Growing pains: Are big studios doomed to fail?
Studio growth is risky - Bizarre Creations, Avalanche, Realtime Worlds and more help uncover the success and pitfalls of rapid expansion
Our industry is a young one and, as any teething toddler or pimpled teen can attest, growing can be tricky business. Recently, however, the repercussions of growing too quickly have been widely felt as not a week goes by without word of a "restructuring", "downsizing" or "shifting focus" among major game studios the world over. Part of this frightening state of affairs is to be taken on a case-by-case basis - as is widely known, when a studio comes to the natural end of a project it often makes financial sense to release certain elements of the workforce (especially if said project doesn't meet sales targets, however unrealistic they may be). It's why many QA teams are on temporary contracts and perhaps why outsourced talent is becoming more commonplace: the hire-and-fire cycle is simply an aspect of our industry. When a game ships, sometimes the guillotine has to drop.
"The hire-and-fire cycle is simply an aspect of our industry. When a game ships, sometimes the guillotine has to drop"
It's disheartening, though, to hear of lay-offs and drastic, seemingly unexpected, redundancies as we approach a new console generation. Equally shocking is that these stories come from across the board - from first-party teams like Studio Liverpool which sank without trace last year to a recent round of redundancies at IO Interactive and a big-scale reshuffle at Zynga which saw teams and studios released from its family. It raises the question of whether there's a more general trend emerging for studios to grow too large, and too quickly, for their own good. Has the game industry, like a rebellious, directionless teen, run on pure instinct, gusto and passion without considering or calculating the consequences? And how can we learn from past and present examples to course-correct for the future?
Patrick O'Luanaigh, director of TIGA, has vast experience of game studio growth in the UK. "I've been fortunate enough to have always worked at growing studios," he tells me. "When I started at Codemasters, I was employee number 30, working in a portacabin. By the time I left, they had over 200 staff and a huge state-of-the-art building. I then joined SCi as creative director, as one of around 30 people at the company. By the time I left, SCi had taken over Eidos, and the entire company had nearly 500 people." The early aggressive expansion of studios like Codemasters and Eidos are often hailed as success stories for the British game industry - beacons of golden-age hope, but O'Luanaigh is honest about the myriad issues that plagued such momentum. Top of the list? Over-ambition. "Overreaching is a problem I've seen happen at both companies - Codemasters ending up half-building a huge amount of office space that they didn't use because their plans were too ambitious, SCi taking over a company that was simply too big, complex and burdensome for the directors involved, in my opinion."
Martyn and Sarah Chudley co-founded revered UK studio Bizarre Creations during a timescale that overlapped with O'Luanaigh's own experiences. Bizarre had humble beginnings when it began in 1994 in the husband-and-wife's home. "We started out with Martyn, one artist and one programmer," says Sarah. "Two desks in the dining room and the artist on the sofa. We added another artist and programmer later in the year and moved into a 500 sq ft office with a tiny sink and loo in one corner."
"We weren't interested in growing, being a big studio, making more money or anything like that - our growth was organic"
Sarah Chudley, Bizarre Creations
From these humble beginnings the company grew from strength-to-strength, awarded the revered Formula 1 licence by Psygnosis with a headcount of nine and growing to 20 people by the time Bizarre was underway on F1 '97. Having proved itself proficient in the genre, the studio produced arguably its finest title with Dreamcast-exclusive MSR - at the time hosting just 35 employees - before hitting the 50-member mark as it entered talks with Microsoft and the Project Gotham series came to fruition. Bizarre's early, experimental years are an inspirational story of a UK indie reaching for the stars and... well, reaching them. And it's undeniably a result of the company and couple's vigorous recruitment policy, as Sarah details. "All of our indie studio growth was for necessity rather than by choice. We didn't want to be big, or important, or 'high net worth' - all that was important was making the best games we could, and employing the people that we did in order to do so. We weren't interested in growing, being a big studio, making more money or anything like that - our growth was organic, driven by the games rather than management strategy... I don't think we even had one."
Christofer Sundberg, founder and CCO of Just Cause developer Avalanche Studios, backs up the sentiment that growth for growth's sake is a path to failure: "It's very individual and depends on the goals you set for your studio. Avalanche Studios has never had a goal stating 'become a 200-plus employee studio'. That mindset has been very helpful and let us grow organically with ongoing projects. We went through quite an aggressive growth phase in 2007-08 and experienced the downsides, so this time around we planned it better. I don't encourage anyone to have the goal of growing. Our goal is simply to constantly get better in the open-world space, to constantly create better games for players."
