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It Pays to Play
The burgeoning video game industry in San Diegoby Joe Dodson
San Diego is known for its health care and defense industries, but perhaps its best kept secret is a thriving video game industry. From small independent studios to major publishers, San Diego has it all, as a closer look at two local video game companies proves.
Meet The Behemoth: a small, independent developer that produces what it calls “hand-crafted” games. Their model of light, low cost production has perfectly overlapped the emergence of radical new gaming markets, leading to millions in sales. They’re doing big things with small games.
Since the company’s genesis in 2002, The Behemoth has been on the crest of a radical redefinition of the industry. Instead of producing big games and charging high prices, The Behemoth specializes in lower cost, colorful content that can be downloaded over the Internet. Their most recent game, Castle Crashers, sold over 2 million copies on Xbox Live and the Playstation Network.
We recently caught up with The Behemoth Co-Founder John Baez to talk about what makes The Behemoth tick. Part of the answer, at least, is the Swatch watch. Or as Mr. Baez put it, “When we first started…we looked outside our own industry, and I found that the Swatch watch model of doing business was much more apt for what we wanted to do as a company.”
Mr. Baez and associates particularly admired how the Swiss watchmaker was able to compete by pairing inexpensive watches with artistic wristbands. Swatch’s commitment to simplicity and style became the company's guiding light. For their part, The Behemoth emulates the Swatch approach by pairing simple game play with the adorably vicious art of Co-Founder Dan Paladin.
But while Mr. Baez is quick to credit his company’s success to its artisan approach, he admits that surviving as an independent studio isn’t all fun and games. It’s also toys. In 2003, when The Behemoth was struggling to get its first work published for Playstation 2, Mr. Baez and company stumbled into figurines.
“We decided to do a line of figurines because we figured if the game never shipped and we never made any money, we’d have little figurines to put on our desk.”
With the help of an associate and a Chinese manufacturing plant, The Behemoth was able to sell merchandise to fans and trade show attendees before ever selling a single game. The resulting revenue not only kept the company afloat while Sony contemplated publication of their first retail game, Alien Hominid, but it also relieved the pressure of having to live from game to game. Most independent studios fund their future titles with the proceeds from their past ones, making flops catastrophic. Though The Behemoth certainly doesn't plan on producing a dud, their multiple revenue streams give them greater margin for error and more room for creative freedom.
However, one of The Behemoth’s most innovative creations isn’t a game at all. It’s something called Testopia, and it’s actually an operational solution to what Mr. Baez calls the industry’s “binge and purge hiring process.” The problem is this: testers have to be hired to debug video games, but once their work is done, there’s nothing for them to do until the next game is nearly finished. For an independent developer that produces a game every several years, that adds up to a lot of costly downtime. Testopia addresses this issue by farming unused testers out to other indie developers at “the lowest possible price.” According to Baez, The Behemoth can retain its testers at no cost, benefit the indie video game community as a whole and generate revenue from yet another stream.
Of course, The Behemoth’s business is games and business is booming. Their last title, Castle Crashers, arrived in 2008 and sold over two million copies. At $15 each, Castle Crashers provided a revenue stream to a company with only 12 employees. Up next is a puzzle game for Xbox Live called Battleblock Theater, in which the hero is forced to solve puzzles for the enjoyment of feline captors.
The developer also released its first iPhone game in early 2011, for free, called Super Soviet Missile Master. Regarding the price, Mr. Baez explained that Missile Master is meant to introduce the studio to iPhone development; a foray into a new frontier for a video game industry pioneer.
Of course, there are several frontiers in the video game industry and Sony San Diego is exploring most of them. From cloud computing to 3-D TVs to motion controller technology, the Sony studio is on several different cutting edges at once. On top of that, they also produce the industry’s biggest baseball title, MLB: The Show. Christian Phillips, Sony’s senior director of product development, explained what the company has on deck.
With his tattooed forearms and jeans, Phillips would stand out like a sore thumb at a more conventional corporation. But in an industry built on sore thumbs, Phillips is right at home. Or as he puts it, “I’m living a dream by virtue of the job that I have, because it allows me to earn a paycheck doing what I would do normally for free. Don’t tell my boss I would do it for free.”
But if his work is so fun, what does he do when he isn’t overseeing game development? Taxes? Actually, he follows emerging technological trends, with an eye toward their implementation in his company’s operations. The latest engine of Phillips’ professional hobby is the Amazon EC2 S3 server cloud. Phillips followed its development in his light, carefree moments and discovered a scalable network of servers that can expand or contract based on the preferences of a user.
As Phillips puts it: “Cloud computing allows us to write scripts and tools that…if we know that we’re reaching capacity, from [an Android] app we can spin up new instances of EC2 literally in minutes and there's no downtime and no outage for the end user.”
This is a big deal in an industry that sees most of its sales front-loaded into the first couple of weeks after retail release. But how does one get permission to take a chance on unproven technology in a corporation as large as Sony? Doesn’t Sony’s size limit flexibility?
Not at all, according to Phillips, who said his team essentially became a guinea pig for cloud computing: “We build all the tools here internally and now what we’re doing is feeding it back into the larger Sony ecosystem.”
Sony San Diego is taking a similar approach with two of Sony’s proprietary technologies: The Move motion controller and 3-D TVs. The Playstation Move is Sony’s answer to the Nintendo Wii, while the Bravia TV can create eye-popping images when combined with the PS3. It’s up to studios like the one in San Diego to figure out how to translate these tools into games – and sales dollars.
“The way we approach any product that we decide to build, the first question is ‘Why could this only be possible on the Playstation 3? How does it support the company’s different initiatives?’ – such as 3-D and motion control, [as well as] driving consumers to the PSN.”
These seem like difficult questions to answer, until you consider Sony San Diego’s main game – baseball. That’s right, Sony San Diego’s flagship game is MLB: The Show — the industry’s most successful baseball title every year and a clear fit for both motion control and 3-D technology. It’s easy to see how a baseball flying toward the plate will be improved by 3-D, and it takes no great flight of fancy to imagine swinging at the ball with the Playstation Motion controller.
Somewhat harder to imagine is all of these pieces loading the bases of the average living room, without unloading one’s wallet. But Sony San Diego isn’t too worried &– their game has been the best in town for years, averaging high marks on meta-review sites such as Gamerankings.com and Metacritic.com.
That’s a brief glimpse of just two companies that contribute to the San Diego video game industry. Other major players include Rockstar San Diego, THQ and Sony Online (makers of the recent DC Universe Online). Although these companies are all very different, they have one thing in common: they prove that in San Diego, it pays to play.
Joe Dodson (Rady Full-Time MBA ’12) spent 10 years as a video games journalist, including time as the editor in chief of Game Revolution, the features editor at Gamespot.com and as a blogger for Yahoo! Joe decided to go to business school to learn to play the game that pays.