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DDM Agency: "The midcore market has been really brutal"

Joe Minton, co-founder of DDM, talks with us about the death of midcore and the state of the industry for developers

It's a time of great change in the game industry, with new platforms, new business models, and many new development studios and publishers. Somewhere in the intersection of all this lies Digital Development Management (DDM), which bills itself as the world's leading business and talent agency for video games and digital entertainment. The agency combines a variety of services under one roof, according to president and co-founder Joe Minton. “DDM has three initiatives,” Minton explained. “The first is to represent talents in the industry, the companies that make games. We represent about 40 companies around the world that make top-line console games, PC free-to-play games, social, mobile, tablet, you name it. We help those developers get deals, help them find great deals for their businesses and advise them moving forward.”

“Our second division is our consulting division, where we help people who are looking to make big publishing plays in the business, and how to organize and run their company,” Minton continued. “Our third division is our game production services division, and the goal of that division is to fill in all the gaps that are needed to complete a project. We've established representation agreements with the very best in the world across all these categories so we can bring a complete solution to the table for any game project there is.”

Given DDM's position at the crossroads of the game industry, Minton has a broad perspective on the current state of development deals. It is difficult for development studios living from contract to contract. “What we've been going through in the industry is the midcore projects having gone away a fair amount,” Minton said. “DDM started working in China three and a half years ago to develop relations there because we knew that free-to-play PC games were going to be very important for development studios. Now many of our clients who made midcore console games have transitioned successfully and gotten projects that have kept their companies in business, creating free-to-play client PC games. That's the type of thing that I'm really proud of, because we're helping companies to see what's coming and adjust to that.”

Opportunities have been drying up for developers in the console market, according to Minton. “The midcore of the console market has been really brutal,” Minton said. “Games that three and four years ago maybe cost $6 to $14 million to develop, most of those opportunities have gone away due to a combination of the recession, the transition and the rise of mobile, tablet, and free-to-play. All those together have wiped out midcore market. There's an argument to be made that a couple of years into this new console cycle it may come back again, but we'll see.”

"Games that three and four years ago maybe cost $6 to $14 million to develop, most of those opportunities have gone away"

Joe Minton

Still, Minton feels there are development contracts out there to be had. “I'm not down on the overall console market. We continue to sign huge projects for clients for next-generation games, and we continue to sign digital products for the Xbox Live Arcade and PSN. There are still opportunities there; it's just that the midcore went away. Most development studios were reliant on the midcore to stay in business.”

One of the questions about next-gen development has been the cost of development; some developers have pointed to the additional cost of doing models with greater polygon counts and higher resolution textures. Minton has a clear view of where the budgets are headed for next-gen console titles. “Major publishers will have a few properties that they are really going to put big bucks behind,” Minton noted. “Those projects will be $30, $40, even north of $50 million in development costs. But that will be a subset of the projects, and I believe that most of the next-gen projects are actually being built on similar budgets to current-gen.”

Minton offers a few reasons for that. “One is simply the credit capacity of the publishers has not increased; you could argue that it has diminished since the last console cycle started up,” Minton said. “The next is that developers are getting much more comfortable with outsourcing a variety of their development needs to keep costs down. The third is that there continues to be ongoing improvements in engines and tool set technologies that can be licensed to reduce risk.”

Minton sees that publishers are putting more effort into mobile and other platforms rather than consoles. Publishers do not seem to be making as big a push into next-gen consoles as they did at the beginning of the last console cycle. “You could say with the last generation of consoles that most of the publishers were following a fairly similar strategy, in having a few bigger bets and a bunch of midcore, and trying some licenses and some new. There was a degree of difference among publishers but not a marked difference,” Minton observed.

“Now, publisher by publisher, you'll have a given publisher that's making a much stronger bet on digital, or a much stronger bet moving away from consoles,” Minton said. “Other publishers are putting their toe in the water on digital, but at their core and at their heart they are really a retail, primarily disc-based console publisher. We've been seeing over the course of this last year virtually every publisher wrestle with how much they want to go with straight-up mobile and tablet. The answers are coming down very dramatically different company by company.”

"It is going to be a world where people are gaming in sufficient quantities to run profitable businesses on consoles, on PC free-to-play, on PC download, on mobile, on tablet, on social, and maybe even on dedicated handheld gaming devices. It's an all-of-the-above world"

Joe Minton

Does that mean somebody's going to be right and somebody's going to be wrong? “I'm a huge believer in all of the above,” Minton said. “It is going to be a world where people are gaming in sufficient quantities to run profitable businesses on consoles, on PC free-to-play, on PC download, on mobile, on tablet, on social, and maybe even on dedicated handheld gaming devices. It's an all-of-the-above world.”

