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scribble-1Everyone loves original games. But few developers take the risk of making them in the video game industry.

Enter Jeremiah Slaczka, the creative director at game developer 5th Cell, dropped out of high school in his junior year. Working with his partner Joseph Tringali, he made a string of licensed cell phone games to get their company off the ground. Then they decided to risk everything they had to make an original video game called Drawn to Life, and they did it again with another game, Scribblenauts.

scribble-2In 2006, while living with his parents in Bellevue, Wash., Slaczka successfully pitched the game Drawn to Life to THQ, one of the biggest makers of video games. The drawing game was an original Nintendo DS handheld game that went on to sell more than a million units. Drawn to Life spawned a sequel and a spin-off, rewarding the studio with success and empowering Slaczka to proclaim 5th Cell would never work on a licensed game again.

In the video game industry, Slaczka’s proclamation is bold. For many developers, it’s just a pipe dream to work on their own original titles. The hit-driven video game industry, like the movie business, regularly relies on sequels and licensed properties to generate sales. This year, after a slew of recession-leery publishers have pushed their games out of the competitive fall lineup, only a few original games remain.

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One of those original titles belongs to 5th Cell. Scribblenauts, the company’s fifth DS game, is an innovative puzzle-action title enabling players to use tens of thousands of words, which turn into objects to solve puzzles. The inventive Scribblenauts won best original and best handheld game at the E3 game trade show this year by the Game Critics Awards. The game shipped Sept. 15 to mostly positive reviews, scoring an above-average 81 on the review aggregator, Metacritic. Here’s the story of how the company survived, first by making crappy mobile games just to get its foot in the door, and then eventually investing everything it could in making games that nobody else was doing.

miahAn unusual start

Like his father and grandfather before him, Jeremiah Slaczka (right) dropped out of high school. The 17-year-old Chicagoan didn’t like it. After dropping out, he didn’t know what he wanted to with his life and spent time hanging out with his friends while living at home. In 1998, while browsing gamedev.net, an online community site for developers, Slaczka saw a game development advertisement. The company, Epix, was run by Joseph Tringali. He had plans to make a PC RPG. After a few conversations, Slaczka convinced Tringali to make a console game.

In 2000, after a year and a half in development, Slaczka and Tringali’s Xbox game, Fate, met just that when their small company couldn’t secure venture capital funding for the project. The two went their separate ways but remained on good terms. Tringali went to work for Funcom and then for Harry Miller, co-founder of GameCock, in Hong Kong, where he learned to make mobile games. Slaczka remained living with his parents, who moved to Washington State. He decided to immerse himself in screenwriting. Picking up dozens of how-to books, like Syd Field’s “Screenplay,” Slaczka studied and wrote scripts for two years.

The Hong Kong Connection

scribble-4In 2003, Tringali contacted Slaczka to convince him to start another company, this time making mobile games. Tringali’s work experience in Hong Kong exposed him to the proliferation of mobile games there and he felt they could import that same success to the US. The two started 5th Cell that year, signing their first contract with THQ Mobile.

With Tringali back in the U.S. and Slaczka still living with his parents in Washington, 5th Cell developed its first three original mobile games. Using their own money to fund development, they made SEAL Team 6, Siege, and Mini Poccha. The royalty rate for those games was substantial, said Slaczka, and it convinced them to continue making mobile games.

From 2004 to 2006, 5th Cell had a solid run as a mobile games developer. The team followed up with six more games for THQ and EA, all of which were licensed. They developed games such as Lemony Snicket’s A Series of Unfortunate Events and Full Spectrum Warrior.

The hard fall

Despite the string of consecutive mobile games, 5th Cell was struggling to make ends meet. In 2006, according to Slaczka, the mobile market dried up. They tried their hands at a PC casual game, D.N.A., which returned little profit.

That’s when they started working on really “junky stuff,” Slaczka said. “We started working on the worst of the worst mobile games. Stuff like Bunko. It was terrible,” he recalled. Quicker than anyone had expected, creatively, financially, and even morally, 5th Cell hit rock bottom.

“We were still taking our royalties and putting them into making unoriginal games, but it wasn’t going anywhere,” said Slaczka. “It’s really hard to compete with licensed titles because publishers don’t care about licensed titles on mobile. They’re just like, ‘pump it out.’ They said things like, ‘We have Eastern development teams who can do this for much cheaper.’ That’s when we let go most of our employees.”

In 2006, 5th Cell let go 15 staff members and retained three, Tringali, Slaczka, and their technical director, Marius Fahlbusch, who still attended Munich University in Germany. Tringali and Slaczka helped each former employee find employment out of moral obligations, said Slaczka. “That was our worst time,” he remembered.

scribble-9Gambling with Drawn to Life

5th Cell’s fiscal philosophy had always been to re-invest all its profits back into the company so they could remain financially independent. They had always paid their employees first. No one owned expensive cars and they were still working from multiple cities across the globe. Slaczka still lived at home, Tringali in Hong Kong, and Fahlbusch in Germany. Tringali was still working abroad and when paychecks weren’t coming in, he was funding the business from his own credit cards. He had accumulated a $30,000 debt.

