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Last Updated: Wednesday, 20 October, 2004, 23:02 GMT 00:02 UK
Game start-ups revise strategies and hopes
By Alex Kleiderman
BBC News Online business reporter

Spider-Man 2 screenshot
The major publishers are backing movie tie-ins
Video game developers with entrepreneurial visions have been forced to revise their strategies as they struggle to enter what has become a very clubby industry.

"Five years ago a small start-up could have made a dent, but these days the game scene is dominated by the mega companies," says Mark Banger, a developer who has worked for three firms in London since 2000, all of which have gone bust.

And yet, there is the odd gap in the market for nimble, new entrants who rely on their creativity to produce new games into niches badly served by "risk averse" publishers.

The publishers - companies such as Electronic Arts and Activision - are the games industry's top players. Their job is to release games made by developers.

In recent years, the publishers have become ever more selective about which developers they will commission, essentially because the cost of creating games for consoles such as Sony PlayStation 2 (PS2) or Microsoft Xbox can now reach 10m ($18m).

This has created a second tier of dominance where developers that are able to cope with drawn out production schedules and big budgets land most of the major contracts, such as sequels to previously successful programs that are produced in-house, or tie-ins to Hollywood movies like Harry Potter, The Lord of the Rings or Spider-Man.

Low risk

For newcomers such as 25-year-old Mr Banger, the industry's closed shop attitude is frustrating.

Online gaming is an area where small groups of people with innovative ideas can make waves
Toby Simpson, Nicely Crafted
Having formed Aftershock Studios with two friends in 2003, he soon approached the publishers with a game plan hammered out by his experienced colleagues.

Many of them had worked on the football themed Championship Manager Quiz and the hope was that they would emulate its success with a similar game based on the NBA basketball league.

"Many publishers would have nothing to do with us," Mr Banger, says. "The ones that did talk to us decided in the end that they wouldn't take a risk even though the cost would be low and the returns potentially high."

Making waves

But the little guys are not giving up.

Many UK developers have turned their focus away from the big budget games segment and are instead making games for mobile phones, portable device and online play. Development costs for such games are much lower, and they can be easier to distribute.

Time of Defiance screenshot
Nicely Crafted believes innovation takes place online

Cambridge-based Nicely Crafted Entertainment's multi-player online strategy game Time of Defiance is a case in point. Since its 2002 launch, the game has built a loyal subscriber base with players signing up via its website.

"Online gaming is an area where small groups of people with innovative ideas can make waves," says the firm's founder, 34-year-old Toby Simpson.

Nicely Crafted, which has a staff of 11, has entered into licensing agreements in Asia, the US and Europe to boost subscriber numbers.

"Our model is less risky in that our costs are lower due to using our own server technology and it is subscription-based so cash-flow is more predictable," Mr Simpson says.

"The reduction in cost of development means we require fewer subscribers in order to be profitable."

Company of gamers

Other companies have decided to bypass conventional channels to the market by avoiding mainstream publishers altogether.

Essex-based Ignition Entertainment has decided to incorporate both publishing and development within its company.

King of Fighters screenshot
In most game companies these days, the senior managers don't play games
Greg Baverstock, Ignition
Its development wing, Awesome Studios, is run by veteran games creator Archer Maclean, and also licenses titles from other firms such as Japan's SNK.

"We are all gamers," says marketing director Greg Baverstock. "That's kind of unique because in most game companies these days, the senior managers don't play games."

Tight budgets

The privately funded firm with 50 staff was formed in 2002 when a group of smaller studios and publishers merged.

Model shows off the PSP
Ignition aims to position itself as a PSP developer
Its catalogue of cheap console and handheld device games such as Pool Paradise and The King of Fighters is expected to bring its turnover to more than 11m next year.

New portable consoles should help the firm make a mark; the company has spent more than a year developing a puzzle game called Mercury in time for the impending launch of Sony's PlayStation Portable (PSP).

"Bigger companies can spend six months in research and development and then scrap a concept," Ignition's managing director Vijay Chadha says. "We're not at that stage.

"But as a small company we really care what we put out on the market. We have managed to take budgets and a time frame and produce some very unique products."

The question for Mr Chadha, though, is whether this is enough to conquer the well established super developers, such as Rebellion, Rare and Bullfrog, which made their names during the 1990s games boom.

These leading developers have either been acquired by or depend heavily on major deals with leading publishers such as Microsoft or Electronic Arts.

The risks involved in such deals are obvious: "Outstanding or innovative new ideas can be killed by a committee", says Jason Kingsley, co-founder of Oxford-based independent games maker Rebellion.

And this, the newcomers hope, is where they might have an advantage.

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