In the first part of our interview with Silicon Knights president Denis Dyack, we concentrated on the Canadian industry, a subject very close to the developer, and how the company intends to help grow the regional talent base in Ontario.
In the second part published today, Dyack agreed to discuss some recent developments in the games business, including cloud computing and how it could be crucial to a single format future, the introduction of Natal and motion control systems to consoles
Q: You're known for the traditional blockbuster games for consoles. But has the studio focus changed any over the past 18 months, and specifically since the release of Too Human?
Denis Dyack: Silicon Knights is going to remain focused on big budget titles. What's happening is we're following the model of the movie industry and I think it's a natural evolution. When the movie industry began there were a lot of studios and a lot of pictures coming out but not a lot of huge hits. Then they all merged into the six studios that we have today. There's still independent film ideas, but the major money makers are through the main studios. All the iPhone stuff, all the mobile phone stuff, though there may be some money there, it's what I would consider indie. Elsewhere, budgets are getting bigger like with Modern Warfare 2 that's done a good haul at retail. You're going to get fewer of those.
Q: Have you seen a reluctance from the publishers you've spoken with, to invest in blockbuster projects? If you fail at that scale you fail big...
Denis Dyack: Of course. That's all part of the mergers, acquisitions and bankruptcies. You'll get companies that continue to play in that and others that will have to merge to survive or exit completely. It's really going to come down to the bigger players who will continue to play the game and others that are going to withdraw. You're seeing a lot right now of this movement to iPhones and stuff because there's nothing else out there. It's very possible that Silicon Knights could have a success on that format, but it's not our interest, it's not our model.
Q: You're siding with the big boys?
Denis Dyack: Yes, that's where we want to be and that's where we want to stay. We've always been big proponents of high production values. We'd rather do fewer bigger titles than several small ones. That's the way we've always been.
Q: You've always been a big proponent of the single-format future. Do you see the recent buzz around cloud gaming from the likes of Gaikai and OnLive as running parallel to that, or becoming the single place where all games can exist?
Denis Dyack: When I first talked about a single format future, one of the things I talked about was technology and commoditisation and how the value of the technology will continue to move towards zero. Theoretically consoles could be commoditised to zero and not exist any more. Which is exactly what cloud computing is. In some ways it's the absolute elimination of any hardware as far as the consumer is concerned, because the hardware is the cloud. It helps on so many levels because it resolves the piracy issue, which is a massive problem today, and the used games issue, because you buy something and it's yours forever it resides on the cloud. These are wins for the consumers and wins for the game developers.
I don't know what the current stats are but if you go two years back I believe there were over 300 games released in November 2007. There's a term in commoditisation that's called performance oversupply. That's when the market starts over performing and giving the consumer more than it can possibly consume. If you have Gears of War which is unique to the Xbox 360 and Uncharted 2 for the PS3, they're not really competing against each other. Depending on which console you have you have an oversupply of games because you can't play them all unless you have all the consoles. The average consumer can't buy all those games. So the idea of a singular console is good because it makes people compete on an even playing field. It's not about who's better at programming the PS3 or the 360 or the Wii. It's a game first and foremost. Forget the hardware, I want to be entertained.
Q: It's surprising how many people scoff at the idea of a single format for games when we already have single, or standard formats, for music and film.
Denis Dyack: Look at movies and the DVD player is a really good example of an open, competitive field where you can buy any hardware and you know the movie will play. People confuse a one console future as a monopoly and that's completely wrong. The idea is it would be an open standardised format where anyone could manufacture. A counter argument to that is, we're talking about the PC platform, right? But the PC is not standardised. When you go and buy a PC game the first questions you ask is 'will it run on my computer?' That's a marketing campaign, 'this will run on your PC, don't worry'. The real problem is the consumer needs to be confident that when they buy Game X they will be able to play it, period. If a grandmother goes into a store and wants a specific game for her grandson, she has to figure out the console, the ratings system, and all these barriers that have been artificially created. People think that's normal because that's all we've ever had. I know of no instance of any technology that hasn't been commoditised. I'm a big believer in that still. Context is everything and these are complex matters. This is a win for everyone. For consumers and publishers and as a developer I just want to makes the games.
Q: Have you spoken to OnLive or Gaikai or Sony about any of their cloud plans specifically?
Denis Dyack: The interesting thing about OnLive that a lot of people are discounting it so quickly. People always find reason why something can't happen. Cloud computing could be like the Berlin wall. No one could ever imagine it falling, but once it fell no one could imagine it being up any more. With cloud computing people think it's going to be really hard and ineffective, but I'll tell you right now that we're ready to socially accept cloud computing.
