Depressing Realities Surrounding Developer Closures

Around late 2011, Pietriots member Deguello did a written piece on people wanting Nintendo to go third party and why such a thing would do more harm than good. Even today, it still speaks volumes because lately everyone is pinning Nintendo as doomed because the WiiU isn’t selling X amount of units. The same thing happened with 3DS. While I can easily point out the issue (IE Third Parties making excuses…again, people not being early adopters), developers and their publishers seem to be under this boggling mind-set that Nintendo is not worth it and the Next-Gen systems Xbox One and PS4 will be better suited for them.

Allow me to show this cute cat doing a face palm.

facepalm-cat

What we are witnessing is the 2006 mind-set all over again. Over the last six to seven years, we’ve seen over a hundred developer closures, thousands of lay-offs and two publishers close for different reasons (bankrupt and shuttered by new owner). Despite having billions in their bank account, little to no studio closures, and hardly any lay-offs and in fact built a brand new HQ for Nintendo of America, they are still doomed because third parties (of the western variety) don’t want to support them. Maybe that’s a good thing, because publishers these days are doing little to nothing to keep good faith of developers unless they are working on a popular yearly entry franchises (high ho Call of Duty and Assassins Creed).

In fact, I’ve noticed a few trends over the last six years that have made me wonder why Third Parties are never called-out for their behavior, yet Nintendo, the least scummy company of all, is constantly bashed. So what are these realities?

Reality #1: Studio Developers and Publisher Executives do not see eye to eye.

Left Man: “We made it exclusive to WiiU for a reason Joe, its finished!”  Right Man: “Well too bad Bob we’re delaying it for six months!”
Left Man: “We made it exclusive to WiiU for a reason Joe, its finished!”
Right Man: “Well too bad Bob we’re delaying it for six months!”

In 2008, three top Retro Studio designers quit the company because they were tired with working on Metroid and decided to form their own studio away from Nintendo’s guiding hand. Said designers hyped a partnership with EA for said few years… and nothing happened. Their only game since splitting from Retro has been… a PS Vita port(s) of MGS2 and MGS3. They did have a Metroid Prime-like Mega Man X game in development, but that got canned too, thankfully.

The example I listed above is when developers who go independent from a publisher’s studio end up not doing so hot. Developers splitting from companies are not new, and in fact the main reasons for this happening is usually their relationship with the executive board. Capcom themselves have seen two major splits in over six years, Clover (now Platinum) and Keiji Inafune. Yet why does this happen? Usually because the executives sometimes meddle in the affairs of the other developers, and this meddling sometimes have negative impact on the game being developed. And sometimes, these executives don’t know the first thing about making a game.

Let’s point to a more recent example of this happening: UbiSoft Montpeller and UbiSoft in general. Rayman Legends, once a WiiU exclusive set for Feburary and Nintendo setting up a marketing campaign for it, was delayed, when it was fully completed, to September. UbiSoft stated that WiiU’s sales weren’t good enough and decided that the game would do better multiplatform. The problem with this thinking is that, one, Legend’s predecessor Origins was multiplatform and tanked at launch (only selling semi-well once heavily discounted), and two, Legends took advantage of features on the WiiU which the PS3 and 360 don’t have unless you want to spend money on an accessory/iPad knock-off nobody wants . Having played the Legends Challenge App, I have no idea how they are going to pull these features off on those consoles if you refuse to spend extra dough for a Xbox Glass and PS Vita (actually, when drafting this Legends was also announced for Vita too).

This pissed a lot of people off, because Legends’ demo was amazing and the exclusivity would’ve given it a chance to not be swept under the rug. The developers, rightfully so, were pissed off majorly; have you noticed that Montpeller’s games haven’t been big hits, but games like Assassins Creed, which get BIG advertising, are? I would be pissed with the PR department, but the executives are running the show.

If Ancel and his team do split from UbiSoft (which is looking more and more likely because Legends has a snowball’s chance in hell at succeeding now), there is a fifty/fifty chance of them doing well independently. Trying to get a game funded, published and released is more difficult these days then you imagine. As Kickstarter is proving, independent developers have discovered the way of crowd funding, though it doesn’t always work out. Money isn’t something that grows on trees.

Unless you plant money in the ground.
Unless you plant money in the ground.

Reality #2: The game’s budget was not made back in sales.

It is now 2013. I am in my mid twenties and remember what game life was like back in the early 2000s and the 90s. When a game sells two million copies, it was considered a great success, and there is a good chance you made back your development budget quite well. Yet at the start of 2006, that changed; if you sell two million copies of one game, its no longer considered a success anymore, but a failure.

Seriously.

This is what publishers and developers think they have droves of.
This is what publishers and developers think they have droves of.

