As the chairman of the EGDF (European Games Developer Federation) and a founder of Quantic Dream, Guillaume de Fondaumiere has a great perspective on both sides of our industry, both business and creative.
Catching up with him at Gamescom, GamesIndustry.biz took the opportunity to ask about his perspective on the current economic climate, the issue of UK tax breaks and the influence of technology on his work, as well as his continuing work on getting ratings parity with film and television.
Q:The work you do with the EGDF must have given you a good perspective on the health of the European industry - what sort of state is it in?
Guillaume de Fondaumiere:What I've seen since two, three years is a real shift in the industry from a development standpoint. In most countries, you know the EGDF is the federation of the national organisations representing developers, and we see in all the territories, in the UK, in France, in Germany, the Nordic countries, the arrival of a new generation of game developers who are more in the online space, more in the mobile space who are de facto at the same time who are partly developer and partly publisher and partly distributor, and that is very interesting. And I think that when I look at the industry today I really see this shift happening, and I would say the industry is very healthy in a sense.
Those traditional developers who have survived, I wouldn't say all of them are fit, but are experienced, and I'm putting Quantic Dream in that pack, we're certainly more experienced, more mature, we went through several cycles, we start to understand what we're doing to a certain degree, and so we've reached this stage of maturity that I think can be a great foundation for the years to come, for the industry as a whole.
The industry is evolving and in five or ten years time there will probably be two or three times as many people working in this industry as is the case today.
And I see this new breed of developer, guys who are 20 years old, and I see myself 20 years ago when I started and I think that's a very good sign. It shows also that some doomsayers, always predicting the end of this industry, no! I think the industry is evolving, and it's very good, and I think that in five or ten years time there will probably be two or three times as many people working in this industry as is the case today. So I'm relatively optimistic.
Q:Martin Seo of NHN was telling me that in Korea the recession has lead to consolidation and acquisition rather than fragmentation. Is that a healthier result?
Guillaume de Fondaumiere:You know it's... fusions and acquisitions, I think the statistics of how that works is not very positive usually. There is a lot of value that is being destroyed through mergers, and I think it's always the danger when you put smaller studios together to form big studios to lose a lot of value, a lot of creativity.
On the other hand of course, having larger corporations that leverage risk and can scale operations has also it's positive points, so I think it's difficult to answer this question with yes or no. To a certain degree what happened in the nineties, in the year 2000, 2010, in Europe, is I think quite healthy. A number of studios have grown to a certain size, and reached critical mass I think, and I think that's the first stage. Maybe we're at the verge of the next stage, where companies that have reached this size, have gained experience, can come together to form bigger corporations.
I think that might be necessary simply from a financial stand point, because game development necessitates a lot of funds. Especially today when you see more and more developers start to develop, self-fund development and publish games, and they will need a lot of money to do that. There will probably be the necessity for some of them to come together, to form larger corporations, do IPOs and to be able to scale up financially to reach the critical mass they'll need to have to be able to run their operations independently.
Q:I've had a number of EA interviews this week, and one of the most interesting points raised has been the evolution of their business, they seem to have adopted a model almost like a republic. Does that seem like a good idea to you?
Guillaume de Fondaumiere:Certainly. I think the model that you are talking about, which seems to be, in effect, the new EA model, is something that I think is becoming more and more the norm. Most big publishers understood that you simply cannot put two thousand people into a giant hall and squeeze them to produce games, working 9-10 in the evening, and crunching for two years. And also I think most of the publishers now understand it makes more sense to work with independent entities, whether these are truly independent developers, not owned by the publisher or even internal studios that they've acquired or that they've structured. It makes sense, we're a creative industry, and so you need to... creativity obviously can't express itself if there are too many people involved.
You need independence, you need the liberty and freedom to be able to express yourself in the way that you want. So that's in essence the model and I think this is the future now - can independent developers get together in that same manner? Possibly, we'll have to see how they can share resources maybe at certain points, or maybe funding, so that's all possible. We have to see.
To a certain extent I very much still believe in the publisher/developer model. And this is one of the reason that we at Quantic stay also with this model, simply because development is a business on its own. Publishing is a business on its own. You need large funds to be able to publish a game globally, and I think it's still a little bit idealistic to think you can simply... you found the money to create your game, and you create the game and somehow through PR and showing it at shows you're going to sell the game. I think unfortunately it doesn't work like this. You need a lot of funds. What EA is doing, what to a certain extent Sony are doing, what Microsoft are doing, being a shelter for creative entities, and providing funds but also support, and the service of publishing, can certainly have a great future.
