38 Studios and Going “All In” with Game Design

Today, in the face of a terrible economic crisis, 38 Studios and Big Huge Games both laid off their staffs, extinguishing some 379 full-time jobs in the blink of an eye.

It is the latest in a long line of studios to shut its doors despite the fact that the gaming industry is enjoying some of its greatest success ever. How is it possible that so many companies are finding themselves in trouble while the industry as a whole appears healthy and growing at an enormous rate?

One problem might be something that I’m labeling “All In” game design. In poker, the concept of going “all in” is to push all of your money in on one bet, giving you a 50/50 chance of doubling your money if you win the hand, with the risk of going home empty handed if you lose. It’s a tremendously risky move, one that very few players actually use correctly. In game design, developers go “all in” by banking on one game to either make or break them. In 38 Studios’ case, that game wasn’t the game they released (the very-good if not great-selling* Kingdoms of Amalur: Reckoning), it was the game that now will likely never come out, the MMO Project Copernicus. With Copernicus, 38 Studios (and Big Huge Games) went all in with a planned 6 years of development time and a budget approaching nine figures. Simply put, the project was too big for the studio, and now the employees are paying the price.

For all of the success the game industry is having right now, there is a huge gap between the sales of the top tier of games and the middle tier. In fact, there probably is no middle tier, and it appears that developers are hurting by not being able to fall between smaller downloadable titles and giant AAA titles. If developers were wiser with their budgets and created realistic expectations for themselves, these problems could be lessened, and more teams would find success in being able to develop games that can appeal to a niche market (which would probably help foster creativity, but that’s another story for another day).

I would also advise game developers to look to the music industry for guidance. There’s been an enormous shift in the music industry in the last few years, with musicians releasing free albums and finding the success of those albums leading to marquee concerts and awards without having to ever go through the major label system. Artists that take this route are able to build up word of mouth for the “proper” album debut, making them household names before giant marketing budgets inflate the costs of making albums.

If game developers had the opportunity to cut their teeth on smaller releases, they might be able to find themselves in a position to sell games on their talent, not the market strength of their IP. I don’t know if thatgamecompany will ever release a “major” game, but they’re doing wonderfully on PSN, even without the major advertising presence of some larger games. It would be wiser to take that route instead of amassing talent and putting a huge budget behind one game that, if it fails, would basically destroy your company. The market is speaking. There’s no room for all of these large games. I just hope developers are listening.

*VGChartz isn’t completely accurate, I know.