The sleepy village of Godalming, nestled in the rolling hills of Surrey, seems like an unlikely place to house an international creative powerhouse. The cobbled main street of the town gives no hint that science fiction violence and terrifyingly fast car racing simulations could be one of its main exports. But then again, Kuju Entertainment, whose nondescript but bustling offices are housed on the outskirts of the town, is a company which itself defies expectations.
After all, isn't UK independent development meant to be in crisis? Yet here is a firm that can boast a customer list which reads like a Who's Who of the videogames industry, including Activision, Nintendo, Konami, Sony and Codemasters. And isn't it meant to be almost impossible to make money as an independent? Kuju turned a profit in its second half, according to results published during the summer. Shouldn't smaller games industry firms be battening down the hatches in preparation for the stormy transition? Not a bit of it; the firm's latest office opened in Brighton only a couple of months ago.
Business development chief Ian Baverstock can be credited as one of the architects of Kuju's success. A well-known face in UK industry circles, and a senior figure in the TIGA developer trade body, Baverstock is refreshingly pragmatic and honest about the prospects for independent developers in the coming years - a future which he clearly believes is very much a bright one, even while being realistic about the immense challenges faced by developers and publishers alike at the next hardware transition.
Kuju turned its business around in the second half of last year, announcing a profit which turned around a difficult first half. "It was in line with our expectations," according to Baverstock, "and slightly ahead of where the City expected us to finish up, but only very slightly. We're just very pleased to have turned the business around and got ourselves sorted out again after a fairly poor first half."
Primary among the reasons for this turnaround is the company's decision to reorganise and refocus its business, he believes. "We reorganised the business into divisions, and I think that allowed us much better focus on where we were and weren't spending money, and where we were and weren't making money," he explains. "We actually just had the business better structured in the second half. Also, I think we had slightly improved flow of work, which was good. We were just better organised - we got ourselves sorted out."
That reorganisation has seen the company's northern studio, in Sheffield, being operated in a more independent way - an experiment which has proved hugely successful. "That division, the Sheffield unit, have been working on the project that we announced for Codemasters," Baverstock tells us. "They've got other things on as well - that's been a pretty big success for us, and we're quite happy with the way that things are going so far. As much as anything, it's been an exercise in running a more autonomous studio, and we've now followed that model with the new studio in Brighton. Both of those studios run more autonomously than London has done so far, and obviously we hope to make London more autonomous going forward as well."
The Brighton studio is the latest addition to the Kuju family - although, in ways, it's not actually a new additon at all. The studio is largely made up of staff from Wide Games, which was itself founded by former Kuju staff - so many of the key staff have actually worked at Kuju before.
"They've come full circle, and we're very pleased to have them back," says Baverstock, smiling, when we mention this. "We knew they were good guys, because they worked for us before - we obviously know them very well, which is very good. We've been in conversation with them all the way through. We've always kept a good relationship with them, and have been very impressed with what they've learned and with what they achieved as Wide Games. The fact that they're now Kuju people is excellent, and we're very pleased about that."
The team in Brighton is currently working on a project for Sony, which Baverstock describes as "a big deal in industry terms, and a huge opportunity for us." He sees major scope for growth in the Brighton studio, and believes that in choosing a location for a new office, the south coast city offered a lot of advantages to the company.
"When we looked for a new site, we obviously looked for an existing management team, preferably an existing team of people, and ideally people who could get some work reasonably quickly," he says, "but also a place where we're going to be able to get people in the long term, both in terms of a local pool of talent, and a place that people want to go and live. Brighton is an attractive place to live, so it easily fits all of those categories, as do Sheffield and London."
Although Kuju's head office in Godalming is only a few minutes away from the Guildford headquarters of another Britsoft powerhouse, Lionhead, there's a world of difference between the two companies in terms of their approach to the market. Perhaps one of the most visible differences is that Lionhead exclusively works on its own IP, whereas Kuju has largely built its reputation by creating high quality games on time and on budget, but based on IP owned by other firms.
"In an ideal world, we would be sitting there strategising our own portfolio, and our own mix of IP, types of game, publishers and all the rest of it," explains Baverstock. "I think it would be a reasonable comment to say that for the last couple of years, the independent sector has been pretty tough - and if you've got credible, top quality people that want to work with you, you try and work with them. You don't sit there and go, 'well, we're not doing any more of those type of games for a while' or anything like that. You try and work with people."
"So we haven't approached it in that way - and we're at the end of the cycle, where in general, people want you to work on their IP. We're very pleased that we took the idea that became Advance Wars: Under Fire to Nintendo - we're very happy about that, although obviously the Advance Wars IP is well and truly Nintendo's, no question about that. A lot of the other projects are unannounced, and there isn't really much I can say... But most of it is somebody else's IP."
Looking to Next-Gen
Baverstock adopts the same pragmatic approach in his views on next-generation platforms; although Kuju has been working on creating technology for the various platforms, he believes that the company has to be flexible in responding to the demands of the industry, rather than trying to set its own agenda in terms of next-generation development.
"We're doing some work [on next-gen R&D]," he says. "We've just spent quite a bit of time looking at some PSP work and we're now looking at next-gen platforms - what we're going to have to do with our own technology. We've obviously been looking at RenderWare and some of the other middleware platforms."
"I think it's going to be a very big question, where you commit resource. We're trying to identify things that we can spend money on that definitely step us a long way towards next gen, without necessarily being things that have to be ditched if someone says 'use this middleware platform,' or something like that. There's a lot of stuff there that you can do - so yes, we are looking at it, but we haven't signed anything next-gen to date."
