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Lionhead's first decade

Peter Molyneux and co-founders discuss the past ten years

Hitting the age of ten is no small feat, especially for a UK games studio, and especially in such a challenging past decade of change. Nonetheless, last week Lionhead celebrated that very milestone, and so sat down with the three founding members of the company to mull over old times.

Sitting at a table for an hour and a half with Peter Molyneux (CEO, studio head and chief designer), Mark Webley (director) and Tim Rance (CTO) is to invite a stream of memories, some of which yield a keen insight into the life of a game studio, others of which are hilarious, if sadly unrepeatable.

What is true is that Lionhead's beginnings were humble, despite the popularity of some of previous studio Bullfrog's titles. Initially registered at Companies House as Splinter Studios, there was only the vaguest notion of what it should actually be. What do you remember most clearly from ten years ago?

Tim Rance: A smelly little room in Peter's house.

Peter Molyneux: Well let's describe that actually. It was all started during a conversation in a pub: "Let's start a company." It's quite beyond me why we said this, but that's how it went - the way not to start a company. Then we spent the next three hours talking about what we should call it. We didn't talk about what we wanted to do, where we wanted to be, or what the problems were. But from there it snowballed, until it was actually started.

Tim Rance was the first person to officially join the company, and then Webley moved over several months later, to start on building libraries. Molyneux only came on board once all work on Dungeon Keeper had finished, but by then they were in contract negotiations with EA to produce Lionhead's first game.

TR: A lot of those early days were spent with a lawyer negotiating a contract for a game, which was undefined and couldn't be talked about, with EA.

PM: My final days on Dungeon Keeper were spent negotiating this contract. Because I was in this office [in my house] we had this awful fax machine. This chap used to keep sending the publishing agreements through - none of us were negotiators, so we kept sending it back, and they were getting fed up with us, and vice versa.

But then the final draft came through, all we had to do was sign it and send it back, except the fax machine kept churning up the paper. So I said, "Right, if you don't work this time, I'm going to pick you up, throw you out the window, get a sledgehammer, and smash you to pieces."

Well, it churned up the paper, so I picked it up, threw from the first floor window, literally took a sledge hammer and smashed it.

Now, they're very tough things. They may look frail, but after about ten minutes of hitting it, this fax was still looking like it could take it.

TR: The funny thing about that first contract, we couldn't actually name the game. Had it been named it would have automatically been owned by EA, because Peter was still employed by them at the time.

Mark Webley: We hadn't fully formed the idea really.

PM: Looking back, EA were fantastic. They could have been very difficult, but they weren't, they just really wanted to work with us.

At what point did the game start to take shape?

PM: What happened then was that we went away and thought of three game ideas. One was about a jail break, one was about an evil dictator, and the last one was called Magicka.

We sat round, we talked about it, presented our ideas, then voted on it - and the Magicka idea, which turned into Black & White, was born.

From there more team members were added and work on the game began in earnest. One of the first public displays for the work in progress was in 1998, at E3 in Atlanta.

PM: We got this small room, that was smelly, dirty, all it had was a table, in a far off hall. All we had was a ten second FMV and this little prototype.

TR: Which wasn't 3D, it was isometric.

PM: And by the end of the show, there was a queue all the way around the stand to come in and see it.

MW: We won something.

PM: I think we won Game of the Show for that, and it was nothing. I think that was one of the greatest experiences I've ever had. I remember flying back on the plane, and just bursting into tears.

Following that there was a fair amount of press attention for Lionhead, which came at a time when the internet was beginning to blossom with mainstream interest.

TR: The web was just getting going, and they needed content, they needed stuff to talk about.

PM: And we were stupid enough to not be paranoid at all about anything we were talking about. We had webcams up in our office, so people could see. We had days when all of us would go on to the boards and start chatting to people.

DW: And quite a lot of fansites were springing up then.

TR: At one point we had 350 fansites and I remember we had links to all of them.

PM: But that all took us forward, to the year of release of Black & White, and it was the sixth most requested piece of information - excluding porn - on the whole of the internet, according to the Guardian.

One E3 I came back through customs, and was stopped, so that the customs bloke could get my autograph.

Black & White was a great success as an original IP, followed later on by Fable, although it wasn't a straightforward road from one to the other.

PM: There's a bit of a story behind Fable, of course, and that is this thing called "satellites." We had Steve Jackson, who was our business guy, and he came up with an idea one day.

We had all these people knocking at our door [with ideas for games], so why didn't we set some of them up in an office, give them an accounts package, make sure they do the documentation right, get a contract with a publisher for them, and then sit back and take whatever percentage it was?

We did that with two people we'd worked with before, they showed the game ideas, and that's where it all started going a bit wrong, because no publisher wanted to sign from an unknown, they wanted to sign a game from Lionhead, because we were getting all the press.

Slowly it turned from being a satellite idea, which was a really good idea, into something that was a huge amount of hassle. And this is where, when you're setting up a company, the small mistakes you make come back and haunt you time and time again.

At around this time Fable began to come together, and although it was signed originally to Activision in pre-production, that didn't work out, so the team spent some time negotiating with several other publishers.

One of those meetings, with EA, didn't quite go according to plan.

PM: I quite like practical jokes, and there was this one clause that EA were obsessing about, on cross-collateralisation. I told them not to put it in, because we would never sign it if it was.

TR: Do you remember, before the meeting, I egged you on a little bit, because we were discussing it. You said you didn't think they were going to go for it, and that you should pull out some underpants. So I said that you really should do that, but then I bet you that you wouldn't go that far. And this was the three most important people at EA at the time.

PM: We were in the meeting and they brought up the clause, and I'd stuffed these pants down my trousers.

TR: You said, "I've only got one thing to say to that - underpants!" and threw down these pants on the table.

PM: They were slightly grey; they'd been in my sports bag for a couple of months.

TR: And the EA guys just nervously looked at each other.

PM: And I had to just sort of take them back off the table.

That deal didn't work out, but soon they were talking to Microsoft, who was at the time keen to set up deals for its original Xbox platform. BC and Fable were soon signed up on favourable terms, but then Lionhead took a rather different turn.

PM: Because of the success of Black & White there was a new level of fans that came to see us, and these were financial fans. There was this one bloke, no experience in the games industry, he was a business entrepreneur. He sat us down and said, "You idiots, I can make you worth a billion pounds in 18 months, guaranteed, and you hardly have to do anything." And we of course went, "Okay, that sounds great."

There was this whole new thing about flotation that started to happen, and that meant that suddenly we went from being a whacky games developer into a professional thing, we were going up to the City of London and having these incredible meetings.

We had this huge bank backing us, who would only back five star flotations. And that's when this big business team came together. That flotation went all the way, right up to 48 hours before the public announcement.

TR: We'd spent a fortune on this, millions.

PM: We spent virtually all the profits from Black & White getting to this float.

TR: All the lawyers' fees, and so on.

PM: Then, two days before the float, the stock market crashed.

TR: It was June 2002, everybody was worrying about war, and markets hate uncertainty. I remember our banker picked up the phone and said "Have you seen the FTSE? It's 300 points down." We tuned into Reuters and saw the stocks across the board were all red.

That event, for a small company, was almost crippling but it did focus Lionhead minds back on the task at hand - that of creating games. Fable was another successful title, and the situation eased.

Read part two next week, including Molyneux's thoughts on MMOGs, the UK games industry and what he'll be doing in the next ten years. Interview by Phil Elliott.

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