Games have usually always been expansive to make depending on the situation and/or scope. The most expansive game before the start of this generation, and the biggest record holder to my current knowledge before the big budget mess starting in 2006, was Shenmue for Dreamcast. Cost seventy million dollars to make and seven years to develop across three different SEGA systems. While the game was lauded and managed to get a Japan only Dreamcast sequel (which later made it to XBox in other regions), both games bombed and sunk Yu Suzuki’s career. In fact, the state of SEGA now is due to the fact they didn’t see much financial return on game sales for PS3/360 games for the last four to five years.

A publisher is what funds game development, and with that money the developer makes the game for the publisher. On top of that, money is also spent on advertising. If you see lots of advertising, you can imagine the budget was big for it. If not, then there was little money or none at all. These days, the only way for a game budget to break even on returns is if they make enough sales in the initial sales run. That’s right folks; that game you worked tirelessly on for the last few years of your life might be the path to you getting the pink slip.

Dead Space 3, which released to average critical reviews, needed to sell, according to the developer, five million right away to break even. This number was considered ridiculous since Dead Space, as a series combined, hasn’t come close to breaking this mark. While the first Dead Space was great, it wasn’t anywhere close to a high seller despite making a respectable million units (like Metroid Prime 3). Yet the developer debt and the rising cost put the goal at a number that was next to impossible to make. While Viseral Games isn’t shuttered, they are now being lumped into making Star Wars games for EA.

A developer that came close to nearly shutting down was Rocksteady, the developers of Batman: Arkham Asylum. While the game moved three million units, the budget was not made back and Eidos nearly shut them down. In fact, Square Enix’s financial melt-downs have largely been attributed to the poor performances of the games they published under the Eidos label.

And there is also this…

Thirteen is usually considered a unlucky number. We’re seeing it a third time, when we don’t want to.
Thirteen is usually considered a unlucky number. We’re seeing it a third time, when we don’t want to.

And speaking of publishers…

Reality #3: The publishers cannot afford them any longer and/or stay in business.

At the beginning of 2013, THQ, a publisher that has been around for nearly twenty odd years, went bankrupt thanks to the combined failure of the uDraw tablet on HD platforms among multiple release flops. Developers who were tied to the company faced closure unless another publisher took them under their wing. Several did, except Vigil Games, developers of Darksiders.

As mentioned in the previous reason, publishers fund the game development. Yet as things get more expensive and the returns grow smaller, the companies will feel the sting. To combat this and decease costs, they scale back on developments and/or close studios. SEGA, for instance, went from proudly declaring themselves a hardcore publisher to being the laughing stock of the entire industry; in 2011, they did a massive restructuring which saw them heavily cut back on projects. One of these projects was rumored to be Bayonetta 2, which Nintendo swooped in and funded. In fact, 2012 saw hardly anything from SEGA except Japanese only (until I think March?) Hatsune Miku games and PSN/Live Arcade ports of old games. There wasn’t a single retail Sonic game in that entire year. Yet now we’re getting WiiU and 3DS exclusive Sonic Lost Worlds. Hmm… I wonder how that came about.

A sticker saying “paid for with Nintendo’s money” should be put on the back, just saying.
A sticker saying “paid for with Nintendo’s money” should be put on the back, just saying.

Two telling examples of publishers really feeling the sting is both Square Enix and EA. Despite having successful 3DS titles in Japan (which they are fully capable of localizing themselves hint hint Square Enix), they are pushing more mobile smartphone games and Final Fantasy, the former which I highly doubt will see big returns and the latter being at this point damaged goods which nobody wants anymore. EA, which has been closing development studios left and right, laid off thousands of employees and had constant retail flops… is considered a good reason why Nintendo’s third party support is in trouble. Despite being declared the worst company in the world, making themselves look like awful people and forcing Origin on to ALL of their games.

As someone pointed out: “How could third parties save Nintendo when they can’t even save themselves?”

FINAL THOUGHTS

As of this moment, these are the three big reasons behind developer closures that I can think of. With the ‘next-gen’ fast approaching, I’m expecting to see the fantasy of ‘next-gen’ success to burst like a bubble. If the WiiU isn’t selling as well at launch, how can the PS4 and Xbone do better when they are more expansive and the games people want don’t even come out by then? On top of that, the whole ‘Cross-Generation’ bullshit is sort of negating the need for a new console.

I just don’t know anymore.

16 thoughts on “Depressing Realities Surrounding Developer Closures”

  1. I suggested this before – I think it’d be interesting to put up an article tying the “Wall of Shame” series to a list of studios/publishers that closed their doors over the past few years. Except that the “wall” should contain all titles associated with the studio/publisher.

