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An industry boom leaves mid-size studios behind

10 Years Ago This Month: A swath of studio closures suggests how significantly the HD era upended the status quo

The games industry moves pretty fast, and there's a tendency for all involved to look constantly to what's next without so much worrying about what came before. That said, even an industry so entrenched in the now can learn from its past. So to refresh our collective memory and perhaps offer some perspective on our field's history, GamesIndustry.biz runs this monthly feature highlighting happenings in gaming from exactly a decade ago.

A Rising Tide Swallows Small Ships

It was the best of times, it was the worst of times. 2008 was a banner year for the games industry, setting retail sales records that have yet to be topped or even seriously challenged. The Xbox 360 and PS3 were really hitting their stride, the Wii was difficult to find on shelves a year and a half after launch, and the Guitar Hero-fueled rhythm game craze was being turned up to 11 with the imminent launch of Rock Band. But while the AAA space was awash in money, many mid-tier developers were struggling.

"While the AAA space was awash in money, many mid-tier developers were struggling"

April made that abundantly clear from the get-go, with a trio of studio closures in the first week alone. First, Don Daglow's Stormfront Studios suspended operations after nearly 20 years. In its early years, the company created the original Neverwinter Nights for America Online, as well as the Tony La Russa Basbeball series. By the time of its demise, it was more known for working on film adaptations (Eragon and The Lord of the Rings: The Two Towers) and licensed titles (the console Forgotten Realms effort Demon Stone). Its last original titles came in 2001 with the Xbox-exclusive nautical combat game Blood Wake (which really did have impressive water effects for the time) and the PS2 RPG The Legend of Alon D'ar. At the time of its closure, Stormfront employed a little over 30 people.

Castaway Entertainment was the next to go. Founded in 2003 by ex-Blizzard veterans of the Diablo series, Castaway worked for years on a Diablo-esque game called Djinn (see video below), which it never formally announced. A number of unrelated projects had been cancelled, and by the time of its demise, Castaway had only shipped a single title, the Xbox Live advergame Yaris, a racing game promoting the Toyota car. The studio employed 25 people.

Cover image for YouTube video

The first week of April also saw the closure of Pseudo Interactive. The Toronto-based developer of car combat games like Full Auto and Cel Damage lasted more than a dozen years and had grown to over 50 people before it ran out of gas. It had been working on multiple titles for Eidos, but the publisher was on shaky financial footing of its own at the time and shelved those projects, leaving the developer up a creek.

The rest of the month brought more bad news, as Sega confirmed that it would be closing its Birmingham City-based Sega Racing Studio after just three years and a single published game: the well-reviewed Sega Rally Revo.

"Activision renamed Z-Axis to Underground Development in February of 2008, foreshadowing where it would be putting the studio just two months later"

Finally, Activision announced it was shuttering Underground Development, better known to the world as Z-Axis. In the post-Tony Hawk flood of extreme sports games, Z-Axis was the only studio to give Neversoft a credible contender with the Dave Mirra Freestyle BMX franchise and Aggressive Inline. Activision acquired Z-Axis in 2002 and had the studio develop an X-Men movie-based game, port Enemy Territory: Quake Wars to the PS3, and assist on projects like True Crime: New York City.

Activision renamed Z-Axis to Underground Development in February of 2008, foreshadowing where it would be putting the studio just two months later. Underground had about 45 employees.

Adding insult to injury, Activision CEO Bobby Kotick was quoted in an interview the next week talking about how great the company was to studios it acquired.

"We built a model that celebrates entrepreneurial, opportunistic, independent values. It's almost the opposite of Electronic Arts, which has commoditised development," Kotick said. "It did a very good job of taking the soul out of a lot of the studios it acquired."

Yes, that's Bobby Kotick slamming the competition for taking the soul out of studios it acquired. Yes, the same Bobby Kotick that boasted the next year about how he wanted "to take all the fun out of making video games" and how he instilled a culture of skepticism, pessimism and fear at the company.

The last game Underground Development worked on was Guitar Hero: Van Halen, released in late 2009, in the wake of Kotick's comments. In addition to getting a retail release, it was given away as a mail-in freebie for those who purchased Guitar Hero 5. When I received my copy of Guitar Hero: Van Halen in the mail, it came with a note saying "We hope you have as much fun playing these incredible games as we do making them."

Happier News

April wasn't entirely a downer month. For example, after word of Sega Racing Studio's closure, Codemasters swooped in to save the talented racing team from the hangman's noose.

Does that sound familiar? If so, it's probably because a couple years ago, Codemasters did the same for Evolution Studios after Sony decided to drop them.

Pseudo Interactive's story also had a silver lining, as a trio of programmers from the company--Chris Harvey, Ryan Maclean, and Graham Smith--took the opportunity to form a studio of their own. That outfit, Drinkbox Studios, would become a staple of the Toronto development scene, putting out critically acclaimed games like Tales From Space: Mutant Blobs Attack and Guacamelee. So happy 10th anniversary to Drinkbox Studios, here's hoping the second decade is as good to you (and your players) as the first.

As long as we're celebrating milestones, let's also wish a happy 10th birthday to Heroes & Generals developer Reto-Moto and Ubisoft Kiev! And even though this column is all about the last decade, it's worth it to honor the staggering 25th anniversary of High Voltage Software, a Chicago-area studio that has worked on an incredible array of platforms, genres, and hit games over the years but rarely gets time in the spotlight for its efforts.

Amazing Stories

● Here's a quote from Boom Blox senior producer Amir Rahimi unwittingly explaining why his collaborator Steven Spielberg would be well-suited to direct Ready Player One a decade down the line: "I was actually pretty surprised to find out how much of a gamer Steven Spielberg is. He - regularly, when we meet with him - makes references to games that a lot of us game developers haven't played or haven't played in years."

● You know how they warn you that drowning people are a risk to take others down with them?

● Industry pioneer Ralph Baer was not entirely thrilled with the medium he helped create: "Violence sells. There's no question about it. And why does it sell? Because in the last 30 to 40 years, in my opinion, we have managed to debase our culture unbelievably."

● Remember when Microsoft rejected Valve's attempt to put Portal on Xbox Live? Totally worth it to preserve that 150MB size limit...

● Bless Nokia's heart, they just would not let the N-Gage dream die.

● Four years after the franchise debuted, Monster Hunter had sold 6.3 million copies across two games, two enhanced portable editions of those games, and an MMO spin-off. The latest entry in the series, Monster Hunter: World, sold 7.5 million in a little over a month on sale.