“I couldn't even guarantee you a 10% chance of a hit anymore” - Capps

Former Epic president on the massive difficulties in development today and why he happily spoke at Unity's GDC presentation

Having overseen blockbusters like Gears of War and Infinity Blade as the former president of North Carolina's Epic Games, Mike Capps knows a thing or two about games engines and what it takes to make a hit game. It's been over two years since he left Epic, and while he's served on the board of the Academy of Interactive Arts & Sciences and companies like Sphero, he's not looking to start up a game studio or get directly involved in development again. He's been doing some free consulting for friends in the industry but Capps made it crystal clear that he wants no part of actual development.

"Everyone assumed I was going to start a game studio when I left Epic. I was like, 'I was already at the best game studio in the world. Why would I ever leave to start up a new game studio?' So, yeah, that's really hard work," he told during GDC.

Capps labeled himself "semi-retired" and he's enjoying the freedom of spending more time with his family, but there's another major reason he's not looking to develop a game right now: it's simply too risky. Yes, there are more opportunities for developers now than ever before, but it's also harder than ever to become very successful.

"There was room for million-unit selling console games 5 or 6 years ago and there's no room for it anymore. You just can't make enough money now," he noted. "One of the reasons that I'm not starting a game studio... I think if I were to pick the 20 best developers I've ever worked with in my life - and those are some really good developers - and someone gave me $30 million or whatever it would take or $5 million to build an amazing mobile game and said go, I couldn't guarantee you a hit. I couldn't even guarantee you a 10 percent chance of a hit anymore. It's so hard and it's so luck based at this point.

"If you don't have that kind of predictability [in the market] it's a really bad investment of your time. So I'm scared as a game developer to think about making a game"

"No one can look at Crossy Road and say they seriously knew that that was going to be a hit. And so if you don't have that kind of predictability [in the market] it's a really bad investment of your time. So I'm scared as a game developer to think about making a game."

Capps' mindset is that building up an infrastructure and making a number of games becomes a safer bet. "You see companies like Gree or Kabam that kind of continuously have solid products. Some of them break out, some of them don't, but because they're building the infrastructure and a way of making games that they can kind of repeat that. They've got a methodology and sort of a structural advantage to making games. But one-shot hit-chasing in the video game business is scarier than it's ever been to me. The cool thing is anyone can do it, right? You can do it in your basement over a summer and it could be great. And that could mean that you're set for life if you do it perfectly. It was kind of nice back in my day where you had to know retail and you had to have a good relationship with Microsoft and Sony and all those things to be successful and you had to have very specialized talent to build the engine you needed," he continued.

Ironically, as the barriers to entry have been removed and more and more toolsets like Unity and Unreal and Source are free to use, the same democratization that's leveling the playing field is making it somewhat more challenging for veteran developers. The market is too crowded now. "A barrier to entry... was good for me as a game developer because we were breaking barriers where we could as an engine developer. As a game developer it's nice to not have as much competition," Capps acknowledged.

Speaking of engine developers, the toolset wars really heated up during GDC as Capps' old company set Unreal free, Valve announced Source 2 would be available for free, Autodesk got in the mix and Unity CEO John Riccitiello showed his feisty side, trash talking any engine maker that demands royalties from game makers. Interestingly, Capps took the stage during Unity's presentation, which certainly raised a few eyebrows.

"Epic did not ask me to come up on stage, so I would've happily done it for them too," Capps asserted. "So it was a little bit of 'I went to the dance with them because they politely asked.' It was fun. They were actually really nice guys. I'd never met anyone at Unity because they were DC and I was Marvel, so why would I know any of them? So it was actually kind of neat to meet some of their team. There are some pretty talented guys there."

While John Riccitiello was quick to call out royalties as being akin to free-to-play whale hunting, Capps was a bit more diplomatic when we asked him to offer his thoughts on the tools scene.

"I'd rather be at Unity than any of the game companies that are using it right now, because it's a tough market right now for game developers"

"The math is that Unity is cheaper than Unreal if you make more than $30,000 or something like that. It's a 5 percent royalty versus $1,500 max or something, right? So it makes sense if you think you're going to be successful and you don't care which engine you use... to use the one that's cheaper, right? But there are lots of reasons to use Unreal over Unity and vice versa depending on what platforms you want, the fidelity of various systems," he said. "So I would hope a developer who's making a decision about what engine to buy would start with what the engines can do and not worry - I mean, it's all free now, right? It's all cheaper than it's ever been. So that's the great part.

