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Monday, January 12, 2009

Video game middleware pricing, licensing, and positioning

For some time, I've been drafting a post with various directed thoughts around middleware pricing, licensing and product positioning for the vidoe game market -- both in general and relation to Gamebryo from Emergent Game Technologies.

After reading a post Saturday morning from Brett Seyler, Biz Dev manager for GarageGames's Torque SDK, I'm pulling out a subset of that content, and piggy backing off of Brett's post.

First, let me say the GG post has some very good, very candid information. I'm impressed with what GarageGames has done in the market, I personally share several of the same philosophical goals detailed in Brett's post, and he and I share at least some slant common background in that both he and I have had to make "a very weird kind of transition ... from that button up [financial services] world to the laid back, but hyper-competitive world of a startup software company". I probably could not agree more with him that "business is just business, and finding ways to succeed and get more done is universal across those kind of boundaries." (Frankly, the game industry as a whole would do better if they would get over their hubris, acknowledge this, and utilize applicable genuine big gun folks from other industries.)

And I empathize with Brett, because developing pricing and licensing models is wicked hard work -- "throw something at the wall and see what sticks" is a legacy (and potentially company-costing) way to figure out business models.

But ... ;-)

All that said, there's more going on in the GG post than just the listed "Pricing and Licensing" topic. It's a also a product positioning post, and there is intentional or misinformed placement of Gamebryo within the context of the post (which, to be fair, may be due to the candor and scope of the post, so it's almost guaranteed some things will fall out).

First (and easiest) to correct is Brett's mischaracterization of Gamebryo as an "upstart". Gamebryo is, in fact, one of the longest-standing and oft-used game engines in the market, reaching back to it's storied roots with Numerical Design Limited (NDL) and the NetImmerse engine. A lot of the same engine developers have consistently updated, redesigned, and re-architected the engine over the years to meeting the needs of interactive developers, and keep up with that changing landscape of hardware platforms. Gamebryo easily predates Torque (even in it's pre-GarageGames incarnation as the Tribes 2 FPS game engine developed by Dynamix in 2001).

Second, it's easy to see the "competitive positioning 101" marginalizing going on here.

(Hopefully, what follows will be articulate, and still respectful of GarageGames's positioning.)

In positioning your company and / or product, you obviously want to showcase why you're the only right solution for the problem, and why anyone else in the same space is either (a) not really a competitor, and / or (b) is missing the boat for actually solving the problem.

Brett posits the following in his post:
"Gamebryo has some good tech and a good marketing / sales team, but no dedicated studio to consistently test the tech and then demonstrate where they stack up next to Unreal or other AAA competitors, so I think they're doomed to fail in AAA."
Intentional or not, this is a masterful positioning statement. Acknowledging that it does tip its hat to Gamebryo's proven technology, it still attempts to do the following:
  1. Minimize the tech as flash over substance (just "a good marketing / sales team")
  2. Question our credibility (inferring "no dedicated studio" is a negative in Emergent's product / service offering)
  3. Ignore published titles to imply there is no way to measure how we "stack up next to Unreal or other AAA competitors"
  4. Marginalize us as being "only" a triple-A offering
  5. Sow the seed of doubt as to our viability (um, "I think they're doomed to fail")

These are easy enough to answer, and that one sentence gives me not only a springboard to refute the allegations, but a nice framework with which to do so.

Gamebryo: Proven Tech that isn't Flash (Minimize the tech as flash over substance)

Building on the freshly reiterated fact we've been around for a good while, keep in mind Gamebryo's been used in more than 250 titles, with more than a hundred more currently in development. This doesn't include academic, research, some government, and related licensees of ours, which makes this number go waaay up.

All of this is across multiple platforms -- more than any of our major competitors, and also more than Torque (and it may be more than any of our major competitors combined, but I need to fact-check that).

I also find this allegation from GarageGames interesting, since one of the things they try to head off is the perception of Torque (particularly Torque 2D) as being a Flash also-ran. (See, I made a funny with the title of this section, combined with middleware humor. Erm, I also totally dig Flash.)

Emergent's strength is making technology for your game (inferring "no dedicated studio" is a negative in Emergent's product / service offering)

There are pros and cons to developing / publishing games as part of a middleware business model. Same goes for not developing a game.

On one extreme is Epic, who makes their game engine to power Unreal Tournament III and impressive Gears of War 2, and licensing those game feature enhancements as engine enhancements for an ancilliary revenue model.

On the other extreme are hobbyist game engines that do nothing but make the engine (or subsets like math libraries or software rendering), with no vehicles exercising or demonstrating their tech.

