Realtime Crisis

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The demise of developer Realtime Worlds is something of a seismic shock for the UK games business, and especially for the town of Dundee - one of the locations where game development has particularly thrived in this country over the past decade.

In the immediate term, it means that hundreds of developers are out of work. The human cost of a company of this size collapsing is immense. Families will be uprooted and relocated, and some will struggle to keep their heads above water, especially since the firm apparently lacks the funds required to pay wages and redundancy packages.

In the longer term, however, I suspect that the impact of RTW's demise will be felt by the UK games business for many years to come. The company's failure is not entirely a shock - it launched an MMO-style game which was hugely expensive to develop, but which received poor reviews, a combination which would be a fatal blow to most game companies. The scale of the failure, and the context in which it has happened, however, will have a major impact on how the industry does business.

Realtime Worlds absorbed an absolutely vast amount of investment - over $100 million of publicly declared investment. It worked on a game which was enormously ambitious, but seemingly dogged by poor management, leading to huge delays and, I suspect, vast amounts of wasted development effort on features and content that didn't make the cut. According to its newly-appointed administrators, the end result is a firm that's £3 million in debt and can't afford to pay.

When the company was taking all that investment, it looked like Dave Jones and his team were in the perfect position. He was the high-profile developer, the creative mind behind the global brand that is Grand Theft Auto - a name which would resonate in the boardrooms of investment firms just as well as it does in the bedrooms of college students. GTA undoubtedly opened doors, and Jones' bullish style, his aggressive talk which minced no words about taking tens of millions of dollars to build a great game, is exactly the kind of thing that some investors want to hear.

Independent developers have often struggled to make themselves attractive to large investors, so what Jones was doing looked like magic. Some even felt like RTW was blazing a trail that the rest of the industry could follow, opening doors to major investment which other developers would be able to pass through.

In light of what's happened, we need to question just how happy that idea actually is. Nobody is questioning the assertion that making modern games is expensive, but it's not this expensive. APB, in the cold light of day, is not a $100 million game. It's not a $50 million game. It's a much cheaper game - $10, $15 million perhaps - which has exceeded its timescales and its budgets over and over again, and that may well have happened precisely because RTW's success with investors led senior members of the company's staff to feel like they didn't have to worry about time and budgets.

It's tantalising to wonder what would have happened to APB if it had only been able to secure $20 million in funding. With five times less budget, would the project have been abandoned? Or would the pressure have forced the game's management to tighten up their processes, lock down the design in detail and nip impossible ideas in the bud early, and deliver a better game several years earlier? We'll never know, of course, but the reality is that very few of those $100 million can be seen at work in what eventually shipped.

So while it's obvious that investors are going to be much more wary of independent studios in future - and frankly they weren't exactly embracing them with open arms to begin with - it's perhaps less obvious, but even more important, that studios should also be wary of investors, and of drowning their creativity in cash. It sounds like a high-class problem to have, even a slightly funny one, if you're a studio eking out a living on publisher advances - but the joke is probably lost on hundreds of unemployed staff in Dundee today.

Moreover, this whole affair reflects a basic disconnect between investors and gaming tastes. One of the reasons, I suspect, that APB was able to pull in so much investment was simply because it's an investor's kind of game. It's testosterone-filled, action-focused and hugely competitive and combative. It plays to precisely the kind of macho stereotype which many investors have of gaming - and which many investors themselves find attractive.

Yet the reality of gaming's audience is somewhat different. There are, of course, many macho, combative games out there, and many of them are very successful - but studies have suggested that a pretty large majority of gamers are actually more enticed by co-operative, social style play than by direct combat. That's only likely to become more important as gaming's market expands further away from its young male origins.

Hindsight is 20:20, but for exactly that reason, it's also very useful as a learning tool. In hindsight, then, we can see that investors were probably backing RTW for the wrong reasons, that RTW was taking its success with investors as a licence to go over time and over budget, and that the result was a product which cost vast amounts to develop but didn't have much to show for it. Even the most fundamental financial calculations around APB don't make sense - had the game managed to attract a couple of hundred thousand subscribers, a moderate success for an MMO, it's still hard to see how it would ever have recouped its development costs.

Meanwhile, elsewhere in the industry, companies have radically changed their perspective on development. Monolithic, five-year-cycle MMORPGs are still in development, of course, but short development cycles and fast iteration are becoming popular models for many online games. Companies using those models are constrained creatively to a degree, of course, but at least they're not betting $100 million on the launch of a single product with a tortured development history.

That's the kind of model some developers are getting used to already, and others are going to have to accustom themselves to. The creation of monolithic projects funded by publishers isn't going to go away, of course, but if you're setting up as an independent studio, putting together millions and spending years building your opus simply doesn't look like an attractive option any more - and even if it does look great to you, RTW's demise is going to have investors spooked for years.

Independent developers can thrive by being nimble, efficient, and innovative, by latching onto new technologies, new creative concepts and new business models faster than those in lumbering publishers can. They can create and launch products on timelines bigger firms can only dream of, unencumbered by internal politicking and red tape. They can build prototypes and turn them into products, iterate quickly and let the public in early - and of course, they can build massive goodwill simply by being independent, by being seen as the "good guys" by media and consumers alike.

What they can't do - what Realtime Worlds tried to do, and failed in such dramatic fashion - is tell themselves and others that making a game costs $50 million (or $100 million, for that matter) and takes years and years. That's a notion which everyone needs to disabuse themselves of - developers and investors alike. The kinds of game which take tens of millions and many years to create are the preserve of giant publishers who can absorb that kind of investment in turnover figures that extend into trillions - not of an independent studio which will end up destitute should the game fail to be an enormous hit.

That, more than anything else, will be the impact of RTW on UK development - a final curtain, perhaps, on the peculiar notion of independent studios which give up all the advantages of independence in favour of chasing the dream of the big-budget blockbuster. The numbers just don't make sense, the risks don't balance out - and nobody knows that better than those facing an uncertain future in Dundee, or counting their losses in investment firms around the world.