to re-used code) and so the cost saving after the license fee has been paid is often small to non-existent.

The Real Deal
The real problem here is none of these things. The real problem is rent.

To build a studio requires a location where potentially hundreds of desks can be accommodated, where considerable infrastructure needs to be put in place. Office space costs a lot of money in some locations, and so studios operating on the made guy model tend to eschew these locations at all costs. This is why the industry is located in every ass end of the country, rather than centralised around a hub. That and a healthy quantity of 'roots put down' syndrome where a lot of the long-in-the-tooth successful types aren't really keen on moving any more because they have other commitments.

So rent keeps studios apart, and that keeps contract workers on the hunt for a better gig. It keeps the studio stuck out in the hinterlands, which makes it difficult for it to drum up fresh or passing business. Very few developers are in a position to make advergames, for instance, because they have no presence in Soho. Rent also, perversely, keeps studios big, because it turns out that firing 100 people is a hell of a lot easier than it is to hire 100 people when it comes time to ramp up production again. Ask Ninja Theory. They have had job ads running solidly in just about every industry medium for forever trying to get Heavenly Sword done. That's what happens when you locate yourself in the ass end of Cambridge, requiring anyone you hire to move house and life. For a contract on a limited term project.

Add this to the problem of finding funding in the first place from a skeptical business community - and it is pretty skeptical - for 2 mil for a demo, and the made guys' problems increase. A lack of fluidity in operations and an insistence on locating the studio in Dundee, where nobody wants to work, means that at some point the cycle breaks. Endless articles from "luminaries" on gamasutra bemoan the lack of funding, and the made guys try their hand at consulting and on-line poker and a lot of industries that they don't really understand, losing a lot of money in the process.

Campus Issues
It would seem then that the publishers would take up the slack. One of the advantages of being big, after all, is the ability to move people around. EA Vancouver, all 2000+ people of it, surely has the might and magic to retain people in large numbers and put them to good use. Well no, not really.

They can move people around, but the problems of operating at such a vast level are that the politics does not make for a conducive environment for creative people. So people don't do their best work and a lot more money is spent on what should be semi-decent titles. As with any industry, the more regimented the creative methods become, the less effective they become and the more has to be spent producing projects of internecine wars between departments and awful quality like The Godfather. It's a method that makes money for now (just) but as with all behemoths it shows the true meaning of the phrase lumbering giant, and giants stumble.

Ready, Set Go
A very few companies have the capability or management nous to think beyond this. Nintendo, for example, have managed to retain a creative culture, much as Apple have done, and on the smaller end a company like 3D Realms has also managed to stay ahead of the game by a lot of very clever business deals giving them considerable room for manouver. Most companies, even companies with "luminaries" in charge, do not have such a luxury. They have to meet their milestones like everyone else.

While the virtue of "Done when it's done" is appealing to many, in practise it is impractical for any other than those who really know what they're doing in the business (like Scott Miller seems to), have an extremely loyal pre-prepared fanbase, as Nintendo do, or are so small that they can afford long operating costs, like a few indies seem able to do. Everybody else is on the clock.

The only real solution in the long term is for the industry to re-organise itself and centralise in a big city.

In reality, none of the development companies of today would need to be anywhere near as big as they are if they were able to reliably hire freelance staff on a month to month basis. They might not even need to give them office space. They would be able to hire service companies if those companies could provide their services cheaply and reliably (such as QA) and within shouting distance rather than half way around the world.

The only realistic way to achieve this is if the made guys either stop repeating their cycle, or if we wait for them to retire or leave. The development company of old is an outmoded institutional sort of place with silo mentalities that have propagated as long as they have because they were good businesses, but this has become less and less the case. Publishers still very much need external creative minds doing their thinking for them, but those minds have no means to do that because all the made guys are still making little kingdoms and wondering why they crumble.

Centralisation is the key. By centralising, companies are essentially sharing a local staff pool. If the UK industry decamps to London (for example) then that means that dozens or hundreds of studios are all using the same group of people. They live a Tube ride away, so short term work is far less ugly a prospect. It is much easier to do deals both inside and outside the industry (those advergames etc) and so prospects become healthier.

Centralisation translates to flexibility. That's the central point, and flexibility sees us through the bad times and the good. With the industry's penchant for not learning lessons except by complete accident, this does not mean that it is about change just because I snap my fingers. It's going to be a slow ground-swell sort of thing. I don't fundamentally believe that any of the made guys are capable of serious change any more, and so they are on the slow path to crumbling and working for publishers eventually. This is sad for some, but in reality it is necessary. All industries need a bit of creative destruction every once in a while to make space for new shoots to grow, and we are way past time in that regard.

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