“I finally turned to Joe and said, ‘What are we doing this for?'” explained Slaczka. “We’re not doing what we set up this company to do. If we are going to go through all this crap, dealing with taxes, dealing with HR, and trying to land contracts for games, and we’re not getting paid very well to do it, we might as well just join a company. So I said, ‘Let’s create Drawn to Life.’ Joe’s response was, ‘What if we fail?’ My response was, ‘Then we fail.'”

Nintendo launched the Nintendo DS in North America November 21, 2004, following up with the DS Lite in 2006. Slaczka had an early concept for an original game and wanted to make it for the DS, which at the time was still gaining footing with developers and consumers in North America. They submitted their concept to Nintendo to acquire a DS development kit, which Nintendo initially rejected. Fahlbusch, however, had some experience with homebrew tools he felt he could apply to the DS; and so he hacked Nintendo’s handheld system. “There were few tools out for the DS back then,” said Slaczka. “He hacked it totally blind; it was ridiculous.”

5th Cell created a second demo, this time in video form, based on Fahlbusch’s reverse engineering work. They touched it up and sent it by mail to Nintendo. This time Nintendo acquiesced, commenting they liked 5th Cell’s demo and its persistence, and gave them a license to make DS games.

scribble-10The make or break summer of 2006

Shortly after receiving their development kit, in April 2006 5th Cell reached out to the media. IGN’s Craig Harris penned two stories on early work the studios showed him based on the Drawn to Life demo, exposing the little team to readers and potentially to interested publishers. The articles gained reader interest, but no publishers.

5th Cell didn’t care. It was re-energized by the idea of making an original game and scoring the DS dev kit. It hired three summer interns from Digipen to work on its new original game, Drawn to Life. Slaczka told the interns if they worked the summer, they would likely have jobs by the fall; what he didn’t tell them, and didn’t know, was how he would pay them.

5th Cell’s persistence–and its luck–finally started to pay dividends. Thanks to an error in THQ Mobile’s accounting department, THQ called 5th Cell that summer and sent the developer back royalties from earlier mobile games. THQ owed 5th Cell $30,000. “It was actually the right amount of money we needed for summer,” said Slaczka. In those three months, 5th Cell built the backbone of Drawn to Life.

Tim Campbell, currently the director of operations for Vigil Games, and the former vice president of business development for THQ in 2006, had created a team to seek out new studios they could sign. One night while on MSN, a business associate of Slaczka’s inquired about his project. They conversed and Slaczka showed him the still-in-development game. His contact was impressed and put Slaczka in contact with THQ. In August 2006, Campbell secured 5th Cell’s first DS contract.

“There were a lot of developers at the time that did contract work or work for hire for the DS, but I didn’t meet very many developers at the time who would give anything to make games on the DS,” said Campbell. “That’s how 5th Cell approached it. They were one of the few developers I met that aspired to make games on the DS. To this day I have never gotten a pitch from a third-party developer that was more perfectly suited to a platform as Drawn to Life was for the DS.”

scribble-6Ch-Ch-Changes

From August 2006 to fall 2007 5th Cell developed Drawn to Life, an action-platform game in which players could, using the DS touchscreen, draw their own hero. Once created, he or she had to scour the planet for blueprints to re-store order to an imaginary world. When the THQ contract for Drawn to Life was signed, the studio consisted of five employees, Slaczka, Tringali, Fahlbusch, one of the three remaining DigiPen interns, Brian Firfer, and Brett Caird, their Australian business development partner. 5th Cell signed 19 more employees to complete its first milestone.

Development with THQ, however, started uneasily. In October 2007, when THQ’s product development team saw 5th Cell’s first milestone, they “freaked out,” according to Slakzka. They thought the demo looked horrible.

“When they saw the first major milestone, where our backend was working beautifully but which you couldn’t see, they freaked out,” said Slaczka. “It had crappy art, it didn’t have any polish. It made sense; they put their neck out for a totally new company. So we really had to get into gear and push our stuff forward to make sure they were happy about it.”

For the second milestone in March 2007, Slaczka’s team started “dropping polish,” i.e. improving art, eliminating bugs, and streamlining the interface. From that point on, THQ was pleased with development, he said. Also during development in 2007, Slaczka finally moved into his first apartment.

