A 'customer report' from Stardock - the closest the company gets to quarterly financial postings - has revealed the extent of the impact which the release of fantasy title Elemental had on company working practices and expectations.
The document is a remarkably open self-assessment for the developer, praising the performance of the company's utility-ware division, but calling the game department's year "difficult." The release of Elemental, which critics agreed showed promise but was deeply flawed, is singled out as a major low point for Stardock, and one which revealed the rot which had set in to the company's development process.
"Last year was a difficult year for the games unit," reads the report. "The release of Sins of a Solar Empire: Trinity was a high point, but the launch of Elemental: War of Magic created a black eye for the company. War of Magic was the second Stardock title that had launch troubles, Demigod being the first.
"Demigod went on to be quite successful, because while it suffered from some initial networking issues, the game itself was excellent. By contrast, though War of Magic was able to resolve its technical problems very quickly, it soon became clear that there were underlying compromises in its basic design, compromises that resulted in a game that fell far short of our expectations.
"Put another way, what appears 'fun' on paper does not always result in 'fun' in reality," adds the report.
"The issues surrounding War of Magic's launch led to a reorganization of the Elemental team at Stardock, and a rethinking of Stardock's development and publishing philosophy. It was determined fairly quickly that Stardock's games unit treated its development process much more casually than the typical rigorous software engineering effort. While such a process can work with very small teams of dedicated personnel who are all comfortable wearing many hats, it falls apart on larger projects."
The report also identifies serious problems with team structure and the Q&A process - problems which the developer feels have now been solved by the appointment of Derek Paxton and Jon Shafer as project leads and the establishment of a new QA process. However, Elemental as it stands is not a title which the company feels is worth much more of its time, moving on instead to a standalone expansion which will reboot the title with new mechanics.
"War of Magic was a disappointment to Stardock and its fans in a number of areas and exposed some deep-seated problems with the games unit," the report continues.
"While War of Magic has subsequently been greatly improved, Stardock is not convinced that this title, with a 55 metacritic average, can redeem itself. Therefore, rather than tie new designer/project manager Derek Paxton to the previously planned expansions of War of Magic, it was decided to have Derek and his team focus on the creation of Elemental: Fallen Enchantress, a stand alone expansion which will not require users to purchase War of Magic."
The document also expresses the company's belief that new business models will start to spread from social, casual and online games to core and traditional titles, mentioning "open-ended strategy" title Society - which Stardock calls a free to play game which was in development before the phrase was ever coined.
"The company does believe that free to play/DLC represents the future for gaming (PC and console). As digital distribution overtakes retail, the necessity of having a game be a monolithic, $49.95 purchase will dissipate, allowing for more flexible models for gamers."
The success story of the last year has been Stardock's proprietary download service, Impulse. Second party revenues for the service tripled over the last year, and although Stardock acknowledges that it won't be troubling Valve's Steam anytime soon - Impulse is identified as its most successful business and growing fast. That has allowed Impulse to avoid the need to stock Steamworks titles, something which competitors have been forced to do.
"However, Steam's dominance over AAA titles increased in 2010 due to the greater utilization of Steamworks by the major publishers. Most decision makers are not fully aware yet that using Steamworks requires their customer to install the Steam client and create a Steam account in order to play the game," says the document.
"Despite this, Steamworks has become so commonly used that Steam's competitors such as Direct2Drive and GamersGate have begun selling titles that use Steamworks (thus turning their customers into Steam users!).
"Impulse's profitability has allowed it to simply not stock titles that use Steamworks. While Impulse has 'only' 3 million users (approximately), that number is more than sufficient to serve as a very effective distribution channel for our partners and for Stardock. Valve CEO Gabe Newell recently stated that Valve is more profitable than Apple or Google per employee. Given the per employee profit of Impulse, we believe that statement. Thus, Impulse has no incentive to force its customers to install a third party client in order to play a game."