"So pick the engine you want - if you were making 3 billion dollars and you had to give 5 percent of it to Epic, you might not have made that 3 billion dollars without them. You might not have gotten that 3 billion dollars if you'd chosen a different engine for what you're trying to do. So I would choose the tool you want and then figure out - since you don't have to pay for it up front, it's great to be generous after you're successful. That's way more fun."

Coming back to the difficulties of the industry currently, Capps reiterated that being a weapons dealer (so to speak) is still a far safer bet than getting in the trenches to fight the good fight.

"I'd rather be at Unity than any of the game companies that are using it right now, because it's a tough market right now for game developers. Now, mind you, as a creative expression method, I think it's amazing. Being a writer is awesome, being a writer who's trying to make a living off writing, is really hard. I think it's the same with games," he said. "So I like platforms as a business right now because there's more developers than ever. And I love that the [tools are] all getting cheaper. I think that trend continues. I think we'll see a lot of totally free engines."

Another problem for studios that actually do make a hit is that the market then demands more and inevitably developers get burnt out on a franchise. It happened with Epic and Gears of War, it happened with Bungie and Halo, and it's likely to continue to occur.

"It's a financial risk issue. If you're sitting there on a Gears 1 and it made however much money and sold 6 odd million units, and you're like, 'What do we do now? Do we do another one of those, which we'll do so much faster now, because we have a bunch of assets, and we know that game?' So it's not just 'is a Gears 2 more likely to sell than name new IP here?' It's also faster to make it," Capps explained.

"And nobody cares in the market whether it took you, whatever, 100 man years to make Gears 2 or 200 man years. They don't care. It doesn't affect anybody at all. And if I can do it in 100 instead of 200 it's half the opportunity cost. So you could get in a situation where you could make Gears 2 and Gears 3 easily in the time that I could've created Fallout from scratch or whatever. And I think everyone loves to stretch their wings creatively, but at some point, my gosh, why wouldn't you repeat - and you see what happens."

He added, "What would we have gotten if we had not made Gears 2 and 3 and instead made a project that we were thinking about making and didn't do? If we had done that instead, it would have been a different world, maybe one that was not as lucrative, but maybe one we were more proud of. As a production guy, I was really proud of Gears 2 because we did it darn fast and we shipped Gears PC in the middle of it - so I was proud of our execution."

That same problem has carried over in a way to mobile as well. Reflecting on his old colleagues at Chair Entertainment, Capps remarked, "The benefit and curse of the success of Infinity Blade is that it made it very hard for them to do anything other than another Infinity Blade."

Where mobile was starting to skyrocket as Capps pondered leaving Epic, virtual reality appears to be on deck, patiently waiting for the industry to finally push out some headsets and games to consumers so it can hit a home run. But can VR truly make the kind of impact on the market that mobile has?

For his part, Capps is still somewhat skeptical of the technology; not because it isn't cool or far improved on past efforts, but because it may be difficult to get the mainstream on board.

"It'll never work!" he joked, adding, "There was a large part of my career when I said I had a PhD in virtual reality and people would smirk. And that's terrible. And now it's cool again."

"If slipping on a pair of flicker glasses, is too much trouble - then the idea of, 'Ok I'm going to put on my head mount rig and fire up my liquid cooled PC in order to make it happen' [isn't likely to take off]"

Regardless of how cool the tech is, Capps fears that consumers won't want to be bothered, much in the same way that people didn't want to wear 3D glasses at home. He also thinks the combination of the headset and a high-end PC will cost too much for most people. "There's so little tolerance at the consumer level for that kind of an investment. And I think one of the things I'm most curious about - you look at 3DTV as a super easy to use technology that is really unfettered. Just a pair of polarized glasses and people didn't use it because it wasn't worth the trouble. The content difference was there. 3D Avatar looks way better than non-3D Avatar... If slipping on a pair of flicker glasses, is too much trouble - then the idea of, 'Ok I'm going to put on my head mount rig and fire up my liquid cooled PC in order to make it happen' [isn't likely to take off]. I hope it happens but I think it's going to be a while before my mom does that," he said.

