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Torsten Reil: "We can create a world-leading games economy in the UK"

Torsten Reil: "We can create a world-leading games economy in the UK"

Fri 29 Mar 2013 2:02am GMT / 10:02pm EDT / 7:02pm PDT
MobilePeoplePublishingGDC 2013

The Natural Motion boss on why he sees opportunity in Great Britain

Sometimes you have to cut down the big trees to let the forest grow. So it has been in the UK game business, where we've seen several trailblazing new studios rising from the ashes of old business models to become domestic industry leaders.

One of the prime examples of that process is the runaway success of Boss Alien with CSR Racing, which saw the studio snapped up by fellow UK company Natural Motion - a middleware company turned publisher with an eye to bringing the UK's development community back to its former glory.

Following a talk from Boss Alien chief Jason Avent on the art of good monetisation at GDC this week, GamesIndustry International caught up with Natural Motion founder Torsten Reil to see what makes him think that he can replicate the success of CSR with the country's industry as a whole.

Q: So we saw Jason Avent of Boss Alien presenting on how to work the micro-transaction model earlier - something his team has done superbly with CSR Racing, which lead to your acquisition of the studio. He was telling the crowd that you now sell more cars in CSR than all of the real world motor manufacturers added together...

Torsten Reil: Yeah! So we're selling around 120 million cars a year in CSR and the global car production business is around 60 million, so we believe that we're the biggest car manufacturer in the world. Virtual cars, admittedly, but...

Q: Are you able to give any indication of what sort of revenue you're generating from that?

Torsten Reil: I can give you some figures to triangulate! We've got around 200 people at the company and we're comfortably profitable - that should give you some idea. I can't give you exact figures because, after all, it's a competitive market.

Q: So I presume you're moving more and more into that market of looking at acquisition. You're stable financially, you've got a wealth of in-house tech which you can easily pivot new projects around - and the first thing you asked me when I sat down was who I thought you should keep an eye on...What are your immediate and long term plans for building the empire?

"We're around 200 people with the majority working on internal development"

Torsten Reil: We do a lot of internal development as well now - as I said we're around 200 people with the majority working on internal development. Our biggest office is in Oxford, we have a studio in London, obviously Brighton with Boss Alien and then we've got a San Francisco office just around the corner which we've just founded. They're all really nice offices, in fact - every studio has fairly recently moved into new offices.

Anyway, the upshot of all of this is that a lot of the focus is on the internal games which we're developing right now but we are on the lookout for pockets of talent. That's something we're going to be pushing a lot more now in the next few months, especially in the UK.

We're particularly looking for teams that have strong leadership and that have a really high commitment to quality, which is exactly what Boss Alien had. I believe that Britain probably has the best development capacity for high-quality mobile games because of the mobile background and we believe that this is becoming more and more important now as we see faster and faster mobile devices.

So our plan right now is existing game development but starting to look for really great teams in the UK, who really want to make a difference and have their games played by millions of people.

Q: Previously your business has pivoted on licensing your tech out to other companies. Is there a point where you start to say, actually, we want to keep this tool or middleware to ourselves because we think it's so good?

Torsten Reil: That's a very good question and the answer is...kind of. On mobile we do believe that our technology is providing us with a competitive advantage because we're the only company which has fully interactive characters, which on a touch screen is magical - it works really well.

Having said that, on consoles - and the next generation of consoles as well, we're licensing our technology, we licence all the really good stuff as well. Anyone working on really high end console AAA games can licence our technology, but on mobile we don't licence it.

"Mobile is already quite a lot more profitable than our technology business"

Q: So you see mobile as your core business going forward?

Torsten Reil: In terms of revenues, yes - it's already quite a lot more profitable than our technology business, but that doesn't mean that our technology business isn't important to us because A it provides revenue and B it's a very important part of our DNA. We're a very technology-driven company. We love using technology as a way of making something really cool.

