MS closing Ensemble (AoE, Halo Wars)
- Thread starter Acert93
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There isn't anything you can you do with first party that can't be served by third party devs. Third party aren't going spend much time trying to sell publishers on niche titles but many will gladly produce one if you as a pub are paying.
Just because you reducing your level of in-house devs doesn't mean you abandoning developing IPs. MS might try to grow their IPs by creating them in-house and using third party companies to develop thoses IPs into games.
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The advantage with 1st party devs is a freedom to create and experiment leading to original ideas, and expertise in the hardware. The 2nd party idea would require someone in the console company to have an idea and commission it - 'let's create this niche title'. The first party method gives developers the freedom to experiment without having to worry about finding a publisher, a worry that will constrict ideas onto stuff they think publishers will want. This allows such titles as ICO or EyeToy to be created, where perhaps otherwise the developer would have dropped the ideas fearing no-one would produce them. Supporting developers as an ongoing concern should yield more variety and originality. Unless you have a think-tank of creatives at Head Office brainstorming and requesting titles to be produced, 3rd party exclusives are most likely to be a case of the console company shopping around seeing what's being made and buying anything that catches their eye.
The other aspect is hardware expertise. A developer focussed on one platform can accumulate expertise and share ideas, increasing results, decreasing costs over time, reusing engines where appropriate. A 3rd party will take the commissioned job with their current abilities and experience which are invariably less than ideal because they've had to focus across multiple platforms and haven't concentrated on best practises for the one platform.
The other aspect is hardware expertise. A developer focussed on one platform can accumulate expertise and share ideas, increasing results, decreasing costs over time, reusing engines where appropriate. A 3rd party will take the commissioned job with their current abilities and experience which are invariably less than ideal because they've had to focus across multiple platforms and haven't concentrated on best practises for the one platform.
None of those advantages are worth diddly squat if your first party house can't manage to create IPs that create profits and leverage with your userbase. Even first party devs will be limited on how much experimentation they are allowed based on the success a console's first party is overall. Nintendo software division is highly profitable and its success at selling software is probably the reason why Nintendo has the most diverse library with a ton of niche titles. MGS's lacks that type of succes and outside of Viva Pinata most of MGS's game fall into common genres.
All of the big 3 have R&D department within their software division. Both Sony and Nintendo have large first party division but they have in the past being able to take advantages of situations that MS haven't been privy too.
Sony's first party size is the result of catering to two generation of consoles that each broke a 100 million units. Nintendo has lacked that type of console success in the previous two generations but Nintendo first party development division is almost 25 years old and has also been developing for monopolistic handhelds and/or consoles for a large part of that period.
MS has neither the userbase or ability to leverage a large part of its userbase to buy MGS games to warrant a large first party division nor heavy investment in niche titles. Furthermore, niche titles are often the product of hardware success not the other way around.
Again none of those advantages means much without success. Whats the better scenario?
Scenario A: 80% of the profits on a game that took 10 millions dollars and two years to developed and sold 750k units or Scenario B: 33% of the profits on a third party game that took 25 million dollars and 3.5 years to developed and sold 3 million units.
I don't disagree with you, except perhaps I don't think a 1st party developer is solely required to turn a profit to be worth something. There are two strategies here to acquiring content for the platforms, with MS going a different route to the other two. Neither strategy is fundamentally flawed as to be not worth considering.
Edit : I'll add that one thing wrong with your scenario is it considers only one title with different success. It's not like the choice is between A and B, but a choice to create a game and see what happens with it. When funding several games across multiple developers, of which some might sell 750k, some 1 million, some <200k, and 1 five million, the picture becomes more complicated.
Although of course if the console company is publishing a 3rd party game, they'll be making more than 33% vs. 80%, as they'll be getting the license and publisher cuts, the same as if the game was created in house. The only difference I think would be a first-party investment on tools and hardware etc. would be money building up the 1st party assets, whereas funding spent on a 3rd party developer wouldn't be buying assets for the console company. That is, if £1 million of Sony's investment with Guerilla Games was buying hardware and tools to make KZ2, and £1 million of MS's investment in Epic to create Gears 2 was spent on the same, after the games were finished, Sony would be £1 million in assets up on before the games' creation, whereas MS's £1 million investment would belong to Epic, losing MS that money.
Edit : I'll add that one thing wrong with your scenario is it considers only one title with different success. It's not like the choice is between A and B, but a choice to create a game and see what happens with it. When funding several games across multiple developers, of which some might sell 750k, some 1 million, some <200k, and 1 five million, the picture becomes more complicated.
Although of course if the console company is publishing a 3rd party game, they'll be making more than 33% vs. 80%, as they'll be getting the license and publisher cuts, the same as if the game was created in house. The only difference I think would be a first-party investment on tools and hardware etc. would be money building up the 1st party assets, whereas funding spent on a 3rd party developer wouldn't be buying assets for the console company. That is, if £1 million of Sony's investment with Guerilla Games was buying hardware and tools to make KZ2, and £1 million of MS's investment in Epic to create Gears 2 was spent on the same, after the games were finished, Sony would be £1 million in assets up on before the games' creation, whereas MS's £1 million investment would belong to Epic, losing MS that money.