Ten to fifteen years ago there was a standard formula for creating a profitable game, and that seems to be tossed in the junkheap. There's no set strategy for anybody, and everybody's trying to craft a strategy that's successful for them and plays to their strengths, and it's different for everybody. “The net result is it creates a lot more uncertainty, more time taken for things to get signed up, more chaos, and in chaos there's definitely more damage that's caused, but there's also more opportunity,” Minton said. “That's fundamentally why we started up the production services group, because we see within this chaos an entity that has for example, raised money to create a mobile fund, but they're not a publisher. They don't have departments throughout their company that handle PR for the games, or marketing for the game, or customer support, or customer service. They don't know what to do with the data that's generated from live operations, there's no clue of any of that. To be able to plug all those gaps and say 'Here's a solution'...we're finding very willing ears.”

The shift from fire-and-forget game development to games as a service is a huge shift, according to Minton. “For developers, this concept of having a group of people not just creating DLC and then being done, but perhaps needing to have those people being dedicated for a year or more can be tremendous. It can provide an ongoing set of revenue that helps to weather the timing of signing new deals, but also can add greater risk because they need to keep those people available, and it's even more of a scramble to line up jobs for those folks.”

The explosion in crowdfunding over the last year seems like a positive trend, according to Minton. ”I love it. It's great to see that folks can raise multiple millions of dollars with the right kind of package that can lead to a quality game. Everyone in the game industry has lamented different game genres that have fallen by the wayside as they could not support the ever-increasing game development budget.”

Still, Minton feels the whole crowdfunding story has not yet been written. “Like other folks, we're all holding out breath for what's going to happen when the first high-profile one blows up. A third of all games put into development, no matter where they're put into development, don't see the light of day. So that will happen to some degree with Kickstarter games as well. Whether the crowd is accepting of that risk or not, clearly we will find out over the next 12 months because something will go wrong for at least one high-profile product, just by the laws of chance.”

While many observers wonder if the next generation of consoles will be as big as the current generation, Minton has no doubts. “I think it's going to be bigger,” he said. “The really high-profile games continue to grow the amount of cash they can generate, and the consoles will still be driven by huge hits as before. There may be less midcore, at least at first. There will be much greater focus on ongoing monetization strategies. I don't believe that the next generation is going entirely free-to-play, but it'll be much more likely there will be large games that continue to monetize the big hits, not just for a few DLC packs but for a year or two for players. Bringing that kind of revenue stream into consoles, while still having huge hits, will mean the market is very likely to be larger. Not to mention the fact that every single day there are more people gaming in the world than there were the day before.”

"For next-generation the buzz is much more 'game as a service, ongoing connection to the customer, continued content'"

Joe Minton

Minton looks at the differences between the current generation of consoles and the next generation and sees games-as-a-service being key. “The buzzword for the current generation, when products are being pitched to publishers, was 'the game plus a ninety-day disc retention strategy.' That meant ninety days worth of downloadable content to make it so that the consumer would want to keep their disc for three months and not trade it in as a used game a week after getting it. For next-generation the buzz is much more 'game as a service, ongoing connection to the customer, continued content,' maybe even considering in the initial plans what a year of content would look like for a game.”

The global market for games may change the nature of what developers are putting into their games, because they have to think about the potential audience in China or Brazil or other areas. “The smart ones are doing that, but certainly most are not,” Minton notes. “When you see particular content developed in any one region of the world that is successful in lots of regions of the world, either it was plain luck or they really spent time to make what they were up to culturally relevant, understood or at least not dramatically offensive. It's a global market; the rise of the rest is in full swing in the video game business. Who would have thought three years ago that China would have such a towering video game industry?”

“With mobile and tablet platforms, in the areas of the world that were non-factors in gaming, like the Middle East, now there are hundreds of millions of people coming online with high-speed internet and the exact same phone or tablet that anybody in North America or Europe has. That's hundreds of millions of gamers who are suddenly coming online immediately, versus building up slowly. That's happening everywhere. It's astonishing.”

Minton feels that while it's become more difficult for developers, there are many more opportunities for them. “The good news for the more professional game development studios is that the mobile budgets are increasing as the customers are demanding higher quality games,” Minton explained. “As those budgets increase, that means that the team size increases, that means the production management requirements need to be more professional, and that speaks very well for the companies that are established.”

The DDM Agency's Game Production Services division can fill in for any area that a developer might be needing, such as audio, marketing, customer support, community management, testing, or anything necessary to bring a game to market and support it once it's on the market. If you're a developer and are wondering about any aspect of bringing a game to market, Minton urges you to give DDM a call. “It's zero cost to call and there's no obligation, and DDM matches the developers up to the best source for that service,” Minton said.

DDM has partnered with numerous service providers, including [a] list Games, Crisp Thinking, Imagination Studios, Levenson Artists Agency, Localize Direct, and Massive Black. A full list of DDM's GPS partners can be found on DDM's website here.

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Steve Peterson avatar

Steve Peterson

Contributor/[a]list daily senior editor

Steve Peterson has been in the game business for 30 years now as a designer (co-designer of the Champions RPG among others), a marketer (for various software companies) and a lecturer. Follow him on Twitter @20thLevel.

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