Tencent picked up a lot of game properties this month when it acquired Leyou Technologies, a Hong Kong-based game company, for $1.5 billion. Among the jewels are Warframe maker Digital Extremes as well as Splash Damage, King Maker, and Radiance.
The deal is one more sign of the acquisition frenzy around games during the pandemic, which has helped boost gaming because people can play with friends in a social-distanced way and distract themselves from reality.
Digital Extremes, based in London, Ontario, in Canada, was founded in 1993. The company made games like Epic Pinball and The Darkness II. But it found its true calling two decades later with the launch of Warframe, a third-person shooter and role-playing game that has been immensely popular as a free-to-play title. Warframe has more than 60 million registered users across the PC (Steam and the Epic Games Store), PlayStation 4 and 5, Xbox One, and the Nintendo Switch. A version for Xbox Series X/S is coming in 2021. Warframe is the only game that Digital Extremes is operating right now.
I spoke with Digital Extremes chief operating officer Sheldon Carter, who has to manage 345 game developers at the company. Here’s an edited transcript of our interview.
Introducing Sheldon Carter and Digital Extremes
GamesBeat: Tell me about yourself.
Sheldon Carter: I worked at BioWare for a bit on Jade Empire. That was the first game I shipped. I’m from London, Ontario originally.
GamesBeat: Where’s Jade Empire 2?
Carter: I would have loved to have made that game! [Laughs] It’s like your first child, right? I loved working on that game. We had big plans for Jade 2. I don’t know where they are now. They have lots of other cool ideas in the hopper at BioWare these days. But then I got the opportunity to come back to London and Digital Extremes. I was a producer on Dark Sector. I was creative director on Darkness 2. And a few other projects in between that. Then the whole studio piled into Warframe eight years ago.
I’ve been taking over larger and larger chunks. I’ve been COO for a few years now at the company. It’s going great. We’re on the cusp of an update for the global PC build. Games as a service was a totally different transition for our team. We have an update going out in minutes, I think. There’s furious typing all around me on Slack, even though we’re all working from home right now. Things are going great.
GamesBeat: In some ways you have a transition from one Chinese company to another Chinese company, but was it interesting operating under Leyou for quite some time?
Carter: Leyou had–the best way to put it is they knew we understood our business the best. We understood our market and our customers. They left us alone. I’m not saying we didn’t interact with them. There are some great people there. But our interaction with them was pretty arm’s-length. They were content to let us do what we wanted to do and make Warframe.
GamesBeat: Do you reach out to your parent companies, Leyou before or Tencent now, for any insight into the Asian markets, or China in particular?
Carter: With Tencent, we just launched on WeGame, their platform. We were doing that independently of this whole acquisition aspect. We’ve worked with them as a partner. WeGame is the biggest platform in China, and that was one we really wanted to be on. It was nice for us, because it was a preview of what it would be like to work with Tencent in a different capacity. They’re our publisher there, and we just launched four days ago. From that perspective, they’re running the version of Warframe that’s in China, and so obviously we work close with them in terms of insights into that market. It’s worked out great.
Switching to Tencent
GamesBeat: Do you expect any changes as you transition to Tencent?
Carter: We certainly don’t get the sense that there would be. Similar to Leyou, I think they understand that we understand our business really well. If you look at the studios that Tencent works with in that portfolio, they’re still very much in control of their own destiny. We’re excited about that as well.
GamesBeat: It feels like it’s similar to Leyou, except on a larger scale.
Carter: Way bigger, for sure.
GamesBeat: Leyou seemed to be collecting some well-run studios, but then it stopped at a certain point. It didn’t grow as big as I thought it might. But Tencent already seems to be there. It seems like it could get interesting, to have that many peers or sister companies.
Carter: You never know, until these things go through, how it’s all going to work. But the potential there with some of those sister studios and what their knowledge would be, that’s exciting for us.
GamesBeat: Do you feel like you may have more opportunities for expansion now?
Carter: We’ve had our own forecasting for hiring and how we want to grow. Nothing’s changed. It’s just what we need as DE continues to do more things with Warframe and expanding the game into what we always wanted it to be. To be totally honest, I can’t say nothing has changed either way. But our operational needs, that’s what we base our hiring on.
GamesBeat: How many people do you have at the moment?
