Video-game explosion

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      Vancouver may be to video games what Hollywood is to the movies, which explains why there are so many new studios.

      After spending many years in senior positions in the video-game industry, Vlad Ceraldi and Steve Bocska decided recently to take the entrepreneurial plunge. They, along with some of their colleagues, left good jobs with Radical Entertainment, an established Vancouver video-game company, and opened their own development house earlier this year.

      Ceraldi and Bocska call themselves the “joint chief executive officers” of Hothead Games, which is targeting the “casual hard-core gamer”, sometimes through partnerships with other producers. The company, which employs 20 people, is housed in a wide-open studio on the top floor of a four-storey Yaletown office building.

      “We came to the conclusion that we had done as much as we wanted to do in our careers at Radical as far as the type of games that companies like that focus on,” Ceraldi told the Georgia Straight.

      They’re not alone. Small video-game development houses have been popping up across the region. Many of these start-ups are headed by industry veterans. Deep Fried Entertainment, created last year by a management professional and five former employees of Electronics Arts Black Box, announced a deal in September to create game content for Sega Partners.

      Action Pants Inc., formed last April by former senior staff at Electronic Arts Canada, is developing next-generation video games (Xbox 360 and PlayStation 3) for a major publisher, according to CEO and co-owner Simon Andrews. He told the Straight that he and his three partners came up with the name Action Pants because they wanted to demonstrate that the company is a creative, fun place to work.

      “It certainly made the four of us laugh,” Andrews said.

      He noted that his company has already leased a 20,000-square-foot facility in Yaletown, which will eventually be occupied by 175 employees. He said that Action Pants has a deal to create “multiple titles”, though he wouldn’t identify the publisher. “There is a lot of opportunities in Vancouver right now, but it’s also very risky,” Andrews cautioned. “Getting any business off the ground is hard work.”

      Several other development houses—Slant Six Games, Hellbent Games, Blue Castle Games, Ironclad Games, Atomic Robot Games, and Kerberos Productions—have also formed in Vancouver and Burnaby in 2005 and 2006. None of this bothers Ron Moravek, chief operating officer of Electronic Arts Canada, whose parent company, California-based Electronic Arts, is the largest video-game publisher in the world.

      “It makes us at EA really proud,” Moravek told the Straight. “We feel here in Vancouver that we were sort of the godfathers of the game-development industry.”

      Moravek estimated there are now more than 60 game-development studios in the city. According to industry association New Media BC, there are 160 companies in the sector, including developers, publishers, and service providers. Lynda Brown, president of New Media BC, told the Straight that between 4,000 and 5,000 people are working in the video-game industry, mostly in the Lower Mainland.

      “It’s an exciting time,” Brown said. “There is a lot of growth. The worldwide market is projected to be US$65 billion [including digital entertainment and mobile content] by 2010. So we’re at the cusp of really being able to grab the brass ring and to lead in this area.”

      Huge corporate video-game developers already have a major local presence, led by Electronic Arts (2005 revenues: US$3.1 billion), which has the world’s largest video-game development centre at its Burnaby campus. According to Moravek, EA employs 1,800 people locally and sold $1 billion worth of products made in this region in the past year. Paris-based Vivendi Universal Games bought Radical Entertainment in 2005, and another large company, THQ Inc., bought Relic Entertainment in 2004. Take-Two Interactive Software, a New York City concern best known for its Grand Theft Auto series, owns Rockstar Vancouver, formerly Barking Dog Studios. Vancouver’s Propaganda Games is under the Walt Disney Company umbrella.

      Barking Dog Studios cofounder Christopher Mair, now creative director of Hellbent Games, told the Straight that Vancouver is making a mark internationally. “We actually have four or five big-name studios in town, and then tons of little studios that have sprouted up,” Mair said. “The talent here just goes so deep.”

      Many of the entrepreneurs behind these start-up companies have worked on best-selling titles in the past. Mair, 34, helped create Counter-Strike and Homeworld: Cataclysm. Deep Fried Entertainment’s management team is formerly best known for the Need for Speed series, which is an Electronic Arts’ blockbuster hit. Hothead’s Ceraldi, 36, was the producer of Simpsons: Hit and Run, among other titles, and his partner Bocska, a 37-year-old with an MBA, worked on Need for Speed: Hot Pursuit 2.

      Bocska said that large companies do an excellent job addressing the needs of “hard-core gamers”—mostly 18-to-35-year-old males. He said that Hothead Games is trying to serve other segments of the market.

      “It’s people who have high expectations for the quality of the game but they’re not hard-core because they don’t have as much available leisure time,” Bocska said. “They have high disposable incomes but they don’t want to invest the many, many hours it takes to get into the more complex games.”

      In 2005, the U.S. investment house Wedbush Morgan Securities issued a report predicting 10-percent annual growth to 2010 in interactive-entertainment software. It cited several factors, including rapid teen growth, increasing numbers of female gamers, and rising youth incomes. “We see continuing expansion of the age demographic for at least another 20 years, as the oldest gamers stay interested in games well into their 60s and children continue to embrace games,” wrote analysts Michael Pachter and Edward Woo. “One of the drivers for the ”˜stickiness’ of video gaming is the emergence of multimedia in games, with surround sound, music soundtracks, and even movie footage.”