Not just technology for technology's sake, but when you create something that nobody else has and the audience loves it, you create a real competitive advantage - because then you don't have to spend lots of money on user acquisition because people want to download your games.

Q: It's great to hear someone who's heading in the right direction saying what you have about the UK dev scene, especially after such a tough few years. Do you see that growth and fracturing process which has given rise to studios like Boss Alien as necessarily cyclical? Will we see it happen again with mobile?

Torsten Reil: Well it won't repeat itself on mobile, I don't think. There are a number of reasons that the UK games industry is in the state that it's in. Some of it is cyclical because obviously the console business has been quite tough - for everyone, retail has been quite difficult. But that's a secondary trend which is much bigger and at a much faster cadence in the UK which is that I don't think the UK publishing business was managed particularly well, quite frankly. The results were that we had very few publishers which were competing globally.

I think that really hurt the UK and I think that's why we have so little of the world industry right now. I think the talent is still there - as you've said some companies have already risen, new companies will come and hopefully people will want to come and join us and make really kick ass games. The opportunity now is massive: if you're a great developer, designer or artist, now is the time to really use that skill.

I'm glad in the UK that the attitude towards free-to-play is shifting, because last year it was still pretty problematic.

"I'm glad in the UK that the attitude towards free-to-play is shifting, because last year it was still pretty problematic"

Q: Free-to-play and mobile were still pretty dirty words.

Torsten Reil: Exactly, and that's changed pretty dramatically over the last 12 months, especially in the last 6-9 months. That now means that all those talented people who can make all those games for those platforms are now considering it - we definitely think that right now. We believe that we can create a world-leading company and a world-leading games economy in the UK. We truly believe that.

We've always shown that we can create some of the top grossing games in the world. If you look at the top grossing charts now it's not just American companies, there are a lot of European and UK companies.

Q: Do you think we'll ever get back to the stage of producing those world-beating properties again, those tentpole IPs? Or will we be more likely to succeed by producing a larger ecosystem of well performing games?

Torsten Reil: In terms of companies or games?

Q: Both.

Torsten Reil: We'll be creating some of the biggest games in the world - and we'll be creating much bigger blockbuster games than ever. That's true in terms of terms of absolute revenues as well as in terms of absolute profits. Again, with CSR Racing - the profits of that game will be much higher than most, or at least a large number of blockbusters. It's a super profitable game. Revenues are so much higher than the actual costs.

That's just one side. Fast forward another couple of years and you'll see at least a couple of games that are annual billion dollar franchises. We already see that in Japan at Gung Ho with Puzzles and Dragons - probably doing around $100 million dollars in revenues per year in Japan alone on one game on mobile. What we think about as a big, AAA game is going to shift completely anyway. What we now look at as big and AAA will be dwarfed by what we now think of as the small games.

"We can create a world-leading company and a world-leading games economy in the UK"

Q: The games that really pushed mobile development to the forefront of money-making weren't particularly reliant on high-quality graphics or complex tech - because they weren't available. As tech and fidelity becomes more important and more predominant, do we risk mirroring the console cycle and driving out innovation in favour of focusing on graphics instead?

Torsten Reil: Yes, the risks exist in theory if people think that games need to be made in exactly the same ways - we are already seeing some games on mobile which are console games in terms of their production values which is great, but also in terms of their play patterns which is not so great. If you treat a mobile game exactly like a console game you have a problem. If you treat it like a game designed for the device in terms of its play pattern, but also in terms of having a very focused core loop, you can play the game entirely differently.

Even a pretty high-end game, that goes beyond current console levels, you can do it pretty cheaply if you do it on mobile. We have an opportunity to learn from the console design process in mobile. To be much more nimble and much more efficient when we're using our resources.

Q: The rise of IAP and monetisation has come with inherent problems - games are being punished at review for over-aggressive monetisation and we've seen Apple having to refund some customers for IAP too. Where does the responsibility lie for preventing this? Should it be with you, or should customers only spend what they can afford?