My point is that in MS's experience they are getting alot of underperforming titles from their first party devs, while seeing greater success from their third party relationships. Profit is probably the easiest measure to look at when judging big game software. Bascially its the number one generator of profit for the whole console division. Its hard to imagine that your first party division is leveraging and attracting a large part of your userbase and that not show up in the bottom line. Especially, MS where its not like MGS is pushing out a bunch of highly invested, high profile first party titles that haven't been hitting their sales target. The whole point in investing in first party division is one to differentiate your product and take advantage of the profit margins that no one but you can take advantge of on your own console. If you first party division is incapable of doing neither than whats the point?
MS's focus on creating third party relationships should create a different dynamic then what you see with Sony or Nintendo who have large first party teams so are more likely to have a more layback attitude and cherry pick third party titles to publish. MS should be encourage of not only aggressively pursuing third party devs that already looking for a publishers for already developed concept but also those devs willing to work on concept developed within MS.
More often times than not, the publisher retains the IP on a title. Gears of War is a unique case where Epic retains the IP but MS spent less than the typical title to published Gears of War since Epic probably used its own capital to fund the actual development of the engine Gears is based around. Alot of Gears specific engine features made it into the general U3E engine which means Epic probably funded some of Gears development itself so that MS wouldn't have any claim to the general engine code.
Its my belief that due to MS limited userbase and lacking first party efforts, MS will be better served by focusing third party relationships and allowing independent devs to flesh out the offerings of MGS. Those third party relationship have an added bonus of allowing MS to be more thoughtful and patience on trying to establish a more efficient and effective first party division. Basically eschewing the brute force method that often turns cyclic of buying "hot right now" independent devs and spitting out "has beens now" or "not a part of strategy" first party devs who have return little on those initial huge investments.
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I keep hearing that MS has had a ton of success with 3rd party endeavors, but is the ratio so much better than for first-party? Are we talking about non-exclusives, 3rd-party published games like CoD4, GH3? MS' biggest exclusive hit was Halo 3, and at the time Bungie was internal. Okay, Gears and Mass Effect were successes, while maybe Kameo and Forza weren't quite so much. But Lost Odyssey, PGR4, Ninja Gaiden 2, none of these were great successes either. Sony itself hasn't had great successes with either model, but on the other hand, again, Nintendo is strongly first-party and for them it pays off!
Can someone point out this pattern that makes it clear that 3rd-party development is the way to go?
Can someone point out this pattern that makes it clear that 3rd-party development is the way to go?
It depends on the model.
Sony and MS since they follow largely the same model make about $10/software unit manufactured by any 3rd party. They originally attracted developers by being relatively open with developers, only testing for bugs and not judging content (unlike Nintendo circa the end of the SNES period).
MS, Sony and Nintendo get that $10 with zero risk, they don't front the money, if the publisher overproduces, they get paid for it and don't get stuck with the inventory.
Nintendo makes money the same way off 3rd parties, but has never considered it their primary form of income, they expect to make the majority of their money off their own software, and not loose money on hardware sales.
Making a game internally for a large company is an enormously expensive undertaking I would estimate most large companies spend as much as 5x (usually closer to 2x) to do a game internally as they do if they do the game externally. So why do it at all? Usually this comes down to control, both of the money and over the quality.
Big companies rarely renegotiate contracts with 3rd parties if a game slips, so 3rd party developers have one hell of an incentive to deliver something on time and under budget, with quality a tertiary concern for the most part. Internally developed games tend to iterate more and budgets have a tendency to grow during development, there is significantly more overhead, and team sizes tend to be larger.
So internally developed games should always be better? Unfortunately no, games are still largely creative endeavor and some big companies are just not well set up to produce great games either organizationally or culturally.
If you look back over say 10 or so years you'll see a cycle with the explosion of 3rd party developers as larger companies move development out of house usually to save money. Often the companies are formed by employees leaving the larger company. Then later you'll see a lot of smaller companies going bust or being bought by the larger companies, as the large companies try to move development internally, usually to control product quality, or sometimes (with very large sellers) to cut out having to pay a 3rd party.
If you have a console and its dominated by third party sales because outside of one or two first party titles your offerings have been lacking but represent a fortune spent on buying up those behind your first party lineup, wouldn't you look for an alternative strategy to bolster your publishing arm.
All MS is doing is trying to bolster its own publishing arm without investing 100s of millions of dollars in buying up companies. A strategy that they have used in the past but outside of buying Bungie never proved to be the most cost effective strategy. Its funny how MS's biggest franchise is one of its cheapest investment.
We don't know if MS's current strategy is long term or just being used as a transitional tool. MS might be using partnerships to bolster its MGS offering and IP properties while trying to more patient and smarter on how it acquires and setup its first party dev houses.
Yes, Nintendo has a strong first party division but its easier to become the #1 console manufacter than its is to create a publishing arm that can push out more titles and sales to your userbase at a rate that rivals EA and Activision who service the whole market.
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I'm not really questioning MS' decision. They have numbers we don't have, and I'm quite willing to give MS the benefit of the doubt when it comes to making money. I'm questioning our reaction, that seems to boil down to 'naturally, it's the only decision they could have taken', and I don't think the numbers say that at all. I just don't think there's a surefire path to success at all, there's just too many examples of successes and failures. In essence, I don't think that closing Ensemble was the obvious move, as some people seem to think.