      The report noted the breadth of video-game categories, which include games of strategy, sports and extreme-sports games, action-adventure titles, shooter games, combat, racing, fighting, and simulation games designed for personal computers. In addition, there are home consoles created by Sony, Nintendo, and Microsoft. And then there are handheld, portable, and mobile consoles.

      Dan Irish, the 32-year-old CEO of Yaletown-based Threewave Software Inc., likens the current explosion of the video-game industry to the growth of the film and television industry in the 1940s and 1950s. In its early days, he said, the movie industry was controlled by major studios, shutting out independent moviemakers. But by the 1950s, the indie producers could succeed by selling their programs to television networks, which could attract sponsors.

      Irish told the Straight that his company has 50 employees and is creating sponsored video-game content for corporate clients. He also said that video-game producers can explore alternative distribution over the Internet. This can allow them to bypass publishers and retailers. “Retail isn’t going away this year,” Irish commented. “It’s not going to go away next year. But, eventually, I think it’s going away.”

      However, Wedbush Morgan’s analysts claimed in their report that they were “unimpressed” by the business prospects of on-line distribution of video games and felt that Microsoft’s emphasis in this area was a “strategic error”.

      In some respects, Douglas Tronsgard, 36, is the model for some of the new local entrepreneurs. Back in 2002, he was working as a producer at Black Box Games when it was bought by Electronic Arts (which first set up shop in the Lower Mainland by purchasing Distinctive Software in 1992). “Most of the people from Black Box went on to work at EA, but I did not,” Tronsgard said, adding that he wasn’t offered a position that he felt was appropriate.

      So he decided to create his own company, Next Level Games, which adopted a different approach. The video?-game industry was known at the time for its punishing hours and tight deadlines. Tronsgard and his partners chose instead to highlight the importance of a balanced work-life relationship for managers and employees.

      “We would get the efficiency and knowledge of the experienced guys without having them completely burnt-out,” Tronsgard said. “This had never been done before in video games.”

      The company started with 12 employees and has since grown to about 100 full-time workers and six contractors. Its first title was NHL Hitz Pro, followed by the soccer-game hit Super Mario Strikers, for Nintendo.

      “It has certainly sold more than a million units, that’s for sure, on the GameCube, which is the console with the lowest installed base,” Tronsgard said. “So that’s quite an accomplishment.”

      Tronsgard added that the privately owned company is expecting a big year in 2007 with a sequel called Super Mario Charged for the Nintendo Wii console, as well as another unannounced game. His company, he said, is focusing on producing games that will be sold in retail stores, and he noted that although inexpensive Xbox Live Arcade games are being distributed on-line, he doesn’t expect that this will occur with bigger titles anytime soon. “I think on-line distribution is a great thing to talk about but is not as close as we think,” Tronsgard said.

      Brenda Bailey, chief operating officer at Deep Fried Entertainment, said the founders of her company also want to create a “sustainable” development house where people can enjoy working for the rest of their careers. Bailey, who is in her late 30s, added that the Deep Fried founders believe that creativity suffers in a large corporate environment. As a result, she said, the business plan calls for no more than 35 employees.

      “We were approached by a very well known, large American publisher who said, ”˜Oh, you guys are the Need for Speed team. I want you to build a racing title on the PS3 [PlayStation 3] and we’re going to throw heaps of money at you, give you three years to do it, and you can hire 85 people,’?” Bailey recalled. “It took us about a week to get our feet back beneath us and realize this isn’t what we wanted to do.”

      Electronic Arts Canada’s Moravek said his company retains its edge by offering advanced training at EA University, which is a company subsidiary. “When you’re on top, people always want to knock you off,” he said. “So we always have to be a few steps ahead.”

      Almost everyone agrees that finding talented employees is one of the toughest challenges facing this growing industry. “Having new people in the studio doesn’t help you the way having experienced people in the studio does,” Bailey said. “That’s just the fact. How do you get people experienced? I’m personally looking at co-op programs.”

      Lynda Brown of New Media BC hopes that a new graduate school for gamers called the World Centre for Digital Media Entertainment, housed at the Great Northern Way Campus in Vancouver, can help address skill shortages. She also said that New Media BC is developing a feasibility study to address how to attract more interest from the venture-capital industry.

      “In the past, we’ve built railways and we’ve built broadband and we’ve built ports to help us transfer our goods,” Brown said, referring to the development of previous large Canadian infrastructure projects. “This is a whole new way of thinking.”

      Simon Andrews of Action Pants said that Vancouver has the highest concentration of video-game companies in the world. “I think it’s definitely going to grow,” Andrews said. “What Hollywood is to the U.S., I think Vancouver is going to be to the games industry. That’s pretty damn exciting. We’re definitely doing the right thing at the right time.”

      Electronic Arts Canada put this region on the video-game map. Now some entrepreneurs in their 30s, including several Electronic Arts Canada alumni, are helping Greater Vancouver become home to one of the world’s fastest-growing industries.