Carter: It’s about 345. If you look at our career page, there’s a laundry list. We have a lot of positions that we’re always looking for. I don’t think anything is going to change there.
GamesBeat: And is it still all Warframe all the time? Are there other projects or experiments in the works?
Carter: Doug would probably disconnect the call if I revealed anything. But right now, the way we’re oriented, pretty much the entire company is focused on Warframe.
GamesBeat: I know it wasn’t always that way. Do you feel like you’re gaining something by having such a focus on the one project?
Carter: A few years ago we had a game called Amazing Eternals we were working on. That team ended up just all coming onto Warframe. When you have a game with so many content desires and needs, and also–obviously it’s working out for us. It’s a big success. For us as a studio it just makes sense for us to be working on the thing that everyone has been engaged on for so long. Eight years is a long time to work on a project for people, but the game has a lot of different aspects to it. It gives us a lot of opportunities to let people move around and try new things. A lot of times, if we have a new game pitch inside the studio, the question often ends up being, “That’s a cool idea. How can we put that idea into Warframe?”
GamesBeat: Where are most of your people based?
Carter: Mostly all in London, Ontario. We have a studio in the states where Doug works, although everyone is at home right now of course. But the vast majority is in London, Ontario, Canada.
The state of gaming
GamesBeat: How do you view the game industry at large right now, given the position you’re in at Digital Extremes?
Carter: Watching the generation change is always fascinating. It gives you some ideas about what studios will come to the forefront, and based on those studios you start seeing the ideas, the trends. We saw Riot announce their MMO plans. That’s interesting. You see a flow in subscription, the way subscription services are growing again, the traditional model of games as a service versus the subscription basis. Cyberpunk shows that there’s still a window for big triple-A. In the generational transition I find that you have to sit and watch for a bit, the first six months, to get a feel for how the landscape is changing. But those are a few things. I’m interested to see subscriptions coming back
GamesBeat: It feels like one of Cyberpunk’s problems was trying to do all the platforms at once. Call of Duty: Ghosts did the same when the current generation was beginning, five different platforms falling at the same time, and it seems like it can lead to flying too close to the sun.
Carter: When you can pull it off–you saw the success of something like Genshin Impact. They dropped across as many platforms as they could at the same time. You get that groundswell. Our approach has been a bit different. We add platforms as we go. That’s also probably a part of our strategy, our DNA. PC, then PS4 and Xbox, then Switch. Now we have the PS5 version. The Series X version is coming soon. If all those things hit–you’re right, you’re flying pretty close to the sun, but I can understand why people try it.
GamesBeat: Have you thought about what Riot is doing now, the notion of going to platforms like Snapchat and instant games and mobile? There are different ways a brand can move around these days.
Carter: We look at all of that. Right now our next big focus is going to be the Series X version of Warframe. We’re still pretty focused on our main markets. But the size of our team leaves us potential to do a lot of things.
GamesBeat: The transaction here is an example of the international nature of the industry. Do you think the industry is going to keep moving in that direction, becoming more borderless? Could that affect you in the future?
Carter: One of the most exciting aspects for us with launching on WeGame in China was that the Tencent crew was committed to updating the game closer to global. With our previous publisher, that was a fine relationship, but it was tougher to move the game at the same pace as global. Our happiest version of Warframe is one where all our territories and regions are playing the same version and can have a shared community, versus fractured communities based on region. That trend is going to continue. We want to do that as much as we can. But obviously, there are governmental restrictions in certain countries that prevent that.
GamesBeat: Is cross-platform still a priority these days, being as cross-platform as you can make it?
Carter: We do live streams with our community once a week, and big ones every two weeks. All the time the question is, “When will I be able to cross-progress on every platform and cross-play with everyone?” Right now you can do that with PS4 and PS5, and inside all the PC communities, but of course, what players want is to be able to play on any device that they choose. Games become a hobby. That’s what Warframe is for a lot of our players. It’s a hobby, and they want to participate in that hobby on every device. They don’t want to have to wait until they get home.
When you switch between console generations, it’s interesting. Someone who’s been a long time PC player might finally get a PS5 or whatever. They want to try it in a different way.
GamesBeat: How big is Warframe as far as the numbers now? What’s the biggest platform?