Torsten Reil: It's everywhere. We have a responsibility to provide good value - the biggest thing we look for, our guiding light, is to avoid buyer's remorse. If you have buyer's remorse in your games you're doing something wrong. If you get that then your customers aren't going to spend again. But equally parents and consumers also have responsibility. It's not like how much you're spending is hidden.

To be honest, I think we'll all end up reaching an equilibrium once we calibrate what's normal, the same way they've reached what's normal in Japan and Korea. We'll get there.

6 Comments

Bruce Everiss
Marketing Consultant

1,692 594 0.4
He is so right. During the console era most British publishers sold out. This left us with lots of development but very little strategic marketing capabilities.

Now we are in the digitally distributed era the cost of market entry is low, so suddenly there are hundreds of new British publishers and strategic marketing skills are having to be learned from scratch.

Canada threw a fortune at console development, which is now looking like a very bad investment. The transition is proving painful in the UK, it must be much worse in Canada with their monoculture.

Finland, per capita, is dominating the digital marketplace. Their governments both national and regional, are switched on in a way that makes the UK look positively slow. And they have an amazing legacy coming out of Nokia. But surely they will just eventually run out of people?

The UK is doing well. Natural Motion, Chillingo, Neon Play, Mind Candy, Jagex, Playfish, Full Fat etc. There are a few big old console studios on the point of imploding. Each of these will rise from the ashes in the form of a plethora of new digital studios. The sooner the better for everyone involved.

Posted:A year ago

#1

Murray Rigluth
Director Development

5 12 2.4
Nice post Bruce - find myself agreeing with you 100%... I also think Finland is a pretty agile country, but that geographic region has always innovated and in 'my opinion' led the way in consumer driven technology/services - e.g. paying via SMS in 1998 for vending machines - to name one of my favourites...

It would be good to see the UK leading the way again though - some really great talented people I have worked with over a number of years - deserve the success and recognition.

Posted:A year ago

#2

Keldon Alleyne
Handheld Developer

428 405 0.9
One problem that needs to be solved: standard deviation (of revenue over production cost amongst developers).

Anyone who knows about economics, maths and business will know what that means.

Bruce, any thoughts?

Edited 1 times. Last edit by Keldon Alleyne on 29th March 2013 9:45am

Posted:A year ago

#3

Nick Parker
Consultant

279 143 0.5
That bell curve Keldon can be a curve of opportunity if management know how to run a business.

Natural Motion and Supercell - two businesses which successfully took the risk to explore new models. One moved into publishing, the second from a MMO (Gunshine) to mobile (Clash of the Clans) and both got it right. Although NM hasn't dropped the mocap tech, it knew when to take a deep breath and explore a different business model, as Supercell did. The industry should take note.

Posted:A year ago

#4

Keldon Alleyne
Handheld Developer

428 405 0.9
That's always the nature of risk, though the big picture which is what I am more concerned with is a climate with a higher failure/success ratio. Naturally there will always be successes in any given climate: either there is a king of the food chain, collective success or total failure.

A stretched bell curve gives rise to monopolisation and gold rushes where you either hit gold or strike coal (with low batting odds at that).

Key question: how many can succeed?

A high standard deviation allows less studios to succeed, worse yet if it is skewed towards failure; so the success of NM and Supercell says nothing about the economy on the larger scale.

It's a bit like saying, if you work hard you can get out of the ghetto and onto wall street. The truth of the matter is that yes, you can get out of the ghetto and onto wall street; but only one of you can because there is not enough room for the other ten million of you down there. So yes, you can succeed, how many big fishes does this type of climate allow? and how does the available successes compare to the number of those competing for it?

Posted:A year ago

#5
I think the real headwind for everyone is going to be lending, credit and the possible currency crisis headed our way. For those that can whether this storm and come out the other side, there may well be plenty of opportunity, but I worry many arent going to make it through the storm.

Posted:A year ago

#6

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