Developers of video games feel disillusioned

Wired on Friday: There is always a temptation to compare the computer games industry with Hollywood. Both involve an intricate mix of masterful administration, financial acumen and genuine creative genius to be truly successful. Both have prima donnas, blockbusters and absolute stinkers.

But you can't match the two precisely. I'm sure I've claimed in the past, for instance, as so many journalists have, that the video games industry can be compared in size - or has even outgrown - the movie industry.

That's partly true but usually compares the combined sales of consoles and software with the film industry's box office. But the film industry is a far greater product than simply its ticket stubs. There are DVD sales and rentals, and the lucrative world of licensing and merchandising.

But there seems to be at least one dimension where the two industries mirror each other and that is the perpetual battle between the studios and the artists they employ.

Last week, the "talent" (to use the Hollywood term) of the video game world, the developers who code the games that sell millions (if not billions), gathered in San Francisco for the Game Developers Conference (GDC).

Game developers slave late hours and rarely see their fellow workers in competing companies, and this annual meet-up has never been merely a geeky industry discussion of tools and programming tips. GDC is as much a social event as a convention, a time to exchange battle stories and drown sorrows on the corporate tab.

But this year, the bar talk was far more than just the usual grumbling. This year, speakers and attendees were close to active rebellion.

The reason? The games industry, the talent says, is becoming a little too close to the bad old Hollywood of the studio system.

Currently, with very few exceptions, the money to create best-selling games comes from the games' publishers: a small group of multinationals such as Vivendi and Electronic Arts, whose strength in the market comes from negotiating licensing deals with existing media properties (movie tie-ins such as Spiderman, sports stars, and arcade game adaptations), close relationships with console manufactures like Sony and Microsoft, and, most importantly, strong control over the distribution of the games. Almost all games are sold the old-fashioned way: in shops, shrink-wrapped and distributed via the publishers' marketing infrastructure.

Orbiting around these publishers are the developers and designers. Sometimes employed by the publishers, sometimes working in small independent outfits, they are beholden to the publishers for almost all of the up-front cost of producing a video game.

A game doesn't get the green light without a publishing deal; a game can't make it to the shops without that publisher footing the bill.

As the average cost of developing a game has grown, the publishers' control over the game development process has grown tighter. Independent outfits are vanishing and the publishers are growing more conservative.

There was a time when two programmers in a garage could produce a best-selling game. As recently as 1992, you could make a commercial product for less than $200,000 (€150,000), said designer Greg Costikyan at GDC. The next generation of console games will require an investment of closer to $20 million.

Why the explosion in costs? Partly, it's a product of the increasing complexity of the modern games platform. Whether written for a PC or a games console, the hardware and creative input that underlies the modern fast-moving, endlessly detailed, cinematically scored, 3D action film, requires a great deal of money and management.

But partly it's a product of the system. Four out of five games, it is said, don't make money. Publishers invest heavily in marketing and support a surprisingly old-fashioned way of shifting product: putting those boxes on shelves. Often, say the delegates at GDC, it's not the coders who see the money and it's not the games that benefit.

Even those who have made millions from their successful games are growing tired. Valve, the creators of last year's hit game Half-Life 2, created an internet distribution system, Steam, rather than rely on publishers to ship their product. The release of Half-Life was delayed while its publisher, Vivendi, sued to prevent Steam from operating its distribution network, claiming breach of contract.

At the other end of the development process, the world-famous British games developer Peter Molyneux spurned investment from publishers and turned to venture capitalists (VCs) to raise funds for his latest games.

At the GDC, it seemed that such attempts to escape the video games industry's studio system had popular support.

"Can we do any worse if we just trusted the creative folks entirely instead of the publishers?" asked industry veteran Warren Spector.

It's hard to say whether the atmosphere at GDC will lead to developers striking out against their masters and starting their own, innovative distribution and investment approaches.

Even if this is more than just fighting talk among peers, it may be nothing more than part of a long repeating cycle - at least, if the parallels with Hollywood continue. After all, the games publishers were once scrappy small companies, just as studios such as United Artists and Dreamworks began as breakaway companies run by the "talent".

Will the money from Steam, which allows Valve to charge a monthly subscription to play its games, corrupt its coders as completely as developers believe the publishers have been corrupted?

Will the VCs who funded Molyneux be as forgiving as publishers if his games don't make their return first time around?

Maybe the world of video games is different. After all, it's unlikely you'll ever hear a Hollywood executive saying, as Spector did at the close of the conference: "I never minded piracy. Anybody who minds about piracy is full of shit" - and to general agreement too.

Perhaps this industry knows something the film moguls have yet to work out?