He stops to think for a second. "I think if it's our choice, then we'll want to run a balanced portfolio of current and next-gen," he continues. "But I think it's unlikely that it'll be our choice. We'll be opportunistic, to some respect."
The topic of next generation development is obviously one which keeps a lot of developers awake at night - especially those in independent studios, for whom the spiralling team sizes and costs represented by the next-gen platforms makes the narrow ledge on which they walk even narrower. I think there are enormous issues for the whole industry - absolutely huge issues about how development is structured," says Baverstock.
"One of the things I think the industry is going to have to do a lot more of is not just outsourcing and contracting - we're going to have to look at things like IP ownership again. The traditional publisher model at the moment is, if they pay you lots of money, they expect to own the IP. Now, whilst I think it's absolutely reasonable that if a publisher pays you lots of money and you've got a lead character and a story and so on, then they should own that, equally if you've built a model of a desk or a table in that game, it seems crazy that if you then go and do another game which needs a desk or a table, you have to redo it - it's just mad."
"So either third parties are going to start producing that sort of library of assets, or developers are going to have to change the licensing model so that they can reuse them. I think content re-use is going to become an important factor in the next generation, just because of cost."
The mention of asset libraries suggests that next-generation development might throw up a range of business opportunities for companies providing services to the development process. Indeed, Baverstock believes that the creation of a whole industry of development services firms is a likely byproduct of the move to the more complex next generation hardware.
"I think there's a market for that," he says. "I think there's also a market for very professional contracting or outsourcing teams - the way the IT industry works, which is that you can go and get a guy by advertising in IT Week or whatever the magazine is, and you can get one contractor fors six months, or you can just go to companies who can essentially provide everything from, say, eight people to work on your project, right up to doing the entire project."
"They're essentially engineering companies, not creative drivers," he continues. "Games developers are this peculiar mix of creative powerhouse and serious, hardcore, process and production engineering with lots of software and technology built into it. They're an odd mix to put together, and I think we're starting to see people - like Charles Cecil [of Revolution] - providing his purely creative solution, and we will start to see, possibly based on all the overseas outsourcing companies, more of a production, technology and engineering resource, with companies who don't actually attempt to put creativity on top."
Not that Kuju is waiting for next-generation to come about before moving to an outsourcing model - in fact, the company, despite currently having around 150 full time staff, has been something of a pioneer in terms of outsourcing for game development.
"We're certainly doing a lot of it," Baverstock says, "and I know other people are as well. I think that traditionally, everyone was quite nervous about talking about doing this. If you go back quite a long way now, two or three years, there were publishers who if you told them you were going to outsource some of it, would essentially just not give you the project. As far as they were concerned they were outsourcing a project anyway, so why the hell would you then outsource it on?"
"I think there's a growing realisation that actually, if you want the right mix of staff at the right time on the project, it's not sensible to have them all on payroll. It's also true quite often that you can reduce costs, you can get the staff you need when you need them - there are lots of good things about it. But, there are an awful lot of careful issues that need to be managed, not only in terms of having the procedures in place to do it properly, but also in managing what your existing staff do and transitioning the business into that kind of model. It's not something that you can do overnight."
"It's a pretty complex area," he concludes, "and it's interesting that the independent sector is probably leading that. There's more pressure on us to figure out what to do about cost between projects, for example, than there seems to be in a lot of publishers."
One of the major issues which is consistently raised about the UK games industry is the lack of indigenous publishers, with only Eidos, SCi and Codemasters really waving the flag for the UK industry on this stage - and both Eidos and Codemasters have been rumoured to be close to a sale in recent months. For a company such as Kuju though, which is working with publishers from all over the world, does this really matter?
"I think it does matter," says Baverstock. "There's no doubt that publishers the world over, all other things being equal, would rather work with a developer around the corner than with one a long drive away, and even more so one multiple timezones away. No question. I think that all publishers recognise that there's some element of risk in working with an external developer, and the nearer they are, that's one way of mitigating risk - they're just on your doorstep so you can keep a close eye on them."
"Obviously, our attempt to solve that problem is by being a developer that doesn't come with a lot of risk," he explains. "We've tried to be a very low-risk supplier, and that's one way of offsetting that. But clearly, if local publishers are bought and the decisions about products are being made overseas, that then puts us further away from potential customers of ours."
"So [UK publishers being sold to overseas firms] could be bad for the UK industry. On the other hand, I hope that if it does happen, it'll reinforce the UK as being the prime site for overseas publishers in Europe. If it does, then it could actually be beneficial for the UK industry, because I think if there was a bit more scale here from all of those companies, then they'd be more willing to put producers here, and to put acquisition decisions in the UK - which would redress some of that unbalance."
"Ultimately," he concludes, "it doesn't make any difference whether the board is based in London or New York - it's where the acquisitions guy is, where the guy with the budget is, where the producers are. That's the kind of thing that matters in terms of making a decision."
Baverstock's pragmatic and realistic views on the challenges facing the UK development industry reflect Kuju's own measured and, so far, highly successful approach to the market. And, even in the face of the challenges of next-generation development and other emerging difficulties such as overseas outsourcing, he is optimistic about the future for game development in Britain. "This is a very fast-moving industry in terms of technology," he says, "and we're at the cutting edge in the UK... It's not just the creativity, we do have a nice technical edge." Even if you wouldn't guess it from the quiet village of Godalming.