How Capital Changed the Games We Play

Small creative studios and profit-driven giants often want things that can't be reconciled.

Since late last year, the French media conglomerate Vivendi has been steadily building its stake in Ubisoft and in Ubisoft's subsidiary Gameloft. It now holds 15.7% of the first and roughly 30% of the second.

Ubisoft is still fighting the giant off, by any means available. The latest is a threat to walk: a long list of creative directors say they will resign the day Vivendi buys the company. If Vivendi doesn't want to pay for an empty shell, it may think again.

Even if you just hit level 30 in Ubisoft's new blockbuster Tom Clancy's The Division, the news may not move you. This is the French studio known for potato servers, bugs and botched launches — and whatever happened to that promised Simplified Chinese version of Far Cry? Most players don't think highly of it. As long as the games keep coming, who owns it hardly seems to matter.

Money moves between game companies all the time. In China alone last year there were more than 20 acquisitions involving game companies, big and small. SNK Playmore, the Japanese company behind The King of Fighters, was bought jointly by Shanghai's Shunrong Sanqi and Dongfang Xinghui.

But when the money changes hands, every player's experience changes with it.

Start with EA, the industry's cancer

Just as filmmakers go to festivals to find a distributor, game studios need someone to handle everything that isn't development.

Like commercial film, making a game now takes a great deal of money — usually more than a small studio can carry. So a developer takes a pitch, or a half-finished build, to a publisher and asks for funding, and the publisher backs the projects it likes. Once the deal is signed, the publisher is the money.

We have written about Factor 5 before — the studio behind Star Wars: Rogue Squadron — and it was ruined by picking the wrong publisher. Brash Entertainment collapsed under its own problems, Factor 5's funding dried up, it could no longer pay its staff, and it closed its doors clutching an unfinished Superman game.

Whoever puts up the money usually gets a say in the game. Publishers read the market and tell developers what they think. Shigeru Miyamoto, for instance, argued that Pokémon should launch in two versions, Red and Green, with different encounter rates to push players into trading — and as a Nintendo man, on the publisher's side, he had the authority to change something that basic.

Without him, Pokémon might still have been a hit, but there would have been a Gold and no Silver, a Sun and no Moon.

Few people on the money side, of course, have ever made anything like the Mario games. Take EA. Voted the worst company in America, the world's second-largest game publisher has given players a very concrete education in what capital can do.

EA prefers to buy studios outright, and its shopping list is long. Since 1987 the veteran publisher has been acquiring development studios one after another. It went after Ubisoft too, and even eyed Take-Two Interactive, the studio behind Grand Theft Auto.

Luckily those deals failed, because EA's shopping list is essentially an obituary:

Bullfrog: the famous Bullfrog Productions, maker of Theme Hospital (patients are asked not to die in the corridors) and Dungeon Keeper. One of the most inventive studios of its era, bought in 1995, closed by EA in 2001.

Maxis: the studio behind Spore, The Sims and the SimCity series. Bought by EA in 1997, closed by EA in 2015. Later Sim games still carry the Maxis name, but the studio Will Wright founded is gone.

Westwood: the legendary Westwood Studios, creator of Dune and the Command & Conquer: Red Alert series, and the inventor of real-time strategy. Bought in 1992, closed by EA in 2003.

The list of companies EA bought and buried also includes DreamWorks Interactive (the Medal of Honor series), Black Box Games (the Need for Speed series) and Origin (Ultima Online). It is long enough that players call EA the industry's cancer, and long enough to have produced a theory: EA buys game studios in order to destroy them.

A recent case is Plants vs. Zombies. After EA bought the hugely popular little game in 2011, it became a different thing: Plants vs. Zombies 2 no longer let you play happily for dozens of hours, it made you grind level by level, for one reason only — to sell in-app purchases. That was clearly not what PopCap Games founder John Vechey had in mind. In 2014 he left the company he had built.

EA is not the only one. Plenty of big companies work this way — Microsoft, for example.

Ensemble Studios, developer of the Age of Empires series, was bought in 2001 and folded into Microsoft Game Studios, then shut down in 2008. The reason? Microsoft wanted to concentrate on the Xbox, and Age of Empires was not a good fit for the Xbox 360. The Fallout series also went on hold for years because its publisher, Interplay, had no faith in role-playing games.

