BC Business
Ted Nugent, Genius Factor Games Inc | BCBusinessIndependent video game developer Ted Nugent left Electronic Arts to start his own studio making games for the iPhone.
A small hub of mobile and social game developers is giving Vancouver's video game industry a reason to remain optimistic.
Five years ago Ted Nugent was the personification of Vancouver’s then-booming video game industry. He got his first job at Electronic Arts Canada Inc. in 1995, when he was only 22, testing games. He was promoted after only a year and a half and spent the next seven years working as a technical artist on blockbuster titles such as the NHL series, a role that straddled the creative and programming spheres of video-game production. He then spent another five years in a more senior role with the company before leaving in 2007.
In 2008 Nugent started his own studio, Genius Factor Games Inc., and now his story illustrates the current state of the industry. Why did he leave? He says he “saw the writing on the wall.” More accurately, Nugent saw the writing on the literally game-changing 3.5-inch screen in his hand. There had previously been signals that the market for console games (EA’s bread and butter) might be stagnating, but it was Apple’s iPhone that convinced him it was time to start his own company. It’s a new world in game development: where once the industry followed a Hollywood model, earning the lion’s share of its revenue from a few big titles made with big budgets, now new mobile and social games that are much cheaper to develop are the future of the industry. In Vancouver this shift has meant layoffs and erosion of the city’s status as a global game capital. Whether or not Vancouver returns to prominence rests in the hands of entrepreneurs like Nugent.
The shift in gamers’ attention from their consoles to their smartphones, tablets and laptops has meant that EA’s B.C. operations have been steadily shedding jobs over the last four years. EA employed 1,800 people in B.C. at its height in 2007; now only 1,200 remain. Spokesperson Colin Macrae says it’s just part of “the cycle of entrepreneurship.” And he’s right; in its 20 years developing video games in Vancouver, EA has played an incubator role for independent studios, supplying talent, training and sometimes capital to startups. But at the same time EA was laying people off in Vancouver, it was building an 850-person Montreal studio, with 400 working on mobile games.
While EA is investing in the burgeoning non-console market, it is not doing it in Vancouver. In addition to building its Montreal workforce, in July, EA paid $1.3 million for Seattle-based Popcap Games Inc., makers of the popular mobile titles Plants vs. Zombies and Bejeweled. Howard Donaldson, president of industry association DigiBC and a former EA executive, thinks Vancouver is losing traditional big-studio gaming jobs to Quebec and the U.S. because of cost: “B.C. has the talent, it has the infrastructure, it has the entrepreneurial spirit to be a global leader, but I’m concerned about the un-level playing field.” Factoring in tax incentives and slightly lower overall development costs in Quebec, Donaldson calculates that it now costs about $4 million less to make a major console game in Quebec than in B.C.
But if the future of the industry is in mobile and social games that are cheap to produce and distribute, not in major multi-million-dollar console titles, there’s reason to be optimistic. A small hub of mobile and social game developers is slowly taking root in Vancouver, and if this summer’s IPO frenzy over Zynga, the Silicon Valley developer of Farmville, is any indication, they’ve found a lucrative niche. Founded the same year Nugent left EA, Zynga had US$235 million in revenue in the first quarter of 2011, about 28 per cent of what established industry giant EA made for the same period.
Optimists point to positive signs for a Vancouver gaming renaissance in edgy social-game developers A Thinking Ape Technologies Inc. and Flickr cofounder Stewart Butterfield’s Tiny Speck, which recently launched a game called Glitch. The problem is that these two studios employ a combined 39 people here. There are many more startups like Nugent’s, a four-person operation that’s struggling to find financing.
Whether mobile and social game developers will propel Vancouver back to the centre of the gaming universe depends on studios like Genius Factor. Nugent’s first offering, an iPhone game called Gravity Well, achieved 400,000 downloads, about a fifth of which were paid. That’s considered a success in the burgeoning mobile game market, but that kind of success means Genius Factor is sometimes forced to pay talent with equity in lieu of cash. “It’s tough right now,” Nugent says with the stoicism you’d expect after three years of struggling to gain traction. “I believe we have a positive future, but the short-term is a real challenge.”