Part of Emergent's business model currently is to not make games. We revisit it on a regular basis (like I said, there are pros and cons), but I think it's pretty important that I'm responsible for a product that makes technology so you can make your game. In my smaller moments, I like to say, "Your title won't be unrealized because we're making ours."

This lets us put more people working on the game engine tech and tools (and more people than GarageGames says they're putting on Torque 3D and its "parallel project").

And, we do make sure we dogfood our own technology by creating samples, demos, mini applications, and playable "games" that test, exercise, and showcase the features. We ship these with the product, with full source code and assets for our evaluators and licensees. Some of these we even make publicly available in playable binary form (like last year's GDC zombie shooter). And speaking of GDC, this year's attendees are in for a treat with our show floor demo (full disclosure: I'm the producer).

Like I said, we constantly evaluate our business models, but this is where we are right now. Gamebryo's power is in large part due to its flexibility, and the fact that you can make your game with the tech, rather than just cracking open someone else's game and -- after a boatload o' work -- running the risk of your title looking like you just re-skinned the engine provider's in-house game.

Our licensees showcase their technology -- and ours (Ignore published titles to imply there is no way to measure how we "stack up next to Unreal or other AAA competitors"

This one is odd, because for me the way to at least superficially measure tech is to look at the titles using it -- and like I said above, there are a lot of titles using Gamebryo.

If you look at just a sampling of titles built with Gamebryo, and current triple-A titles in the market, you'll see us included in big guns like PC MMO Warhammer Online: Age of Reckoning, multiplatform strategy title Sid Meier's Civilization: Revolution, and the upcoming console reincarnation of Splatterhouse. And it's not Crytek's or Epic's logo you'll find on the back of titles like the - current - way - I - spend - my - days - and - nights, Fallout 3.

Sooo ... I think I know how we stack up.

Emergent is AAA -- and then some (Marginalize us as being "only" a triple-A offering)

Gamebryo is proven in the triple-A market, but to marginalize it as being "just" triple-A is a clever way to try to convince licensees (and investors) that GG is going after a different market -- one served just by them.

One of my personal philosophies driving my participation in the game industry is to make the best tech available to people so they can make the best games. That's largely independent of budget or genre. This is a big chunk of why I made the jump from my previous more lucrative financial services gig (that and me just being personally passionate about games; and alliteration).

Sure, Gamebryo is in the headline-grabbing games above. But we're also a great fit for projects of various team sizes, budgets, and project durations -- well below the tens - of - millions - of - dollar, multi-year development cycle titles. And we provide the same great tech and tools to those teams.

As I've written before,

"... Gamebryo actually does hit the sweet spot for developing 3D interactive experiences -- of any size or type -- which for me means making sure we make the best tools and tech available to people making all sorts of games with all sorts of time and budget restrictions. Casual games? Check. Serious Games? Check. Triple A? Check. Commercial titles? Check. MMOs? Check. More? Check."

Not to belabor the point (and acknowledging I don't believe we can be all things to all people), we're also very well-suited for that class of game (with which I join Brett in championing) that is the less than big-box priced, but still innovative, unexpected, and just plain fun title.

As an example, yes, we're in the excellent Sid Meier's Civilization: Revolution. We're also underneath Hidden Path Entertainment's Defense Grid: The Awakening, available from Steam for ~$20.


It's important to say I would in no way characterize Defense Grid as a "budget" title. I would characterize it as that new breed of title that is high production value, great bang-for-the-buck, and innovating under new challenging models of budget and timeline constraints. You should play this game.

Last year, Gamebryo launched our "Casual" program, and while this particular section of the game development market needs a new moniker to showcase the diversity in titles, budgets, timelines, and innovation we're seeing in the space, what hasn't been ambiguous is our success with the initiative. Full Gamebryo, but tailored for your project constraints? Huzzah!

Going back to Brett's contention of shrinking high-end game budgets, I do question his reduction of the AAA addressable market (I'm not sure what he's using to quantify it); though he may just be doing this as an artifact of arguing that's not an addressable market of interest to GG.

While I agree Epic is the well-hyped name in the high-end space (and Brett has some good barbs on that front), budgets for high-end games (and therefore addressable market dollars) have significantly expanded this console generation. While big-budget titles may have had budgets of $10-15M in the Xbox, PS2, and GameCube days, today's titles of the equivalent caliber can run budgets of $25M or more. Since the number of title starts hasn't lessened, linear math says this is ostensibly doubling the addressable market dollars a middleware company could conceivably go after -- but that's independent of the additional growth the industry is/was seeing, at least prior to the economic downturn. If you look at the dollar value of the AAA market as compared to the non-AAA, you could argue triple-A title starts could be anywhere between an eighth to a twenty-fifth of the rest of the market before those addressable dollars started getting smaller than the addressable dollars of those other projects.