But selling to a big company is a last resort

Studios don't hand themselves to big investors in order to die, obviously.

They do it for the money. Making games costs money, and a great deal of it.

Some franchises exist today only because a publisher backed them hard. Call of Duty is one. All 22 people at its studio, Infinity Ward, came from the team behind the famous Second World War game Medal of Honor: Allied Assault.

Once founded, Infinity Ward got its first money from Activision — $1.5 million, in exchange for 30% of the company. That was enough to build a small PC game, and the small PC game was Call of Duty.

Call of Duty was a hit, and Activision bought the rest of Infinity Ward for $3.5 million, picking up the rights to the game along the way — a bargain. From then on Call of Duty shipped a new game every year. Before the buyout, an annual AAA release was flatly out of reach for a studio that size.

Call of Duty is now one of the most expensive series in the business. The sixth game, Call of Duty: Modern Warfare 2, cost more than $40 million to develop; with marketing, distribution and the rest, total spending reached $200 million.

At those numbers, a small company never even gets to try.

Creativity against money

Capital always leaves a mark on the game. An independent studio and a studio owned by a large publisher are different animals.

To begin with, an acquisition costs you people. Core staff who cash out their shares have every reason to leave. After Microsoft bought Mojang, the maker of Minecraft, for $2.5 billion, every one of the Swedish company's founders quit and settled into a comfortable life.

For a studio that only ever had a handful of people, that is often fatal. Those few carry everything: the ideas, the quality, the enthusiasm.

Peter Molyneux, who founded Bullfrog, is the obvious example. After EA bought Bullfrog in 1996 he left and started Lionhead Studios, which released Black & White, Fable and others.

Microsoft bought Lionhead in 2006, and for a while Molyneux was creative director of Microsoft Game Studios. He left in 2012 — and only yesterday word came that Microsoft would close Lionhead and stop development on the next Fable.

So what is Peter Molyneux doing now?

Like every great game designer, he has a dream to chase: more games, better games, games with more ideas in them.

Like Hideo Kojima leaving Konami, these men are not satisfied with the old work; they want something new. There is nothing wrong with that — but to a company chasing money, new means risk. Who can say whether the new thing will sell?

Hollywood today is happy to roll out one superhero sequel after another, and you can find the same plot turns and the same beats in all of them. Audiences, it turns out, will pay for exactly that.

When one flop costs you hundreds of millions, not many companies want to innovate.

Games work the same way. Sega spent $70 million on Shenmue in the 2000s, an unimaginable sum at the time. Shenmue sold badly, and that failure helped push Sega out of the console business altogether.

A publisher like EA does not buy studios so that people can be creative in them. It buys them to make money on sequels.

FIFA is the model EA product. Can you name one new idea in this year's FIFA? And yet its steady sales and steady audience make it one of EA's most important sources of cash.

Life inside a big company kills ideas too. Molyneux has argued that Bullfrog died under EA partly because EA gave it too many resources, meaning to make it better. “Bullfrog moved into a new office, and people stopped shooting BB guns at each other in the corridors. We got an HR department, which looks like a very professional thing to have, but it changed the character of the company.”

“When a company is acquired, it will change,” Molyneux concluded. “Sometimes for the better. Mostly for the worse.”

Which brings us back to Ubisoft, a company that was never well loved to begin with. If Vivendi does take it over, it could get worse.

Vivendi has never been much interested in games. It sold most of its Activision Blizzard stake in 2013, which told you how well it understood the industry; the stated reason was to put more effort and more money into its own television and video businesses.

Activision Blizzard's share price has since risen threefold, and it is now, in effect, the biggest third-party game publisher there is.

Vivendi may want Ubisoft to undo the mistake it made three years ago. Perhaps it likes the look of the Assassin's Creed film, or wants to turn Ubisoft's franchises into film-and-game tie-ins and build products out of them — or, more plainly, to make money.

Ubisoft CEO Yves Guillemot has said clearly that he will not hand the company to a group of amateurs. Beyond what management is doing about the hostile bid, Ubisoft has started to think about shipping fewer games — Assassin's Creed, once an annual fixture, will certainly not appear in 2016. The company says it wants time to try something new with the old series.

Whatever comes out will surely arrive with more bugs. But players, presumably, are glad to see the effort.