    It’d be interesting to see the Nintendo vs. Non-Nintendo efforts put forth by the ones that closed.

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    1. Deg has been the one behind the previous walls. It is an interesting idea (I’ve been tossing around the idea of doing a WiiU Wall as well).

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  2. It makes me really sad to see how close a company like Square is to actually just going away… Will they even still be around in 5 or 6 years? And if they are, will people care about them at all? Or will they care even less than they do now? They can apparently still make great games when they choose to (I haven’t played Bravely Default, but everyone says it’s great), but they choose to take these strange money making routes that… don’t make money? It confuses me. But then again, what do I know about business?

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    1. Square-Enix has been the leading edge of stupid since that Final Fantasy movie (which shouldn’t have been tied with Final Fantasy at all). It says alot about their quality control in general when the only half-decent titles after Vagrant Story in 2000 were, personally:

      – The Dragon Quest DS ports
      – World Ends With You
      – Dragon Quest IX
      – Final Fantasy IV DS
      – The Dragon Quest Slime spin-off.

      All on DS. As shitty as I thought Final Fantasy VIII was, their PS1 output was just as awesome as their SNES output. Also, fuck Kingdom Hearts.

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      1. I’m surprised to hear you don’t like Kingdom Hearts. Imo KH is the last great thing Square ever did. I just wish they’d show the Nintendo fanbase that’s keeping the series alive some love and bring the HD collection to the Wii U. But I also realize that Square’s strategy with KH is to use the handheld spin-offs on Nintendo’s hardware to fund the mainline installments on Sony/MS consoles.

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      2. I could make a case for why the original Kingdom Hearts is a good game. But it doesn’t really matter since the franchise has taken a serious nosedive.

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  3. That was a great article, Matto. “How could third parties save Nintendo when they can’t even save themselves?” Brilliant! I’ve got use that somewhere.

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    1. Yes you should.

      Also, to answer your question as to why I don’t like Kingdom Hearts… I may have another post idea for that in the near future.

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  4. It’ll be interesting to see what the developer graveyard will look like this generation. I don’t think we’ll be seeing Nintendo in that graveyard though.

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  5. So it looks like Montpeller may have been given even more reason to quite UbiSoft. It seems the CEO was lying about ZombiU not being profitable at all despite selling half a million units (which is pretty damn good for a brand new IP not heavily marketed). The reason? It was not a big budget title. The game had only three voice actors, under one hundred people working on it and an online multiplayer mode was scrapped.

    They used this as an excuse to make Rayman Legends multiplatform.

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    1. The bastards. Ubisoft has been a great supporter of the Wii U, but that was some under handed bullshit. even the 3rd parties that support Nintendo can’t be trusted. What compels companies to just keep shooting themselves in the foot like this? Greed.

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      1. Ubi Montpeller was a great supporter of Nintendo/WiiU. The executive staff of any given publisher don’t. Give. A. Shit.

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    2. Well, I can’t wait until the big news sites like Kotaku and IGN pick up this news and make it their lead headline!

      …oh wait. They won’t. It doesn’t fit the established narrative that Nintendo is a horrible, mis-managed company that hates gamers and can’t make good games anymore.

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  6. “If the WiiU isn’t selling as well at launch, how can the PS4 and Xbone do better when they are more expansive and the games people want don’t even come out by then?”

    It seems that mindshare, not marketshare is what’s considered winnning? Remember when bragging about your large userbase meant something? Journos had to change the ‘rules’ thanks to Wii, since PS3/360 by themselves can’t hope to catch its lifetime sales. Now for WiiU, last I checked:

    WiiU: Some million
    PS4:0
    Xbone:0
    Yet WiiU is ‘losing’, a ‘flop’, a ‘dissapointment’, etc to what essentially is a concept, an idea, PR BS. Will journo’s sweep under the rug what will be most likely be lackluster to ‘meh’ holiday sales like they do with Vita? And that WiiU sales/software will be ‘surprising’, because guess what, there’s prolific exclusives from Sept-Dec (with some sprinkling of 3rd party releases and improving indie support). The 3ds gravy train still chugging, while Vita after nearly two years is still ‘trying to find its audience’?

    IIRC, it took Wii a little over 18 months to outpace the 360, and that’s when demand was white hot. Wii took over PS3 after the initial holiday season of ’06 and never looked back.

    Even with combined PS4/Xbone sales, I’d say 24-36 months to at least catch WiiU is a reasonable guess. At that point, you might as call it the PSBone, and 3rd parties acknowledge there’s no difference between the two (I’m looking at you Kingdom Hearts 3, Metal Gear 5/ Phantom Pain), aside from price and MS’s flexible policy of letting you own your games.

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