Q:The tax breaks issue has divided UK industry. Is lobbying for economic incentive the best use of the industry's time?
Montreal is probably still today the number one production region in the world. If there wouldn't have been these tax breaks the wouldn't have an industry today.
On tax breaks
Guillaume de Fondaumiere:I think my position is well known. I was a strong advocate of obtaining tax breaks, of getting first the European Commission to accept videogames, to recognise videogames as a from of cultural expression, and through this recognition obtaining at least the possibility from Brussels to obtain tax breaks. And then I was able to work with the French government to obtain a tax break for videogame production in France, and that works very well.
The first country or the first region which implemented tax breaks was Montreal, Quebec, and we've seen how extraordinarily positive this has been for the industry out there. Montreal is probably still today the number one production region in the world. And if there wouldn't have been these tax breaks the wouldn't have an industry today. It's a very effective way to boost the development efforts in a county or a region. This has been demonstrated.
The question is how long does it take the industry to obtain this? I understand that frustration grows when you ask for something and it doesn't come, and it doesn't come and it doesn't come, on the other hand it took me three years, from the day when we finally got everyone, all the developers on board and everyone said "OK, this is the right thing to do, and now we all work in the same direction." We also worked with the publishers and together, as an industry went to the government and obtained this tax break. So I understand some people in the UK are starting to question the fact that this is the best use of the time, of TIGA in particular, but if at the end you obtain the tax break it's going to be extremely beneficial to the industry. And I think there's no better use of time than trying to get this tax break.
Q:The prospect of a double-dip recession seems increasingly likely. The last one changed the face of the industry with the rise of casual, social and microtransactions. Is there a way for the AAA industry to prepare?
Guillaume de Fondaumiere:I would say that the impact that the recession had, that the most important impact especially on AAA games on console, was the rise of second hand gaming. And I think this is one of the number one problems right now in the industry. I can take just one example of Heavy Rain. We basically sold to date approximately two million units, we know from the trophy system that probably more than three million people bought this game and played it. On my small level it's a million people playing my game without giving me one cent. And my calculation is, as Quantic Dream, I lost between €5 and €10 million worth of royalties because of second hand gaming.
Now I know the arguments, you know, without second hand gaming people will buy probably less games because they buy certain games full price, and then they trade them in etc etc. Well I'm not so sure this is the right approach and I think that developers and certainly publishers and distributors should sit together and try to find a way to address this. Because we're basically all shooting ourselves in the foot here. Because when developers and publishers alike are going to to see that they can't make a living out of producing games that are sold through retail channels, because of second hand gaming, they will simply stop making these games. And we'll all, one say to the other, simply go online and to direct distribution. So I don't think that in the long run this is a good thing for retail distribution either.
Now are games too expensive? I've always said that games are probably too expensive so there's probably a right level here to find, and we need to discuss this altogether and try to find a way to I would say reconcile consumer expectations, retail expectations but also the expectations of the publisher and the developers to make this business a worthwhile business.
Q:There have been some ideas to tackle that - one was a purely second hand game business which funnels some of the price to the publisher. Is that a possible solution?
Guillaume de Fondaumiere:At Quantic Dream, we lost between €5 and €10 million worth of royalties because of second hand gaming
Pretty much everyone I meet tells me exactly what you just told me, "I started playing with my girlfriend, and she at one point grabbed the controller."
Q:Heavy Rain struck a real chord with a lot of audiences which would not normally buy games - you hear plenty of stories of girlfriends kidnapping controllers. What were the purchase demographics like?
Guillaume de Fondaumiere:I don't have the exact figures here with me, there's been quite some studios done on the demographics on Heavy Rain, but in essence what I can tell you is that we have not been surprised in a way, because right from the beginning we knew that we wanted a game that would both appeal to gamers, because we knew it was important to have this audience on board, but also potentially could appeal to those who were either casual gamers or partners of, people sitting next to core gamers.
Pretty much everyone I meet tells me exactly what you just told me, "I started playing with my girlfriend, and she at one point grabbed the controller." I don't think we are at the point, and it has little to do with Heavy Rain, but more with the industry as a whole, we're still not at a point where, especially women, go to the shop and buy this kind of experiences.
