This week on Gamasutra, Stephen Ford’s article has garnered a fair bit of coverage. Is there something wrong with how business is being conducted in the gaming industry? Perhaps. That said, there are a great many companies doing fantastic business and reliably turning out quality products while increasing profits year-on-year. Regardless of any talk of problems needing correcting, Ford puts forward the idea of small production companies dominating the gaming industry in the future. What he’s suggesting, in essence, is that the games industry should adopt the production model that the film industry currently uses, especially as the average AAA game budget increasingly resembles the average blockbuster film budget.

Let’s take a look at the parallels between his model of game development and the film production model he’s basing it on: say we’re a film production company and we want to make a big comic book movie from an IP that we’ve optioned. So simulatenously now, we’re gonna start making the rounds of the different studios and see about finding one who’s willing to give us the money, we’re hiring a screenwriter to write the script, and we’re bringing on board a director and possibly casting the lead roles, simultaneously negotiating all of the contracts with all of those people. That’s the early stages, the make or break stuff. Boom, we’ve got one studio that’s willing to give us the money, and we found a director and big name to star. Let’s say the director also has a character artist he wants to help shape the look and feel of the film, plus an editor and cinematographer he likes to work with, so in this case we don’t need to find those people. So now we can really get into pre-production, scouting locations as we get our casting director on board (we probably use the same one or two over and over again), and hire the special effects company that we want to use, arrange the rental of all our equipment (possibly from the studio that has given us the money, possibly from one of the many other places in town that do such things, perhaps from several such companies), hire all of our production assistants, assistant directors, set dressers, grips, lighting board ops, sound guys, makeup artists, art assistants and all the rest, arrange transportation and housing and food for everyone, and THEN we can start production.

That’s a lot of fuss, a whole lot of negotiations, and a whole lot of places things can go wrong. Film production is a massive undertaking, even for a modest budget. It’s super expensive, because all those people are contractors. It requires knowing just about everybody in town, and the town’s pretty much gotta be LA or New York. So why is that a good idea?

It all comes down to due diligence. For every step of the way, you want to have the very best people you can possibly hire in each role, and you need to be able to fire them instantaneously if they drop the ball in any way. With a good reputation, you’re golden and you can get work into old age if you can keep up, and make LOTS of money in the process. That’s why LA is so notoriously networked. It’s all about who you know and what you’ve worked on, because as your reputation as a producer improves, so does the quality of people who want to work with you, and the more likely it’ll be for the studios to give you big piles of money. The film industry is one with vastly more people looking for work than actual work, and the production house system lets the cream rise to the top, in theory at least. While it seems like it would be cheaper to have everything under one house, it’s important to note that the film industry adopted the production house model to reduce overhead as well as risk while improving the quality of the films produced. Despite my significant dissatisfaction with most of the pablum produced by the film industry, after looking at the stuff made in the 60s and 70s, I’d have to say it’s been largely a good choice. The competitive pressures of the production house model help to ensure that the best managers are in control of most of the money in the industry.

Is the film industry the same as the game industry? No. The process of building a game is a different thing, with its own unique goals and challenges. But can the game industry use the business model utilized by the film industry? Absolutely. The increasing use of outsourcing makes it increasingly possible. As specialized companies rise up to provide the very best quality available in their specialty at a price comparable to doing it yourselves in-house with no worries of overhead, then we will of course see the small production company rise in popularity within the game industry. I don’t think that the studio model will be supplanted, but I do believe that once a major hit of the Half-Life or World of Warcraft variety is produced via this method, we will rapidly see a vast shift, specifically with regards to expansion of the industry. Starting a development house these days is a daunting task. Smaller companies committed to doing one thing perfectly just makes good business sense. The small production team is the natural outgrowth of that market trend. It’s sure not going to happen overnight, but we will see it happen.