Besides, I'm a big fan of scrappy, aspirational companies upsetting the status quo -- regardless of vertical market.

(As an aside, independent of its representational accuracy, for whatever reason I'm tickled by this graphic of Brett's, and Mark Rein's encrumbed face. Dunno what that says. Maybe it's because pecan pie is my favorite?)

Brett Seyler AAA middleware pie diagram

(As an aside aside, I think I've used more parentheticals in this post then I have ever used in a post; if not in a given month.)

We're diversified, and we're here for our licensees (Sow the seed of doubt as to our viability)

Just like middleware is not "our game in a box" (above), it's thankfully also not "your game in a box" (if it was, everybody could make your game, out-of-the-box).

I feel that Gamebryo is a great fit for triple-A projects; but we're not "just" for triple-A titles.

I also believe Gamebryo works well for casual projects; but we're not "just" casual projects (or whatever we name this broad swatch of opportunity that exists between hobbyist and Big Studio).

And while Brett doesn't really talk academics as licensees (which is odd, since I thought roughly half of GG's revenue comes from that constituency), but we've got those folks (including students) covered, too.

I get that Gamebryo isn't for everyone. Being a bit snarky, maybe those folks not needing to save money and time by licensing proven tech that also includes a boatload of additional middleware integrations shouldn't license us.

Being less snarky (and totally honest), I do know Gamebryo isn't for everyone. There are some titles that plan on being so specialized, they don't know if customizing licensed tech will save over building their own from the ground up. There are other projects that might require our tech to be so generalized it would be no good many of our licensees (platform-specific or otherwise).

There are others that don't have the budget or need or for a commercial game engine offering. for some, Flash is a better option (depending on their needs).

And so on.

The good news is we have past licensees who had a later project that wasn't a match for our tech, and come back to us when they have one that does. We have had prospects for whom we genuinely weren't a match, and because we had the conversations and they knew what we were about, they followed up with us when they had projects that were a match -- and they've been tremendously successful.

Multiplatform support, flexibility and extensibility for developers, enabling the power of multiple hardware threads -- these are core product differentiators for us, and they benefit our licensees.

Steady, hardened releases, ongoing new features and functionality, new licensing programs to address customer needs, responsiveness to market and developer requests, tighter platform partnerships benefiting teams at the technology level -- these are all hallmarks of Gamebryo releases.

Those things -- which enable time and cost savings for licensees for all types and constraints -- are what make us successful in the middleware space.

Make no mistake, it's challenging out there right now. There are a bunch of new middleware competitors cropping up. Studios are changing their business models as they react to immediate events, acquisition changes, the "professionalizing" of the industry, a wicked tough global economy, and knee-jerk Wall Street reactions. These all make for the challenging problems we're trying to solve in product positioning, licensing, and pricing models.

Again, I really respect what Brett laid out in his post, and I'm grateful for the springboard it gave me (if you've read this far, maybe you're not ;-).

Comments? Hit me up through my Web page (please include a working Email). Or you can always reach me through LinkedIn, Plaxo, etc.

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SOURCES: Gamespot.com, joystiq.com, kotaku.com, Xbox.com, IGN, GameInformer, Official XBox Magazine, CNN, gamesindustry.biz, and others.

4 Comments:

At 8:02 PM, Blogger Adam said...

Enabling comments for this post for Brett's response.

 
At 12:11 AM, Blogger Brett Seyler said...

To readers of Adam's blog:

I wrote Adam privately with some of my thoughts on his post and offered that I though some of what has come up in my original post on GarageGames.com, and is discussed, would be a fun conversation to have in public. Thankfully Adam thought so too. Thanks Adam.

When I first read this, I was actually kind of flattered that someone from Emergent even paid attention to what happens at GarageGames. We're significantly smaller than Emergent and we typically serve very different parts of the engine middleware market.

I talked a little bit about Emergent in my post, but mostly I talked about Unreal Engine's domination of the AAA space, and why I thought that for GarageGames to compete with Unreal in this space was foolhardy. I gave several reasons for not wanting position Torque in AAA, but the primary reasons were...

1. AAA is well served. There are many choices for studios with large budgets and requirements for high-end visuals. I count the major ones being Unreal, Crytek, Source, id Tech, and of course Gamebryo.

AND...

2. AAA is not growing. It's roughly the same size market it was in 2000, and even going back into the 1990s when Renderware dominated.

GarageGames' Torque engine is targeted at serving developers in emerging, growing spaces of the middleware market. This is the casual games space, the "indie" or low-budget space, and now, rich web gaming. Because Emergent's pricing puts it a bit out of range for most of these spaces (web gaming is not yet well defined beyond Flash games, so excepting that), and because Gamebryo is mostly a popular choice for AAA titles, I've naturally infered that Emergent's primary efforts were focused in this space.

