The Digital Eye: The Business of Videogame Innovation

In The Beginning

In its relatively short history (usually dated to 1978 with the arrival of Pong) the videogame industry has seen a remarkable amount of growth. The early days were times of excitement because every game released was new and unique in some way. They had to be; there was no book, no experience and no precedents in the medium. Until the 90s, games could be made by one to three people. There was not enough processing power to do realistic graphics or physics simulation, so games relied on very abstract graphics to convey their context. The interactive part of the games, the gameplay, was the key. What the player could do with their one button joystick, and later two button and d-pad gamepads, was the focus of the game.

As the processing power of videogame consoles and home computers grew rapidly so did the capacity of game developers to fill up the processing power. One of the most immediate and marketing friendly ways to put this power to use was improving the graphical fidelity of games. Where once we had a blocky yellow circle with a pie slice cut out for a mouth chasing brightly colored ghosts, we now have nearly photorealistic sports figures walking out to the golf course to tee up a shot to the green. The speed of change has been nothing short of astounding.

A Supercomputer Under Your TV

With the release of Microsofts Xbox 360 last November and Sonys PlayStation 3 next week, the amount of processing power available to game developers has hit an all time high. (Nintendos new offering, the Wii, isnt nearly as powerful but their stated strategy is to focus on innovation, even at the expense of graphical prowess.) Its incredible to think that this piece of entertainment hardware can do in realtime what took millions of dollars of hardware just more than 10 years ago. When Pixar released Toy Story, it was visually ahead of its time but the processing resources brought to bear churned out the story a one agonizing frame at a time. We can now approach, if not match, that level of visual fidelity in realtime with a device that costs less than $700.

The problem with this amazing visual fidelity is that it costs a lot of money to create, particularly if the developer is striving for photorealism. No matter how fast the processor goes, it cannot replace the artists who have to create the raw content for it to chew on. To create a state-of-the-art 3D-animated film takes in excess of 200 artists across several years of content creation. The content then gets fed into the rendering farms, which output the final product after laboriously rendering each frame in a matter of minutes or hours. Thats not cheap.

Performance Costs More

In videogames, the development budgets and timelines are often much shorter and sharper than those found in the CG film industry. The content is typically created by fewer artists and it must be constantly checked to ensure that at least 30 frames can be rendered every second on the target platform. This also isnt cheap and is the key reason for the costs of development rising from the heady 80s of one man, three months, tens of thousands of dollars to today, where teams of more than 100 programmers, artists, audio engineers and game designers take upwards of two years and tens of millions of dollars to produce a game.

We can instantly see the results of this increased development cost. Theres no doubt games can look more realistic than ever before. Half-Life 2 has beautiful, postcard perfect scenes and characters who react dynamically and believably to the player. The first time many people see Project Gotham Racing 3 they mistake it for a live televised race.

But there is a downside (other than spending more dollars) to this increased development cost and team size. Much of the flexibility that is found in a small, focused development team is lost. When a team reaches 100 people and millions of dollars are being spent the momentum is incredible. Course corrections are costly and need to be avoided as much as possible. This unfortunately tears at the heart of games, which is their interactivity.

Innovation Requires Nimble Development

Making a game fun is not a simple process. It usually requires many, many iterations on the mechanics of the game to get it just right. With a single developer working on it he or she can quickly try an idea, figure out if it works or not, then tweak it or discard it just as quickly. This rapid iteration leads to interesting fallout even from mistakes and the result is rapid progress in many different directions. Once a large team is committed to a direction every day spent moving in that direction represents many dollars of the overall budget.

Is it any wonder that the large publishers, the primary source of funding for mainstream game developers, are becoming more and more risk adverse every year? If First Person Shooter #14 from last year worked, and sold well, then why not repeat it with some minor improvements this year? The return on investment is much easier to calculate and the risk is much lower. Publicly traded companies, responsible to their shareholders, have a very difficult time justifying the expense of a risky innovative project. Failure means tens of millions of dollars lost.

This unfortunate trend has led to many people inside and outside the game industry muttering, writing and occasionally shouting from the rooftops about the death of creativity in games. While it may not be that dire, the economic reality of putting big chunks of cash on the line cannot be ignored.

Finding Innovation Outside of the Console Box

So where does the industry turn for innovation? Outside of a few notable exceptions (Will Wrights team developing the upcoming Spore is the most prominent example), most developers working in mainstream studios strive for small pieces of innovation in their games and work on gradual evolutionary changes of existing design.

The really disruptive ideas may have to come from the independent games world. Like indie film, the indie game developers operate on much smaller budgets and with much smaller teams than their mainstream counterparts. This often gives them the breathing room to do funky, crazy and innovative things.

Until recently, the problem was getting these games out to potential consumers. The solution has appeared in the form of digital distribution and is best described by an idea chronicled recently in a book of the same name, The Long Tail (Hyperion), by Chris Anderson. It describes the ability of the Internet to make niche products viable through digital distribution. In the past, making a product or writing a book that was only targeted at a market of a few thousand people would be financially unfeasible as they would probably never be able to purchase it or hear about it. The Internet levels that playing field completely and makes it possible for niche markets to thrive.

The Long Tail in Games

Three key factors support this Long Tail effect: cheap distribution, ready access to consumers and democratization of tools.

Cheap distribution is the Internets purpose. It gets bits from point A to point B at very little cost, particularly compared to traditional physical distribution networks. This lets indie developers have a storefront, which reaches millions of potential players at a fraction of the cost it would take to get even a small percentage of that exposure in the traditional retail model.

Ready access to consumers is also enabled through the Internet, but its just as important for describing how consumers find this content. If everyone can put their game up on the net for sale, how do you stand out from the crowd? New companies like Manifesto Games are working to answer this question. By picking and choosing the best titles to feature in its online storefront Manifesto helps drive consumers towards titles they may have otherwise missed.

Democratization of tools is best illustrated by the rise of commercial quality software at prices that are within reason for independently funded (or not funded at all) developers. Full game engines, like Garage Games Torque, can be had for around $100. Microsoft has released a robust programming toolset in the form of XNA Game Studio Express, which is free for use on PC and can, with a $100 a year license fee, push games to the Xbox 360. Even high-end commercial grade animation and modeling tools are down in the realm of affordability. Softimage offers its entry level 3D package XSI Foundation for $495, a far cry from the days of $3,000 per license costs, which drove many independents to use less than legal means to acquire software. And these are just the commercial tools; the open source and freeware community is in on the act as well, constantly improving the state of freely available software.

Who Innovates from Here?

Both mainstream big budget games and small independent games will continue to grow the vital new art form of videogames, but their approaches to innovation will most likely mirror their development approaches. In general the big studios will innovate more slowly, on safer bets, but on a larger scale. In comparison the more nimble indie developers will try out much riskier innovations, more quickly, but on a smaller scale. Hopefully, the Long Tail will catch up with them soon and make getting paid as an indie much easier.

Keep an eye out and Im sure youll see the wonderful innovations from the independent movement bubbling up into the mainstream and hopefully the mainstream will have a few tricks to offer the indies as well.

James Everett is a game designer with Montreal-based Artificial Mind and Movement (www.a2m.com) and spends more time than hed care to admit ruminating about the game industry.