How you recruit can be as crucial as how many you recruit, adds Sarah. "One thing where I think we were very different to many games studios was our harsh recruitment policy, which showed in our extremely low turnover. Many a time we'd have the artists or programmers excited about a talented person, for them to be turned down by Martyn after a 'casual chat' with them. If someone showed a negative attitude, bitched about previous or current employers, appeared arrogant or had the wrong long-term attitude, we knew they wouldn't fit in with our passionate and close-knit teams. And industry 'bouncers' never even got a look in. Our leaving rate for the first 10 years or so - up to 100 employees at a guess - was only about one person per year."
The Magic Number
Even with such an honest approach to staffing levels and approval, Bizarre did inflate to what might be argued was an extreme size. "We gradually and organically grew to about 100 as we went through the first PGR games," Martyn reveals. "Upping as we needed to as the technology increased. Xbox 360 needed more people to develop for than Xbox, for example. At the point that we became an Activision studio we were about 160 people, and they grew us quickly - more so than we had in the past - to a peak of 220 people."
As a game journalist I've talked to and visited a vast number of game developers over the years - from the biggest to the smallest - and one thing that has been a constant in my discussions with teams and studio managers on the topic of growth is the negative effect a spiralling headcount can have on company atmosphere. The trickle down ethos of a studio, of a creative vision, can dilute as team sizes grow. I ask Martyn if he can relate and the answer is simple: "Yes, agree totally. For the most part, [the atmosphere] stayed the same up to a certain level - perhaps 120 or so people? We still had company holidays - officially team building trips [laughs] - for all the staff and their families, partners, every two years. Disneyland Paris, Majorca, Portugal, and then Center Parcs when it became too many people to fly."
"Once you get past 200 you hit a horrible point where you're strolling down the corridor and you realise you don't know the guy coming towards you"
Colin MacDonald, former studio manager, Realtime Worlds
The 120-employee mark is the point at which Martyn painfully remembers the times "when we occasionally saw a new face and struggled to remember their name, and when the office management team didn't know whether or not we should add a partner or family names to the Christmas cards from us. We did still interview pretty much everyone up until we had an official Activision HR department to organise our expansion."
It's a moment of realisation that Colin MacDonald, former studio manager of Realtime Worlds and now Channel 4's commissioning editor for games, can recall from his own experience. "It got tricky after [Realtime Worlds] went past the 100 people mark," he says. "There were stages during the journey towards that headcount: At first the team was small, you knew everyone. There'd be company get-togethers, families would come along, you knew everyone, you'd know their names and those of family members. When we went past 75 people or thereabouts, you started to realise you couldn't keep track of all the families. After 150 employees you started thinking, shit, I can't even remember the partners' names now. And then once you get past 200 you hit a horrible point where one day you're strolling down the corridor of the studio and you realise you don't know the guy coming towards you, if he works there... That's horrific, that realisation that there's someone you don't know if he's supposed to be there or not. That's a horrible point to reach."
"If we'd have had a choice, we'd have stayed below 100, definitely" adds Sarah. "Sub-50 employees were the most fun, intense and enjoyable days, but the passion and dedication that we put in then would be hard to match in our mid-40's with a family on the way [laughs]."
In my own experience, the biggest group of victims of an over-grown studio tend to be, at least initially, the very bottom rung of the employee food-chain (of which I've previously been a part). It's why you can find QA teams with a sense of detachment from a company and project, where an 'us and them' mentality can be fostered and why there may be some mileage in current arguments for the unionisation of the game industry. If teams grow but management style remains the same, the company's message and sense of belonging is spread thinner and thinner across a more numerous group of people.
"[At RTW] we managed to keep a really tight community up until about 100 people and I think that's to do with the ambition of the games we were making," remembers MacDonald. "I've seen studios lose tight community at 50, I've seen others prosper into the hundreds, I think it depends on the individual studio. It's about communication, and that takes effort, you have to make sure the right structures are in place but also that the right barriers are out the way. People need to talk, go for a coffee or a beer or whatever it takes - encourage them to talk, you should all be pulling in the same direction, you don't want an atmosphere or any politics that can inhibit back-stabbing or disrespect. You've got to actively prevent that, it doesn't happen by itself, you need to align the vision of the studio."
