Radical Entertainment, Rockstar Vancouver follow 38 Studios

In 2008 when the The National Bureau of Economic Research announced that America (and as it turned out much of the world) had entered an economic recession in December 2007 the news was hardly news to the average consumer and worker. The deterioration in the labor market combined with increasingly more frequent home foreclosure announcements, banks tightening their lending policy, and the fact that most people were being forced to do more with less were pretty obvious signs. Don't take this wrong; having the reality that you live under confirmed by experts can be a comforting thing, though the fact that there does not appear to be a light at the end of the tunnel yet is a bit disheartening.

For gamers the economic downturn was a non-event -- or at least it felt that way. The bad economy reached deeply into a lot of industries, but the recession alone was not, it seemed, enough to significantly damage the video game industry. At least part of the reason for that has to do with the nature of that industry and the fact that when times get tight money-wise the entertainment value for activities like video games increases. Rather than drop $75 on a night out at the movies -- arguably what amounts to a few hours of entertainment not counting dinner -- gamers can spend $60 on a new video game that will deliver anywhere from 40 to 60 hours of entertainment, making it an obvious choice.

Now that we have that out in the open -- and before we get to the meat of this story -- we just want to point out that it is not the economic recession that is behind the recent studio closings, though it may well have played some small part. In fact the recent studio closings and the failure of 38 Studios happened for specific reasons that had more to do with game performance in sales than anything else.

· The Cost of Doing Business: Video Games Cost Too Much · The Impact of the CES Gaming Zone

38 Studios

When Kingdoms of Amalur launched it was a top-notch title that garnered a lot of praise, and had the people behind its creation at 38 Studios followed the established pattern for new start-ups chances are that they would have continued to thrive and we would be talking about the upcoming sequel instead of news that the State of Rhode Island ended up owning the IP rights to Kingdoms and is now, according to industry rumors, trying to shop it around to the big studios, but is asking for too much money.

The reality is that 38 Studios did backwards; instead of starting out small in somebodies basement or garage they started out big, with a plush corporate HQ and large development facilities, and along the way ended up buying other studios. By all accounts they were hemorrhaging money that they did not have, a trick made possible by a combination of the owner having fairly deep pockets and ready access to a very large taxpayer-backed loan from the State of Rhode Island. A loan that Massachusetts refused to even consider matching to keep the studio from relocating...

The reality is that no freshman title should ever face the sort of pressure that Kingdoms did -- it sold over a million copies but that was only a fraction of what it needed to break even -- and that alone should fully illustrate what went wrong. So to sum it up, 38 Studios was hoisted by its own petard, but that is not what lead to recent major studio closures elsewhere.

Radical Entertainment

Radical Entertainment -- the house that built the Prototype video game series -- was shut down by parent company Activision ;ast month, and the official reason given for the closure was dismal sales for Prototype 2, the sequel to what was a surprisingly robust original title in 2009. After Activision added up the total global sales numbers of the two months following the release of the open world action sequel, they found that the numbers were simply not there. The reality is that Prototype 2 failed to move even a million copies across all platforms, and considering that it was a sequel, and considering the performance of the game it followed, that was unacceptably bad performance.

According to sources at Activision only some of the employees will be reassigned to other studios and projects in the company family -- while others will be joining the ranks of the unemployed.

Rockstar Vancouver

Considering the massive reach of the company and its creative pull, the announcement this month by Take-Two/Rockstar that Rockstar Vancouver would close was a genuine shocker. The decision to shut down the studio which brought the gaming world Max Payne 3 and Bully: Scholarship Edition was based upon low sales figures for its most recent title -- Max Payne 3 -- which barely broke the 1.5 million mark worldwide across all platforms, but the good news is that the staff at Rockstar Vancouver will not be losing their jobs; every member of the team there will either be moved to Rockstar Toronto as that studio expands, or will be absorbed by other studios in the Rockstar family.

Rockstar Vancouver was originally known as Barking Dog Studios, which was acquired by Rockstar in 2002. Barking Dog was founded in May 1998 by Glenn Barnes, Christopher Mair, Sean Thompson, Michael Gyori, Peter Grant and Brian Thalken, all of whom were former employees of Radical Entertainment. Among the titles that Barking Dog published prior to being acquired by Rockstar includes Homeworld: Cataclysm (2000), Counter-Strike (2000), Global Operations (2002), and Treasure Planet: Battle at Procyon (2002).

Interestingly enough, having been created by ex-Radical employees, following its purchase by Rockstar, some of Barking Dog's employees split off to form their own companies, including Big Sandwich Games, Hellbent Games, Ironclad Games, Kerberos Productions, and Slant Six Games.

The current plan to move the Canadian development talent from Vancouver "together under one roof" in Toronto is largely viewed as a positive move by Rockstar, Games, as Rockstar VP Jennifer Kolbe pointed out in her recent press release: ". . . a single Canadian team will make for a powerful creative force on future projects," she said.

Most of the staff will relocate to the new and larger custom-built facility in Oakville, Ontario, which will house the expanded Rockstar Toronto team. The Toronto expansion is being supported by the Ontario government, who weighed in on the decision by Rockstar to combine the teams with the comment that the move highlights confidence in Ontario's leading-edge digital gaming industry. The Ontario Provincial Government is actively promoting the province as the go-to place for Canadian game developers.

A Prevailing Trend

While the failure of 38 Studios was an aberration, shutting down development studios for poor game sales is not a new trend. In 2011 Electronic Arts Shut down the Melbourne division of its popular Visceral Game Studios because it failed to see profits in the studio's future, while the decision by parent company THQ to shut down Kaos Studios was said to be based upon the poor performance of its disastrous last title, Homefront. Propoganda Games was shut down following two disastrous releases -- Turok re-boot and the Tron: Evolution -- as part of an over-all restructuring by parent company Disney, and Activision closed Bizarre Creations following its release of Blur and Blood Stone, with both titles being felt to have failed to hit their niche.

The one notable exception to the poor-sales trigger for closures in 2011 was Australia’s Team Bondi, the studio that brought us the massively successful and deeply immersive LA Noire. The factors behind the demise of Team Bondi had more to do with the fallout from what became a grind in delivering LA Noire, with a staff rebellion leading to a race for the door, as now ex-employees told stories of horrible working conditions, with most of the former staff declaring that the company was the victim of its own success.