Archive:Lanning by GamesIndustryBiz

Capitalism killing games and the world - Lanning

Oddworld founder despises growth models but is encouraged by the indie scene and rise of digital distribution

In the nearly two decades since Oddworld Inhabitants released Oddworld: Abe's Oddysee on the first PlayStation in 1997, the world and the video game industry have gone through substantial changes. The fourth PlayStation is now a target platform for many developers who were perhaps just kids playing Abe's Oddysee on PlayStation all those years ago, but development in the AAA space has become tougher than ever, as budgets have soared and the mid-tier has gotten squeezed. Oddworld founder Lorne Lanning, who's rekindling gamers' love for his IP through high-definition digital remakes, sees hope, however, as more and more indies have leveraged digital and moved away from a growth model that so many big publishers adhered to.

Looking back at the evolution of the industry, Lanning observed that the gap between the GTAs, the Call of Dutys and the rest of the smaller projects has only widened with each successive console generation. And at the very heart of the problem, he believes, is capitalism. (It should be noted that Abe's Odyssee, itself, was already a critique of capitalism).

"That problem has been a trend, really, since I got in. I'd say it's more of a capitalism trend, which means all those companies need growth. If you're a public company you need to have constant growth and you need to conquer more territory, and the day you're not, your shareholders bail. That's it," he described to GamesIndustry.biz.

"And then you get acquired or you get thrown out the door. So in this space, what happened is inevitability someone starts building a $100 million title and then they kill it and then someone else goes, 'Well, we need to be there too next year because we know X number of people are going to buy racing, X number of people are going to buy shooters, X number of people are going to buy football and soccer next year, these are aces in the hole. Someone's going to be grabbing the billion and a half dollars in those sectors. We've got to go after it.' The competition is getting more fierce."

As more and more money was poured into projects and as big companies became more risk averse, developers got shafted, said Lanning. "The terms got worse for developers. So the budget's going up, and now [publishers are] saying, 'Now we're spending $20 million on a title and not $5 million, and at $20 million, we need better terms. You're going to do 10 times the work, but you're going to get a fifth of the backside because we're risking all this money.' Depending on how savvy they would be with the deals, usually they never made money. Most developers never really made money. They were able to stay in the business. But the way the deals were structured, they were basically dead," Lanning lamented.

Lanning made a comparison to the rock and roll business, alluding to a documentary film called Artifact. "So there's Jared Leto, and they're not being good slaves to EMI with his band, Thirty Seconds to Mars, and so EMI sues for $30 million to cripple them and paralyze them so they can't do shit. 'Until you kiss our asses, you're not going anywhere,' [was the message]. In a lot of ways, the game business started becoming that. It's not personalities and it's not companies. It's capitalism. So you get that scale and now it gets more ruthless. These are public companies. This is Wall Street," he continued. Never one to hold back any punches, Lanning took it a step further - capitalism is not just bad for games, it's bad news all around. "I think it's killing the world. I think by any measure of scientific reason it's a provable fact," he stressed. "We've got a lot of problems. Now, I just happen to have been focused on those problems for a lot of years. I've got a lot of friends who are scientists and marine biologists and aerospace people. And we're in our 'emperor wears no clothes' phase, right? But as soon as people can't eat, we'll get over that phase real quick, see how bad shit is. And hopefully we can overcome that. But we need to wake up first."

The growth model that drives most companies in a capitalistic society is not going to do game makers any favors. For Lanning, what developers and game companies need to be focused on is simply having sustainability. "So what is a sustainable model? Well, don't have investors. Don't have an IPO. Don't go public. Then maybe there might be a sustainable model. But can you focus on niches instead of blockbusters? If you're going to continue focusing on blockbusters, then you're going to be competing against the big boys. Now you're half a billion dollars into development... just like the movies. So who can afford to play? But when we talk to indies today, I used to be like, well, if I sell a million and a half units, we're going to be a loser. But today, if we sell 150,000 units we're in the black," he said.

"So I look at it as, if I went with a publisher, you want a 5x return. If you're a venture capitalist, you want a 10x return. If you're an indie, can you double your money? Now, if you were in real estate, and you could double your money, you would be thrilled. So why not in entertainment? So here's where our opportunity lies. As craftsmen, our opportunity lies in finding the niches where we know our audience, we focus on it, we listen to it, we respect it, we treat it with some grace and...if you can keep mobilizing that audience, keep informing that audience, then how much is that worth?" In today's marketplace, Lanning pointed to the indie victories we've witnessed with titles like Octodad or Monument Valley. Yes, it takes money to make money, but it doesn't have to take tens of millions.

