Friday, May 25, 2012

What could have saved Amalur developer, 38 Games?

After running into extreme financial trouble, 38 Games has officially closed down. It’s a sad day in gaming as the 300-odd headcount at the developer was a team with real potential. Kingdoms of Amalur, its first and only game, was not a bad game at all.

But it sold horribly, and 38 Games ended up with a massive debt it was not able to repay. There will be a lot of study and analysis of what exactly went wrong in the future – this is the kind of collapse that can have a ripple effect through the entire industry, but following on from a conversation I had with my good friend Coffee with Games in a previous story, here’s a couple of initial thoughts that could have resulted in a far healthier 38 Games.

Don’t put all your eggs in one basket

While I admire the determination to put together a studio to develop big games, and that in itself isn’t necessarily a bad business decision, by the same token, you need to have something else to help mitigate risk. Even an iPhone game, or a micro-transaction supported Facebook game based on the Kingdoms of Amalur world could have had the duel benefit of promoting the “real game” and earning a little income on the side. This is something every third party developer should be doing, and indeed that’s what many of them do do – did you know Grasshopper Manufacture, the folks behind Shadows of the Damned, No More Heroes and Lollypop Chainsaw also do smaller scale projects – right down to $0.99 iPhone apps?

Creating a revenue stream is critical to any business. Relying in a massive income from a single product is never going to be sustainable – no matter how good your game is.

Have a more aggressive DLC strategy

Many gamers hate DLC, but then many gamers aren’t trying to run businesses. DLC is a good way for a developer to earn more income from a single game. When sales are low, it’s even more critical. I remember reading about two DLC releases of fair size for the game, but that’s it. Perhaps 38 Games had more planned, but in contrast the Dragon Age games had three or four each.

It also would have been a good idea to release those silly little alternative costumes and the like (or more heavily promote, I never saw anything about such things), because while many roll their eyes at the idea, companies like Tecmo Koei with its Warriors games make a killing from that style of DLC.

Develop a game in an existing franchise first

While I understand that 38 Games was set up for the sole reason to develop an original game, creating new IP in the games industry is a challenging prospect. Gamers tend to wait for price drops with new IP, or buy it second hand, and neither situation helps the developer’s bottom line. As much as we all claim we want innovation and creativity, the reality is that when it comes to forking over money we prefer the safe bets. So to help build its brand as a developer, and build up some equity to create that dream new IP, 38 Games really should have kicked things off with a licensed title or contracted out with someone (EA, perhaps) to create a mid-tier game in an existing franchise first.

That would likely have helped smooth the development of Amalur, too, once a project was under the belt and the team had gelled.

I would be very interested to hear from people close to 38 Games some of the other reasons it was able to get into so much debt – say hello in the comments below!
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