Beyond that, the headset makers are asking an awful lot of the developer community. "Last year when Oculus was visiting developers and saying you should develop a game for our platform, they were also saying, but we don't know when it's coming out and we don't know how many people are going to buy it. And that's a really hard story as a developer," he observed. "But that being said, this always happens with new platforms. It happened with the first Xbox. They were trying to convince us, saying it's going to be great, and we're like, 'Really?' And it ended up being cool and then 360 was amazing, but that's how it works. They're like 'trust us and we're going to have the marketing budget' and, at least with Microsoft, they were saying, here's when we're going to ship it, and you kind of believed."

If the VR industry wants any chance to succeed, Capps said, it absolutely must get the technology right from the beginning. Any reports of nausea and vomiting and it's game over in a hurry. "As Carmack said in his talk, 'We ship a bunch of these Gear VRs and have an 80 percent return rate and everyone's throwing up and then that's the end. It's done. No one's going to buy it next round.' So please, gosh, guys, don't screw it up. Take all the time you need," Capps stressed.

Ultimately, augmented reality like CastAR or HoloLens could have better market potential, Capps believes. "Just the fact that I could be using that in the room with my kids and my kids could be playing with their toys... I could be keeping an eye on them while I'm playing, like I do when I'm on an Xbox, like I do when I'm on my iPhone, but if I slap a headset on, I'm no longer dad. That's not allowed, right? So there's a huge number of use cases where people cannot afford to shut out the world even though it's a wonderful way to maximize your entertainment experience," he said.

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Latest comments (5)

Paul Johnson Managing Director / Lead code monkey, Rubicon Development7 years ago
Can't disagree with anything he said, and that's a damned shame for both the companies involved and the punters on the receiving end.

Looking at our own earnings, it's almost perfectly the case that the bigger the game we made, the less money it earned - and not as a proportion but an absolute. So there is actual real world pressure here just to knock out shite app after shite app and simply hope for the best. There's only so long you can resist that fact on moral grounds, especially if your mortgage depends on it.
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Pete Leonard , Amiqus7 years ago
Sorry about that Paul. Pretty clear from previous posts and your efforts (and love for!) GLWG that the approach you mention is not one you want to take, but may have to commercially potentially? Where do you think this is going to leave the industry in the next few years?
The barrier to entry is so low that enthusiasts can make a break and form their own company and if the product is quality then it can be very rewarding - Tom Francis and White Paper Games are two very pertinent examples.

However it cannot be ignored that there are simply too many mouths to feed right now - and that can only go one way.
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Paul Johnson Managing Director / Lead code monkey, Rubicon Development7 years ago
Actually, we're still full time developing Combat Monsters at the moment - our biggest title by bloody miles and also our poorest earner by miles. I admit that this makes as much commercial sense as its lack of audience does (to me), but I'm determined not to end my career making shite.

Of course, the eventual outcome here may not be down to me!

EDIT: Sorry, forgot to actually answer your question:
Where do you think this is going to leave the industry in the next few years?
It's not about "in a few years" imo. It's here now and cannot get any worse for small indies on any platform, it's just that many have not had the balls to say it out loud to themselves yet.

We (indies) had a good run for a while, but the party is well and truly over. In short, a good mobile game that doesn't go meteoric won't even pay the UK minimum wage to its developers for the time it took to make it. Anyone starting up in the market now, without massive marketing muscle, isn't looking "cool and right on" anymore, they just look naieve.

Sorry that was a bit bleak. I don't really do pie-eyed dreamer stuff, too old.

Edited 1 times. Last edit by Paul Johnson on 20th March 2015 9:26pm

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Show all comments (5)
Craig Page El Presidente, Awesome Enterprises7 years ago
What's so wrong with making sequels? Just hire on more people so you can do your sequel and new IP at the same time.
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Chris Payne Managing Director & Founder, Quantum Soup Studios7 years ago
Just a pair of polarized glasses and people didn't use it because it wasn't worth the trouble. The content difference was there.
I strongly disagree with this particular comment. It's not just a pair of glasses, it's a whole new TV - a product which most people only buy once a decade and had only recently upgraded to an HD flatscreen at the time 3D was being pushed. And the content difference is subtle enough that you can remove the stereoscopic effect and still have a perfectly good movie.

VR certainly has a high barrier to entry, but the content difference is a bigger step up than we've ever seen in the history of the industry. It just has to work. So yeah, I do agree with him that they should take their time with the hardware...

And as for not being able to play it while minding the kids...big deal. There are dozens of 15/18 rated games you can't play in front of the kids, I don't see that affecting their sales. Wait 'til the kids are in bed!
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