Carter: Console in total probably slightly–it’s very close between PC and all the consoles together. But in terms of numbers, at TennoCon this year, we had our biggest single day of Warframe in terms of active players coming to play and watch the game. Eight years in, we’re pretty excited about that.
GamesBeat: Have you seen a big pandemic effect on the game?
Carter: I don’t want to say it “helped,” because we don’t feel that way. We all feel the effects of the pandemic. But there’s definitely–people are at home more, and they’re able to play. Again, if this is your hobby, you have more time for your hobby. It’s funny. We have a tough time separating–when we look at this year, we all had to switch to working from home. So what’s this going to do to the type of updates and content we release? At the same time, so many of our players are at home and engaging more. It was a wash of a year to figure out, “Hey, did we do the right things this year? How do we move into 2021 and take some lessons from this year?” Hopefully as the vaccines roll out and people go back to normal, what’s that going to look like? It’s hard to say.
GamesBeat: What keeps you going on things like the marketing side? How are you finding new users?
Carter: The platform expansion always brings in fresh blood. As soon as you have a new console generation, all these new players come in. We also just went to Epic Games Store. You make some assumptions. You think people who are PC players are maybe on both. They’re already on Steam and they have Epic as a secondary. But you’re not sure. The amount of new players we’ve had from launching on Epic is actually surprising and really cool for us. New players are obviously the life blood of any game. We had quite a few different ones over the past–God, it’s only been a month. But over the past month there’s been a lot of different avenues for the game to grow.
When we launched on Switch in 2018, November 2018, within a month we had a million registered users on the platform. Each time we hit a new platform it’s always surprising for us to see, that many people downloading Warframe for the first time. They might have heard of it, or played it on PC a long time ago. But when we hit these new platforms, a lot of new players are activated for the first time. Or maybe it’s the third time they’ve played Warframe, but they’re playing it again.
GamesBeat: How have influencers and streamers made a difference when it comes to making people more aware of the game?
Carter: We find that we–there is some component of them that works for our game. But it ends up usually being more about those hardcore fans that become partners. We have more success with them. Our game is a PvE game. It’s not something where they have to be the thing that drives it. I’m not saying that’s the case for all PvP games either, but in our scenario, it becomes a part of our co-dev that we have with our audience. Streamers are just one aspect that becomes an input channel for us.
GamesBeat: Are localization and culturalization big tasks for you? Does it require a lot of manpower?
Carter: We’ve specialized our support teams. You end up having a community group for the language, a support group for that language, and then those people start turning into translators as well, because we’re localizing. We have a few people on the localization team that just work on the outsourcing aspect, but then a lot of it is inside. We have some talented folks for every language. They work out of London, so we’re getting a personalized touch on localization.
GamesBeat: You have the update that’s ongoing right now. What’s your schedule like for the near future? What’s coming in the next year?
Carter: In the last stream we had on Wednesday, we promised that we’d make fewer promises. We have a whole pipe of things that we’ve let people know are coming. Now, the order of that, hopefully they’ll still be surprised and excited by what’s happening. But we’re not making any new promises now. We’re going to finish delivering the ones we’ve made so far.
The context of this–at TennoCon the summer before last, we did a very ambitious delivery of all this great stuff, all these space battle ideas and connecting in all these different ways. It was very ambitious, and we realized it was going to be pretty tough. We had to split it all into parts. We want to make sure all that content comes out and we restrain ourselves from getting too excited and promising too much, so everyone has the right expectations. We’re trying hard to set expectations for our players so that they know things are going to come out in phases. That’s part of the beauty of live service games.
GamesBeat: At the level you’re at, do you want to become a kind of cultural phenomenon? Is that in the set of goals somewhere?
Carter: Maybe it’s because we’re Canadian, but we don’t set goals like that. Obviously we want people to know and love the game. With Warframe, we always feel like we’re the biggest game that maybe not all of your friends have heard of yet. There’s still room for us to catch a lot of other people.
GamesBeat: Circling back to opportunities with Tencent, what do you think about there?
Carter: I’m probably missing something when I think about this, but the biggest opportunity I see is the potential for collaborating and hearing more ideas from our sister studios. But also just the ability to keep doing what we’re doing. We have our own road map. We know what we want to do. We’re just excited that we can keep doing that. Potentially, if there are new ideas we can find because there’s a collaboration between those studios, that would be amazing.
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