"Those opportunities which grow out of change inevitably also mean destruction"
Halli Bjornson , Lockwood Publishing
"Of course the studio culture changes with fast growth and you stop remembering the names of everyone," adds Sundberg, whose more recent experiences of that aforementioned 2007-8 expansion echo the lessons of the past. "But depending on how you act as a studio head, I think you still have the ability to make things feel small and personal in that large setting. All in all, as long as you plan your studio growth well, I think you'll be fine."
O'Luanaigh agrees: "Along the way, I've learned many of the pains and problems that come with rapid growth," he says. "One of the biggest is the importance of delegation. Directors and managers need to delegate and properly empower other people in order to grow a business properly. This was something that caused real issues at both Codemasters and SCi-Eidos."
Changing Times, Repeated Cycles
While a discussion of the macro- and micro- levels of studio management are crucial to the issue, there's an established pattern to the growth of game studios that extends to the earliest years of console development, and it's determined by a wealth of complex external factors - from audience demands and tastes to industry tech and economic turbulence. "The industry seems to have continual cycles," says O'Luanaigh. "Small teams consolidate and grow big. Big teams burst and split out into lots of smaller teams. And the cycle continues. Over the last decade, we've lost all the big British publishers, and many of the large British development studios. We still have some incredible 'traditional' studios making retail games, but most of these teams are publisher-owned, like Lionhead, Rocksteady, Media Molecule or Rockstar North. There are very few big traditional 'independents'. But in their place are a new breed of digital studios and publisher making different kinds of games - companies like Natural Motion, Mind Candy and Jagex, to name just a few. I think we'll see these companies grow, consolidate and become the big new UK publishers. And no doubt the cycle will continue again in the future..."
We may be gearing up for a new console generation and a potential rerun of those traditional cycles, but it's now an entirely different, unprecedented landscape compared to that of any previous era. In many respects the walls have come down on triple-A game production; we're in the age of the indie and the decline of retail. And it means that there's fresh opportunities arising for teams like O'Luanaigh's own nDreams: "The number of AAA retail games being made is now much lower than it used to be," he explains. "There are fewer big publishers making fewer big games. It's simple supply and demand. Combine that with digital platforms like iOS, Android, PSN and Steam, where studios can publish their own games, own their own IP, manage their own community and keep 70 per cent of the amount that players spend. It's not surprising that the development community has split. There is a big chasm growing between the small numbers of big retail studios and the large number of small digital studios."
Sundberg's own studio is an example of the shifting sands of the game development scene, as his teams tackle not just the major IP open-world actioner Mad Max but also smaller-scale projects in parallel: "I think there will be many opportunities for collaborations between console focused studios and tablet, iPhone focused studios. Even though we have a mobile game in development at Avalanche Studios, we realise that we can't be the best at everything, so I hope we'll see some really cool collaborations to make our future games even bigger and more immersive."
"The day we start focusing on being a business rather than a game development studio, we've lost our soul and our right to exist"
Christofer Sundberg, Avalanche Studios
The new marketplace that accommodates smaller teams is proving fertile ground to nurture the likes of Lockwood Publishing - a premier developer of PlayStation Home titles - and Roll7 - a fresh indie outfit soon to be launching its first Vita game, OlliOlli. Lockwood's co-founder Halli Bjornsson has firsthand experience of a sudden redundancy in the industry; it's actually what lead to his resurrection with Lockwood: "We lost our jobs essentially because a studio we were working at was closing and decided to go for it. When you've got your company up and going then the challenge is to ride those changes whether its up or down. One of the main attractions the industry has for me apart from it's creative aspect is that it changes all the time. It's a constant sea of opportunities but those opportunities which grow out of change inevitably also mean destruction. It's all part of it."
The rapid changes in the industry are why Bjornsson is keen to keep a close eye on the size of his own workforce: "The biggest threat [with rapid growth] is that you're reducing your ability to respond to change. You're always going to have some hiccups you didn't plan for as well so my main consideration would be to have enough access to cash to allow us to deal with any potential hiccups that come as a part of growth."
Tom Hegarty, director of Roll7, whose workforce has grown from three to five with additional back-up in the form of freelancers on art and design duties, is similarly cautious. "We could have grown more quickly than we have, but in the long-term we've actually downsized to keep control of the amount of cash that could sustain what we wanted to do. At the moment we're happy with where we are, but it'll depend on the performance of our next game [OlliOlli]. From there we'll look at the next step, whether its funneling more talent into porting OlliOlli to other platforms or approaching new IP. We like the creative control we have at the moment and we need to be cautiously optimistic about what we do next."