In my blog I give Emergent little chance of success in AAA. I actually used the words "doomed to fail." Maybe a little harsh, but here's my view on that, distilled as much as I can distill it:

* Retail games are sold mostly on pre-launch hype. This means screenshots and trailers where often little game play is exposed. It's usually a ship-it-and-forget-it affiar with your typical launch sale spike and very short tail.
* The retail games model is not yet broken. It still accounts for more than 80% of Western title revenue.
* Publishers still, to a large degree, have big-bugdet developers locked out of the profits, and as a result, they command authority over the kinds of games that are produced.
* Developers, for the most part, often strapped for cash and eager to land their next game contract, will do whatever major publishers want.
* Because screenshots and trailers are what sell, we have, in the games industry, something that looks very similar to the hit-driven Hollywood movie industry. There's not a lot of room for risk and awesome trailers sell.

So it comes down to what makes an awesome trailer or awesome screenshots. If a developer is on the hook to deliver that, what can they use to make sure they get there? What engine is sure to deliver that 10 time out of 10?

Well, of course none of them are. Some offer real, rendering and visual quality advantages over the others, but for the most part, it comes down to really good artists with a big budget who, and this part is really important, know how to get the most out of the engine.

So if I'm a developer, I'm looking for examples to follow...case studies of success. Engine demos do alright, but they rarely get the kind of investment that a full AAA production game gets. Even the best of them (think Project Offset) rarely hold up to the power of something visually ground breaking like Gears of War or Crysis. So I look around and I see some Gamebryo titles, maybe an id title and a Source title. I'll see a number of Unreal titles, but almost surely I'll see at least 1, really mind blowingly awesome looking game made with Unreal Engine. The best looking one is almost always a product of Epic Games. Great artists that really know how to get the most out of the engine they're working with.

My main point re: Emergent being "doomed to fail" is in AAA (or at the very least, always clawing for 2nd place) is that Epic can guarantee an outcome year after year that Gamebryo can't. Gamebryo has no internal studio with a huge budget and massive team of great artists who work with expert programmers and know how to produce the best looking content with the engine. Epic does. Therefore Epic wins, or is much, much more likely to.

Adam's points out that Gamebryo has been used to ship some great titles and for sure, it has. As I mentioned to him, I'm a HUGE fan of Fireaxis' Civilization Revolution (like disgusingly huge...Game of the Week is a brilliant addiciton). It's a great game, but not one that makes for mind blowing screenshots or trailers. Then there's Fallout 3, one of the real visual gems in Gamebryo's portfolio. It also happens to be a great game to play, not just look at, but again, that's a much lesser part of what drives retail sales it should be.

Obviously this whole "best screenshots = best sales" theory doesn't hold up across the board, but that doesn't mean that developes don't seriously consider it when making their engine choice. Why not just pay that extra perctage point or two to Epic in order for a slightly better chance at a really great looking game (or so it goes in the developer's mind...I think).

Note that every other engine in the AAA space has a AAA studio backing their play except Gamebryo. This makes it awfully hard to compete in the current environment. To their credit, they've competed well. To my knowledge, Gamebryo is really good technology and as a company, I think they've made some really smart moves. They expanded East faster than any other middleware provider with smart partnerships, something I wish GarageGames had the resources to do. They're integrated with pretty much every major 3rd party middleware I know of (purportedly "out of the box" but I don't know this for certain). Anyways, lots of good moves and pretty good tech. Is that enough? I don't know, but I'm not betting on it. At least not without some major shake ups in the value chain from developer to customer.

I don't expect Adam to agree. It would be hard to go work in the morning if you didn't think you stood a chance :) Maybe Gamebryo can overcome this strategic disadvantage or it could be that my theory is all wrong and Gamebryo is actually the only one doing things the right way.

In any case, great write up Adam. I think your take on my stuff was pretty fair and accurate, even if you mistook my statements as undermining Gamebryo technically when I wasn't (or wasn't intending to anyway). Thanks gain for allowing me to post and for reading my blog. Hopefully we can both shake things up enough to see Gamebryo and GarageGames succeed together!

Brett Seyler
www.garagegames.com
www.instantaction.com

 
At 11:49 PM, Blogger GooDad said...

Great posts and back-and-forth, guys. I really enjoyed it. Actually read the whole thing! Good points by both, and I have a few thoughts of my own that I'll have to chime in with later.
- John Goodale, Crytek

 
At 4:31 PM, Blogger Brett Seyler said...

Nice! I was hoping we'd get an actual conversation going :) Good to hear from you John. Looking forward to your thoughts.

Brett Seyler
www.garagegames.com
www.instantaction.com

 

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