How Tonic Games Group learned resiliency in the volatile dev business

The video game business does not seem to foster longevity. Dozens of development and publishing companies have come and gone over the decades, and that’s a reality that Tonic Games Group wants to face head on. Tonic cofounders Dave Bailey and Paul Croft understand that it’s difficult to build a company that can last in video games. And that’s why they started Tonic Games Group to oversee multiple existing sub-labels (including Mediatonic, which they founded in 2005) with an emphasis on resiliency. I spoke with Bailey and Croft as part of the latest episode of How Games Make Money, and you can listen to that right here:

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Building Tonic Games Group with an eye on long-term success

Tonic Games Group provides a way for the company to grow without disturbing the way Mediatonic does business. Mediatonic is known for publishing games like the picross visual novel Murder by Numbers. It’s also releasing the upcoming 60-player online party game Fall Guys: Ultimate Knockout. And going forward, Mediatonic will continue doing those kinds of projects. And under Tonic Games Group, sister labels like The Irregular Corporation will put even more focus on its specialty of simulation and strategy games. And everyone under the Tonic umbrella will learn from the expertise across the entire organization.

Again, the idea is to build something that can last. And Tonic sees an opportunity to accomplish by leaning into what it calls “large-scale multiplayer experiences. Fall Guys is a prime example of that. But why are those kinds of games important to a “developer publisher” (that’s Tonic’s term) that is prioritizing long-term success? Because those are the kinds of games where the developer matters for years beyond a release date.

“There’s a big opportunity in developing games which have to last a long time because the developer becomes intrinsic to the success of that game,” said Bailey. “Ten years ago, a publisher might have picked up and let go of developers once a game was finished. But suddenly, the developer has become intertwined with the long-term success. And that’s really key for us in that we’ve been able to take on games which then we’re still running and growing two or three years later.”

And while that might seem obvious, it’s not exactly easy to execute.

You have to get good

The value of running games that last for years is that they are more stable. You don’t have to hire up and then lay off tons of employees once a game ships. Publishers can also more easily predict what their revenue is going to look like. It’s also cheaper to build a game and support it than it is to build a game and then abandon it to build a second one.

But as publishers were realizing the benefits of live-service releases over the last decade or so, it wasn’t something they could just switch to overnight.

“It took ages to get good at it,” said Bailey. “Both Publishers and developers spent a long time trying to figure out how to do this, and a lot of games failed in that process. The design process for a game that’s going to last that long is completely different to a single-player cinematic experience with a start, middle, and end.”

But Mediatonic started as a web-game developer. It was a work-for-hire outfit that partnered with companies like Adult Swim and Sega. So it had experience working with connected technologies, but publishers also began to build incentives into its contracts with Mediatonic. And that provided its own kind of experience.

“What we found was, yes, [service games] gives us more predictable cash flows because we know for months on end we’re going to be running these games,” said Bailey. “But also as we got good at this, publishers started wanting us invested in the long-term outcome of the games. So they would say, ‘we’ll pay you royalties or other performance incentives to keep you motivated to do a good job.’ And that really meant that as a developer we could … start to behave more like an IP owner.”

And that’s exactly the strategy Bailey and Croft are building Tonic Games Group on now.

Prepared for the next change

One other thing that Tonic Games Group is readying itself for is uncertainty. A lot has changed about making and playing since 2005. Facebook games have come and gone. Mobile game pricing has mutated into its current form. And now subscription models are popping up across mobile, consoles, and PC.

“Change is pretty much the only constant in the games industry,” said Croft. “The industry goes through a pretty major change every 6-to-12 months, almost. We’ve got the new consoles coming out soon, subscription services — things change all the time. And that’s really been part of our design in terms of how we’ve built the group.”

Tonic Games Group wants its labels to embrace their voice while also remaining nimble. In the case of Mediatonic, the emphasis favors flexibility.

“Mediatonic is quite unusual in that we haven’t really specialized in a particular genre or type of game,” said Croft. “And that’s really part of our heritage. We’ve walked between all these various platforms and business models — although there have been common through lines. But I guess that ties back to our resiliency and building for the long term. We want the group to be going strong decades from now. And to do that in the games industry, which is a very volatile space, you’ve got to take [the unexpected] into account.”