Drawn to Life was released on Nintendo’s DS handheld September 10, 2007. It sold approximately 55,000 units in the first month. THQ started the ad campaign shortly after, and steady sales continued through the holiday season. Within about five months, Drawn to Life had sold more than 1 million units, which ranked it, at one point, as the 12th bestselling game in terms of unit sales on the DS for third parties, and the bestselling DS-exclusive original game from a Western third-party publisher.

scribble-7Drawing a line in the sand

After Drawn to Life’s success, both THQ and 5th Cell were eager to make more games together–but each had different ideas about what that second title would be. THQ suggested that since 5th Cell had succeeded with Drawn to Life, it should make a licensed title. Having tasted success with Drawn to Life, Slaczka and team wanted to move on. That meant staying true to the company’s original goals–making original games.

“THQ said, ‘OK you did your original title, now do a licensed title for us,” explained Slaczka. “We said we don’t do licensed titles.’ THQ’s response was, ‘What are you talking about?'”

THQ suggested that without another title lined up, 5th Cell would collapse. Slaczka was undeterred. “That’s cool. We’ll pitch you another original title and we’ll build it back up with our royalties.”

The result was Lock’s Quest, a real-time strategy game that built innovative additions to the popular Tower Defense concept. Lock’s Quest released on Nintendo’s DS in September 2008 and received general praise from critics, scoring a handful of awards, receiving a GameRankings score of 79 percent and a Metacritic score of 80 percent. But it didn’t sell like Drawn to Life and missed the 500,000 unit mark.

scribble-8Making Scribblenauts

Having gained experience working with THQ, EA, and Merscom, 5th Cell saw the value of ensuring smartly negotiated contracts requiring low upfront costs from publishers but a chance at high back-end royalties after release. By following this strategy, 5th Cell would retain creative control during development, funding anywhere from 75 percent to 85 percent of R&D with royalties from previous games. If the game was a hit, it would make a profit.

“We totally believe it backend (royalties),” said Slaczka. “This is a hit-driven business, and we don’t make that many games; we make one to two a year right now, so we have to have hits. We make sure we make hits, and we make sure we make money off those hits.”

With royalties 5th Cell earned from Drawn to Life’s sales, 5th Cell researched and developed Scribblenauts over a 10-month period in 2008.

When 5th Cell was in negotiations with THQ for Lock’s Quest, Slaczka had an idea about a game concept called Once Upon a Time. A story writing game, his new idea would enable gamers to write sentences on the DS’s bottom screen, while on the top screen the story would come to life. “This was a good idea, but it wasn’t a game,” Slaczka said. Soon after, he had a dream about adventuring through an Aztec temple solving puzzles, but it lacked replayability. Still thinking how each would work, he combined the two ideas together. He named the new idea Scribblenauts.

In Scribblenauts, players use the stylus to input words onscreen, which then transform into objects that help players collect “Starites” and solve puzzles. For example, you control Max, who might need to get past a tree. If you type in “beaver,” the animal will appear on screen and gnaw the tree down so Max can progress. The action-puzzle game compiles tens of thousands of words, enabling creative solutions to a number of obstacles.

scribble-5Initially, Slaczka’s concept received skepticism internally at 5th Cell. Employees were concerned how it work and how they would get everything in the game. Marius Fahlbusch, his lead programmer, however, got the idea right away.

“That was another reason we self funded it,” explained Slaczka. “We wanted to have complete creative control over development. But at the same time, publishers had a hard time believing it until they saw it. It took us 10 months before we could flip the switch and everything worked.”

They pitched Scribblenauts to publishers in the summer of 2008. “It was a little weird because I would paper pitch it,” Slaczka explained. “I had a little drawing of Max and a tree and an open space, and I would say, ‘How would you solve this?’ And they would say, ‘What are you talking about?’ That was my pitch.”

Slaczka said a lot of publishers showed interest, but most of the big names wanted too much marketing control. The smaller ones loved their game, but didn’t have budgets to market their games properly. It wasn’t until they talked with WB Interactive that 5th Cell secured the contract they were looking for. Slaczka said he liked WB’s combination of collaboration, flexibility, and financial muscle.

WB debuted the game at E3 in June, which came away as one of the most talked about titles of the conference. It received two E3 Critics awards Best Original Game and Best Handheld Game (and landed on one of VentureBeat’s own top 10 lists.

With Scribblenauts complete and in retail stores, we wondered what original game 5th Cell is working on next. “We want to do console,” Slaczka said. “We’re moving into consoles next year. We want to remain independent and see where we can go with that.” Recently the studio revealed it is working on an Xbox Live Arcade title for 2010.

Asked if there was a buying price for 5th Cell, Slaczka responded clearly. “We’re doing what we want to do. We’re successful at it. We’re building our company. We’re making good money. We’re making more money every year. In this economy we have actually grown. So there is no real reason for us to sell out. Why have an awesome car to drive to work [so I could go] to work on Spongebob? I mean, why?”

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