"I remember Martin Scorsese saying 'Everyone wants to take me to $60 or $70 million budgets. I do films for $15 million or under because I know my audience. So at $15 or under, I'm still a hero. But if I spend $60, I'm a loser... because maybe it'll only return 60. Now no one's made a profit. But if I did it for $15, they quadrupled their money.' So I look at it as, can you double your money? If you can double your money, then you can have a sustainable business. You don't even need to double it to have a sustainable business. You just need to stay in business. But if you can double your money, then you can grow a sustainable business. This whole growth thing is just killing everybody. Look what happened to THQ," he continued.

By having a sustainable business, not only are you not a slave to shareholders, but you might be able to innovate. "So now, what does that allow them to build? Here's what they can definitely do - they can keep their people employed, they can build more product, they can continue on that IP or they can start doing other stuff. They can take some chances. And they've got a lot more money now than they had before," Lanning said of Octodad maker Young Horses and Monument Valley dev Ustwo.

And once you're sustainable, you can afford to be late with a product. There's no gun to your head to meet a ship date. And a sustainable model also brings the advantage of being able to experiment with a bit less risk. "So the indie possibility is they can actually find their audience. The cheaper they can make their product, the more creative opportunity they have. So you can take more risks the cheaper you are. My new motto is 'fail faster, cheaper' ... If it's not looking like it's gonna be the thing, drop it and move on," Lanning said.

The other big aspect of the sustainable model is leveraging digital distribution. In the old days, as the gatekeepers retail had a direct impact on how many units you could sell. "So what they say is, 'What have you got? How am I going to sell it? What banners are you putting in my store? What ads are you running there? Because I've got this shelf space and the second these titles aren't moving, I'm putting it in with something that is then. That's my business. I pay for shelf space. You put product on there. You're making me pre-order. Anything I put there is at the expense of something else I could be selling. You'd better sell that shit fast. I wanna be convinced you really believe in this and you're going to sell that fast'," Lanning explained.

With digital stores like Steam and others, of course, that shelf space pressure is removed. "That game could sit there for 20 years and nobody gives a shit. It's taking up a little spec of data. But if someone's searching for it, they can find it. And that did not exist in retail. So all of a sudden, you can start seeing niches that retailers would never focus on because they were too small. And as a result, that cash starts coming in, you start being able to do it. Now, other shifts have occurred too, but that's the real beauty," he enthused. "The independent can now go directly to the customer using his network with full transparency, full reporting, and if they can find an audience - now it's their challenge to do that, the network's not going to expose them - but if the developer can find the audience then they have a chance to actually succeed and keep making more stuff."

Needless to say, the margins are far better with digital too. Lanning used to make $7 off a $60 game and now he could make that same $7 on a $10 game. Lanning is heeding his own words, too. Rather than jumping whole hog into new IP development, he's been re-releasing older Oddworld games on digital platforms (New 'n' Tasty was released on Steam for $20 in February) to build up the capital he needs to make either a brand-new Oddworld or something else altogether.

"The expensive part of making a new game is the new creative stuff. Now, if I try to do a new game with Oddworld, I don't have the money - I'd have to bet it all - to do a new IP, meaning a new title in Oddworld, not just 'we're going to use the Unity engine and build another side scroller.' That was 20 years ago. I want to do new stuff. But I think the audience expectation for what a new Oddworld product would be is one we can't afford yet," Lanning said. "When I have the confidence to see a new Oddworld title come out, I think we're in several million dollars to do that. And at that point, I think I need some type of promotional partner at another level because right now we don't spend on advertising. We're really running on brand awareness. So we're doing more social marketing," he added.

Ultimately, Lanning is still as passionate as ever about the world and characters of Oddworld; in his mind it's a lifelong commitment. "My design for Oddworld is to build it for life. I saw it like Dr Seuss, Walt Disney, like Hanna Barbera, like George Lucas. I want to create shit I really believe in and I can run with it for life... but I don't want to do it in a way where you're forced into an acquisition," he remarked.

In terms of the investment required for a new Oddworld game, we mentioned to Lanning that it would be far lower, of course, on smartphones or tablets. And while Lanning has partnered with Square One with some mobile adaptations of Oddworld titles, it's not a platform that he's keen to launch new content on. "While there's mobile opportunities and things like that, it's not something I'm an expert at designing. And then you start getting into free-to-play stuff and you're in economics. I'm not in economics. I went to art school. So I think more like a film director, less like a Stanford MBA," he said.