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At our GamesBeat Summit 2016 event this week, our theme was about underdogs. And during our talks with some of the leaders of the game industry, we found that everybody has an underdog story. Companies like Microsoft, Epic Games, Nexon, Marvel, and Samsung have all felt like underdogs in the gaming business.
Yes, you could say you don’t feel sorry for these underdogs. Poor Samsung, its market value is only $140 billion. I don’t mean to equate being an underdog with being a victim, insinuate that it’s great to think of ourselves as victims, or state that we should blame these victims. Rather, underdogs are far from powerless. They are motivated to change the world and make possible what was once unthinkable.
Malcolm Gladwell’s stellar book, David & Goliath, is a collection of stories of what we learn when ordinary people confront giants. These are the stories and lessons that come from people who have been in the fight for a long time. Sometimes they lose and go away, but their stories are always inspiring and instructive. It is about people who find an outsized challenge and are forced to respond. They ask themselves smart questions like, “What rules do I play by?” Gladwell declared that much of what we find valuable in this world arises from these lopsided conflicts. The act of facing overwhelming odds produces greatness and beauty.
These tend to be stories that everybody thinks they know, but we often get them wrong, perceiving a strength as a weakness and a weakness as a strength. Giants are not who we think they are, Gladwell wrote. I knew this as I went into our event. I wanted to listen for underdog stories. But what struck me about the talks was that each one had a different kind of underdog story about how they perceived being an underdog and the lessons that they got out of it. It was interesting how a company could be perceived as both a goliath and an underdog at the same time.
Three top investment pros open up about what it takes to get your video game funded.
We often think of business people as part of the goliaths, and the creators as the underdogs. But it was interesting to find business people, like Rami Ismail of Vlambeer, and Owen Mahoney of Nexon, arguing vociferously for the creators as the key to the future of gaming. When the creators take back control of the industry, as Pixar has done in animated movies or HBO has done with television shows like Game of Thrones, then you really have a real business born from a creative renaissance, Mahoney argued. Peter Phillips, executive vice president in charge of games and digital media at Disney’s Marvel, noted how his company was an underdog in that it didn’t have its own internal game studios. But it tries to turn that weakness into a strength by partnering with some of the best game developers.
Robbie Bach, former chief Xbox officer at Microsoft, talked about how hard it was to launch the Xbox back in 2001. That system was ugly and expensive, and it lost $5 billion to $7 billion over four years. Against Sony and Nintendo, Microsoft was the underdog. But it beat out Nintendo in the console wars and put Sony on the defensive with the Xbox 360 generation. Microsoft survived the crisis of the “red rings of death” defect problem with the Xbox 360, but only because it made the transition to building a product that consumers really liked.
“In some ways it’s the way many things work. The beginning is really painful. We were an underdog, and we were not very good at what we were doing,” Bach said. “We didn’t know what we were supposed to be doing. We had a lot of smart individuals, an all-star team of talent, but not a team. The first Xbox, we were lucky to get the product done. I’ve been involved in startups since, just advising, and being a startup is tough. It doesn’t matter if you’re inside Microsoft or on your own. That startup phase is crazy and you have to find a way to persevere.”
He added, “That team got past the first launch, got into selling the product, and started working on Xbox 360. We became a team through that process. That’s what changed things, when we went from being smart individuals to being a working team.”
Tim Sweeney, CEO of Epic Games, runs a powerful game engine company that has also made games such as Gears of War and Unreal. But he is an underdog in a fight that he is currently having with Microsoft, the goliath of the PC industry. Sweeney fears that Microsoft’s Windows operating system will become less open over time through subsystems such as the Universal Windows Platform (UWP), which lets you port a game to multiple platforms like Windows 10, Windows Mobile, and the Xbox One.
Not many people are brave enough to pick this fight.
“A huge number of developers share the sentiment, but most of them don’t want to take on a $400 billion corporation,” Sweeney said in our fireside chat. “I’ve been told it’s a bad idea. But everybody hears this. What we’re seeing right now is that nobody is adopting UWP except for a small number of developers that Microsoft is paying to adopt UWP.”