The way it works is that there's not going to necessarily be a single cloud, so the monopoly goes away, you will subscribe to channels where you don't even pay for specific games, you just pay $50 and just like you subscribe to a movie channel you might get the Activision channel. But you might not want to do that. You might want to just pay for Call of Duty separately and it would be there for you forever. And there would be no need to patch it or worry about compatibility because that's taken care of too. The biggest argument against cloud computing that's held the most water is the speed of light issue and latency. I'm really surprised at how people are sticking by that still. Everyone's assuming that OnLive is going to have central servers, but what if OnLive did something like contacted all the local cable providers and set up a cloud in every city? Then the latency issue becomes a non-issue. That seems pretty easy to me. I can play videogames with people in Russia now, we're already doing that.
Q: Once technology is taken out of the equation, then all we're left with is delivery of content, and there's strong evidence of online services that are close to cloud computing already, right?
Denis Dyack: I don't have any inside information here, but if you were Microsoft why would you want to sell Microsoft Office? Wouldn't you want users to just subscribe to a cloud and get the latest updates all the time? I think it's the future no matter what. Piracy is the big issue. Look at countries like China, where there's a social issue. There aren't strong copyright laws in China. Look at record stores in North America and you won't see anyone in there under 30 because people under 30 don't think they have to buy a CD any more, they can just download an album. In China there's no social drive for people to pay for software, they feel that they don't need to pay for it. When you buy a computer it's filled with software, it's a big issue and the governments are trying to fix it but it's never going to get fixed. There are billions of people there that don't care. If you look at the best selling games there World of Warcraft is up there. It's not quite a cloud model, but you have to subscribe to the servers and it's protected that way.
There's issues with used games right now. There's so many issues that cloud computing will fix and it doesn't have to be a MMO, it can be a single player game. The great thing about cloud computing and non-linear media is you can protect them on the cloud because it requires two-way input. You can't pirate something you don't have and I think it's the future of our industry. It's really difficult to tell how much money is being lost but most companies would agree it's a hell of a lot.
Q: Piracy doesn't just happen with expensive games either. Look at the iPhone where games that cost 99 cents are pirated. It's just expected that it's free...
Denis Dyack: I do this for the creative part but I've got to put food on the table, we all have to make a living. It's a real challenge but that more than anything economics is going to define that success. I just don't see any other option, I see dire consequences if we don't adopt it.
Q: I know it's difficult to talk about Too Human, but can you talk about your thoughts once the game was released were you pleased with the final product?
Denis Dyack: How do I talk about it without talking about stuff that I can't talk about? I really don't want to talk about it right now, but we're certainly happy with the end result, the game that was Too Human. There's obviously a lot of problems associated around the litigation that I can't comment on that's still being resolved which is one of the reasons I can't talk about it. But that will come to light in the future.
Q: Okay. So the big announcements from the console manufacturers this year has been motion control technology have you got hands on with Natal or Sphere, and what are your impressions of how that can advance the console business?
Denis Dyack: I'm always interested to see how new technologies turn out. I'm a big believer in software over hardware. Silicon Knights has always pretty much focused on what can we do as entertainers? I'm sure it's very possible to have success in those areas, but it's not something that I really look at and go "yes, we'll definitely do something on that." I know a lot of people have expressed excitement and that's great to see. We want to create games that are very content driven and tell great stories and I don't see how Natal is going to help me tell a better story or create better content.
Q: You're pretty much working undercover now, and I understand you can't discuss current projects which is good, because that means you're busy...
Denis Dyack: We have marketing plans and if we talk about the games too early it can be a real problem. Marketing is extremely important, more important than anything else and we have obligations to our partners to make sure everything is all in line. Especially now when there are fewer, more important games they don't want to get anything messed up. Right now we want to keep absolutely everything quiet, and it's for the best.
Q: But are you happy to work behind closed doors for the time being?
Denis Dyack: Absolutely, I'm a proponent of it. You'll never see a movie before it's done. Our industry sometimes shows games that are more than a year out. That's insane. If a critic is going to overlook some huge problems then the developer shouldn't show it to the press until it's done, because that just creates animosity between the two. Our industry is still a bit young, but it's a financial issue with cash flows. I would love to have a game finished and in the can before starting the marketing campaign. We'd preview finished footage. If you start defending a game that isn't finished you look like you're making excuses but they're legitimate, because it's not done. In the infantile nature of our industry it's a big growing pain. We're starting to see shorter marketing cycles. Once we get enough money in the industry where companies can sit on a game during it's entire marketing campaign then we'll see more accurate reviews.
Q: Call of Duty: Modern Warfare 2 was only a six month marketing campaign, which was very smart, and interest in it seemed to peak at the perfect time of release.
Denis Dyack: It's safe to say Call of Duty created an event horizon that you just didn't want to be near. There would have been no escape. Everyone at Silicon Knights is playing and they're very critical here. If it sucked they would say, but they're saying it's awesome. I'm happy for Activision, I think that's going to be good for the industry. We need things like that, because despite the horrendous economic conditions that are going on worldwide right now, it really points out that games is a real industry and is going to continue to be successful despite the hard economic times. And when things do get better this is going to be one of the leaders of the new economy.
Denis Dyack is president of Silicon Knights. Interview by Matt Martin.