This new guard of developer is one that has clearly taken heed of the game industry's past, carefully iterating itself towards a headcount that serves creativity rather than any deluded over-ambition. The issue of growth and the lessons explored and explained here may be complex and layered, but one thing is undeniable: Our industry is young, passionate and changing fast. It's clearly essential, in light of this, that it takes some of the vital parenting lessons from the old guard in this feature to heart to ensure that responsibility and respect for new recruits - which extends to refraining from insensible hires in the first place - should be a central, universally embraced strategy across the board.
Famous last words
Christofer Sundberg, Co-founder and CCO, Avalanche Studios: "In terms of nurturing the studio, I'd like to encourage studio heads to not lose touch with games development, which was probably (hopefully) the reason they started their studios in the first place. I know it's easy to get detached as the budgets and projects grow, as bigger publishing partners and investors join, but without the passion for game development you will fail.
Finally, everyone wants to make money, but I have always said that the day we start focusing on being a business rather than a game development studio, we've lost our soul and our right to exist. Passion for games is everything. If you find yourself flat broke (I've been there) and still feel motivated to create the game of your dreams, you're a winner."
Patrick O'Luanaigh, Founder nDreams and director, TIGA: "At nDreams, I've tried to keep the balance between being too cautious and growing too quickly. I think that is part of the reason why we're going strong after nearly seven years - we've never failed to pay anyone's salary on time, and we have a really happy team with very low staff turnover. I think in the future you'll see a real mix. Some companies will be making big next-gen retail games with 250-plus development teams. Some studios will be making bigger and bigger mobile/tablet games with teams from 10 to 50 people. And some teams will be making small digital games on their own in their garage.
One strategy I'd recommend to new studios is mastering a niche. Find a niche that you understand really well - wakeboarding, cake decorating, bomb defusal or snooker - make some mobile/tablet games that hit that niche brilliantly well, and find that you have a great business with a passionate community that is too small for an EA or Activision, but just perfect for you."
Sarah Chudley, Co-founder, Bizarre Creations: "If your main drive is to be a big developer, be an important voice in the industry, to be rich or be famous, then... get out of the industry. We have seen many newcomers over the years thinking that joining the games industry is the way to achieve these self-centred goals, expanding from zero to unmanageable in stupidly short times, signing every funding source they can get their hands on, signing any and every project so they can say 'we're developing 15 games' or whatever... unfortunately, for most, if you're not driven by the games themselves, and passionate about them, then it will come back and bite you some time.
In terms of staffing, treat everyone as equals, not staff You need to be a true team, and all have the same focus and philosophy, attitude and ideally humour too. One person who isn't pulling in the same direction can affect the whole balance, so choose your staff with extreme care, quiz their personality as much as their technical ability, and give raw talent a chance. About two out of three of Bizarre's staff hadn't had any industry jobs before, or came straight from college - or stacking supermarket shelves, packing bacon or driving forklift trucks."
Halli Bjornsson, Co-founder, Lockwood Publishing: "The main thing that comes to my mind when thinking about the dangers of scaling up are the ones that are linked to work for hire contracts. It seems like this is the main studio killer in the UK. You build your studio up on running successful work for hire contracts and then one day one gets cancelled and you have to close the doors. We put a lot of emphasis on getting into publishing our own content as early as we could so we could start going down the route towards independence. We don't mind doing work for hire and partnership projects but you want to mix it at least so you're not totally dependent on work for hire. Publishing your own content also happens to be the most rewarding part which doesn't hurt.
The biggest risk I see with self publishing is simply running out of cash between projects because your last product didn't sell enough to cover the next one. This is why we prefer products as a service where there is no specific major release but rather a continuous and gradual release of content. You could say that there's potentially a golden age upon us in games from the perspective that more people will be able to make and create games they want to create due to the Longtail dynamics. There is more of a business model now for smaller teams alongside bigger on mobile. This may change however as mobile devices become ridiculously powerful and demand higher production values and the companies who gain dominance in the mobile sector initially out-muscle everyone on their marketing spend. That's the usual trend, it happened on console and happened on Facebook. Initially then teams on PS1 were tiny in comparison to what we have today as an example. We may enjoy a brief golden age in the short term.
Tom Hegarty, Director, Roll7: "This new era of the second screen, cross-platform game development is a new frontier for [smaller] game developers. The fact we're publishing at the end of the year to a fixed, huge installed base of fans on a Sony platform [with Vita] is amazing. To be able to cut through the marketing and publishing hurdles, for a team like us with no marketing budget, is amazing."
David Valjalo is a freelance writer and game consultant