Sweeney felt that his job was to speak up for the underdogs.
“The PC as an open platform has become the most vibrant platform in the world. The GPU revolution started there, well before Microsoft adopted it,” he said. “We had 3DFX with Glide and all this innovation that Microsoft eventually rolled into the platform through DirectX. If that had relied on Microsoft’s initiative and Microsoft had actively blocked external drivers and apps that supported them, it never would have happened. The VR revolution is happening now with HTC Vive and Oculus. There’s no DirectVR interface from Microsoft. If you were trying to make that work within the UWP ecosystem, it never would have happened. Open platforms encourage innovation. Whenever you have a closed platform, a monopoly on commerce, and all these platform rules, it stifles innovation.”
Owen Mahoney, by contrast, has some very strong opinions about who the underdogs are. He feels that too many of the companies in the game industry are lopsided in favor of business people who are good at Powerpoint and can make good presentations to the board of directors. These business people are so eloquent, that they are often more successful than the developers who make games and are too busy to learn how to do presentations. The business people, Mahoney says, is why the creative people get shouted out of the room at the board meetings.
Oddly enough, Mahoney is one of the business people, but he sees the problem with those who have his kind of background, particularly when they fail to listen to creators. Creators have been beaten down, and when they go in front of money people, they make a pitch that they think the money people will like.
Mahoney wants to strip that away. He thinks this syndrome is why we have a lack of creativity. He thinks that his job should be to “get coffee for the people who can make us great games, not shouting them out of the room.” When he meets with creative people, he tries to convince them to propose the game that they really want to make.
“The underdogs of the industry are the artists who have been told that something that is not true is true,” he said during our fireside chat. “If you have to get funding, you have to do something that is not why you got in the games business. Those are the underdogs of the industry. Those are the people we have to put back in charge of this industry. The rest of us have to support them. At Nexon, that is what we are trying to do. We are going straight ahead with it.”
He also said, “If we had more artists throwing people out of the room who don’t understand the art of games — that’s a lot of the business people who’ve taken over the industry — and going back to the roots of making games, we’d have more innovation, the way we used to have 20 or 30 years ago. All the games we play today, on console or PC or wherever, come from that source. I wish I could meet more people like that around the world, in the U.S. or Europe or Asia.”
Ismail’s Vlambeer has become a rarity among game developers. After six years of hits like Nuclear Throne and Ridiculous Fishing, Vlambeer is a comfortable, well-financed indie game studio. It has a lot of power to determine its own fate, but Ismail wants to remember his company’s roots as an indie, no matter how big it gets.
Asked about advice for underdogs, he said, “The funny thing is — that’s a question I get a lot and you should absolutely not be asking me that. I’m probably one of the worst people to ask. Most people in this room are the worst people to ask as far as advice for underdogs, except for the basic ideas of fail fast, fail often, keep looking at opportunities. Everything else, we have to realize that we’re looking from a certain perspective at this industry and that perspective is not the perspective of an underdog. We’ll never see their opportunities because we don’t necessarily need them.”
He added, “The thing about underdogs is they need opportunities. They look at Twitch. They look at esports. They look at the way the industry is moving and they see VR. They look at those opportunities because their company 100 percent depends on them. For us those are interesting venues, something to look at. I’m way more interested in learning from those underdogs about what they’re doing. I’m paying a lot of attention to where they’re moving. The ones that survive will have made the right choices.”
And he said, “It’s a good thing to keep looking at the underdogs, the new people. For people to whom I’m the underdog, I think it’s basically what I said already. This industry needs to hold itself and our audiences and our creators accountable for what they do, for creating a good environment. Part of that is going to be crucial if we want to grow our audiences, if we want to make this a global medium. Even though we like saying it’s a global medium, it’s not. We’re getting there, but I travel to a lot of places where there’s not a lot of video games.”
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