They do buy games, you know the female audience is growing, but they don't buy these kind of games. But with Heavy Rain I think we showed that once it's in the household, and once women see what the experience is and they're drawn into it and they take the controller, I think that it's a positive thing that could potentially broaden our audience in the future.
Now there must be more games like this, because a lot of people tell me that the next thing their girlfriend or wife told them is "OK, what do we play next?" And then they turned around and said "in the same genre?" "Yes." And that's it. And so I really hope, because to really make it a market and to really make a segment on its own we need more games like this.
Uncharted is a good example. There's Heavy Rain, there's Uncharted, but there are not so many games in that vein. Tomb Raider next year is probably really looking great and it's probably also going to be one of these games that could potentially appeal both to gamers and to a larger audience and in particular women.
Q:The emotional impact of games seems closely tied to realism in characters, something perfectly illustrated in Heavy Rain. How reliant on technology is the creative process?
Guillaume de Fondaumiere:That's a good question. Of course when you try to portray realism, when you try to show emotions, the graphics become extremely important. You don't necessarily need this high graphical fidelity, we've seen it in past games, but when you have it, it helps. Especially when you want to portray, show, and thereby hopefully have people feel the same emotions, subtle emotions, then you need subtlety in the animation, subtlety in the graphics, and so I think in the future we'll be able to really mimic reality in such a way that you won't be able to tell the difference between a CG character and a real character.
The movie Avatar is a very good example where, when I look at Avatar, I'm seeing what the industry is going to be in four or five year's time. It's going very fast. So as technology progresses it also broadens the horizon of creativity and I think that's a great thing.
Most developers I'm talking to right now are really looking at technology in that direction more and more. Before it was trying to do the best possible explosions, environmental effects, and these are important, but more and more studios are now also looking at characterisation.
I was very impressed by Tomb Raider, I saw at E3, it's also interesting to see what the guys are doing at DICE, or Activision on Modern Warfare and Battlefield because although story and characterisation are not necessarily the unique selling points of these games, there's more and more of it. And I think more and more developers understand that the public is longing for meaning and for story and emotion, and that's a good thing.
I think we've seen in the past ten years how TV has upped its game, very much so. Usually, ten or 15 years ago, you're looking at a TV series, crap story, characterisation was weak, actors were bad and they ramped up, and now we have TV series that's production values are fantastic, great stories, great characterisation.
Everyone is going in the same direction and I think it's a real risk for the games industry not to level up, not to get to a similar level as movies or television series because consumers have only so much hours they can spend on their leisure and if there's great entertainment on one side and a bit weaker entertainment on the other, they'll go to the great entertainment.
Q:You feel very strongly about game ratings, where do you think we stand at the moment?
I think it is high time now for us, after 15 years of defensiveness, to get a little bit proactive on ratings.
Guillaume de Fondaumiere:A few things, if you allow me to. This is something that I think is very important and as the chairman of the EGDF I'm starting to try to educate developers first but also start discussions with publishers about the need, I think, an absolute need for us to change game rating systems.
I think that we've been extremely defensive over the past 15 years. We've created age rating systems that are today far stricter than other media, especially when you compare it with film or TV and I think it has a great number of negative consequences on this industry. Most games that are sold, not necessarily produced, but that are sold, are 18+ products. And when you compare it from a company standpoint to movies, for example, there's a least a two year age difference in ratings, if not more. And I think this is a very important subject.
Q:The UK keeps pushing back changes to the classification system...
Guillaume de Fondaumiere:I think it is high time now for us, after 15 years of defensiveness, to get a little bit proactive on this issue. And especially to have also developers voice out what they think about this and game creators to say what they have to say on game ratings.
Q:Do you think there should be a uniform European, even worldwide system
Guillaume de Fondaumiere:Well we do already have to a certain degree with PEGI a unified system. My problem is not with how unified the system should be, my problem is that we're not on par with cinema and TV. Most people play 18+ games. Have you ever watched an NC17 movie? You don't even know what an NC17 movie is! But you know what an R rated movie is?
Alright, so that's 17 and under must be accompanied by their parents to watch a movie. An NC17 movie is basically a porn movie, and that's basically our 18 rating. And so all our games are porn movies to a certain degree. And consumers, one of the reason why people say games equal violence is because its written all over, all games are rated 18, well not all games, but a lot of games are rated 18 and most of the games that people play are rated 18. That's one of the reasons that we need to change this, and we need to change this fast.