A challenge for Boston video game makers
Making Boston a player in the video game world
Is Boston too serious and square a city for the video game industry? Are we too unhip to nurture businesses built on fantasy -- and dependent on a steady stream of hits, like nano-scale Hollywood studios? It may not surprise you that the very first video game, "Spacewar," was created just over 40 years ago at MIT, on a minicomputer made by Digital Equipment Corp.
In the 1980s, Cambridge-based Infocom made text-based adventure games like "Zork" and "Hitchhiker's Guide to the Galaxy" for the first generation of personal computers -- machines like the Apple II, TRS-80, and the IBM PC. But the company expanded into the boring (but presumably lucrative) world of database software, lost its focus, was sold, and eventually moved to California.
Today, Boston isn't home to a single major player in the video game industry, which racked up almost $7 billion in software sales last year. The industry is concentrated in the San Francisco Bay area, the Pacific Northwest, and around Austin, Texas.
"The revenue from games remains wildly unpredictable," says Dan Scherlis, founder of Etherplay, a new company focusing on the emerging business of creating games for wireless phones. "This is like the movie industry -- it's a hit-driven business." Scherlis suggests that Boston technology entrepreneurs and investors prefer the reliable stream of revenues from a software product that can be sold to big companies, as opposed to video games, where individual consumers must decide that a new game is worthy of their discretionary dollars. "It might be the classic dour Yankee thing," he says.
The games industry can be divided into two chunks -- the creative shops that actually develop games, and the publishers like Microsoft and Electronic Arts that distribute and market them. (Sometimes publishers own their own creative shops, as is the case with Vivendi Universal Games' ownership of Papyrus and Impressions Games, two local developers.) The only sizable local game publisher is a division of Atari Inc. which employs 150 people in Beverly.
Around Massachusetts, though, there is a community of more than 40 small developers, and a trade group called PostMortem that meets monthly. (A post-mortem is the group critique that typically takes place after developers have released a new game.)
There's even an effort to attract more game developers to a renovated mill complex in Lawrence, home to Mad Doc Software, which makes games like "Star Trek: Armada 2" and "Jane's Attack Squadron."
There are three positive dynamics that could help the Boston video game community grow.
One is that venture capitalists seem less reluctant than they have in the past to put their money into game developers. WorldWinner.com in Newton, which creates Web-based games and doles out cash prizes, attracted funding from Zero Stage Capital, HarbourVest, and CommonAngels. Earlier this year, TA Associates of Boston invested $32 million in a Virginia company that created a multiplayer online game called "Dark Age of Camelot," in which players assume Arthurian identities. And within the next month, Westwood-based Turbine Entertainment Software will announce an infusion of capital from a local venture firm.
Venture capitalists have warmed up to multiplayer online games in part because they're addictive. Players create their own characters, trade, fight, and fall in love with one another -- and they shell out a monthly subscription fee, rather than making a one-time purchase of boxed software.
Second: Companies continue to spin out from local universities, most recently Dragonfly Game Design, a Worcester company started by current and former students from WPI and the University of Massachusetts at Amherst. And experienced game industry entrepreneurs keep cooking up new ventures. In 1987, Omar Khudari started Papyrus, which developed some of the first auto racing games. Khudari is now chief executive at Cecropia, a five-person Lexington start-up.
"We want to make games that appeal to as broad an audience as film, television, or novels," Khudari says. "Even though the video game industry has done really well through the technology slump of the past few years, the vast majority of our products are consumed by a very narrow market of people."
Third: Several local companies are trying to establish themselves as successful developers of games for cellphones, a new avenue for industry growth.
"All of the mobile games that're out now stink," says Scherlis at Etherplay. So Scherlis, formerly CEO at Turbine, is trying to raise $5 million in venture capital to buy up several small game developers and get working on a "next generation of mobile games" that will let players interact.
Paul Neurath, a longtime game industry figure, has started a company called FloodGate Entertainment, which is working on two games for cellphones. "For a small studio like ours, the opportunities seem to be in the mobile space," Neurath says. "You don't need to invest millions and years to develop it. And it's a great challenge to come up with a game that will work well on such a small screen."
Will Boston ever be a center of gravity for the game industry? Seems unlikely.
But everyone who does work for local game companies seems to be having a pretty good time. At Waltham-based Blue Fang Games, work usually stops at 6 p.m. so that employees can spend an hour playing the shoot-'em-up game "Battlefield 1942" with colleagues.
Blue Fang's first game, "Zoo Tycoon," was published by Microsoft in late 2001 and has sold nearly 2 million copies so far.
"We buy and play a lot of games," says chief executive Hank Howie. "It's a line item in our research budget."
Online auctioneers
Jon Carson, the founder of Family Education Network, wants a piece of eBay's business.
The auction site, Carson says, does a terrible job hosting auctions for charities since bidders on eBay are looking for the lowest possible price on items.
Carson notes that the National Braille Press recently relied on eBay to auction a dinner party prepared by chef Lydia Shire. The winning bid was $1,200. But when the Dana-Farber Cancer Institute conducted its own auction, a similar Lydia Shire dinner raked in $27,000.
"The eBay audience is a value audience," Carson says. "You get 25 cents on the dollar."
So Carson, who sold his last start-up for $175 million in cash, has spent the last year getting a new venture up and running. It's called cMarket, and nonprofits like the Pan Mass Challenge are already using it to conduct their own auctions online. A yellow leader's jersey worn by Lance Armstrong in this year's Tour de France commanded $36,000.
CMarket officially launches this week at a conference for fund-raising professionals in Boston.
Carson says that about 300,000 charity auctions are held every year. CMarket will take a cut of between 6 and 9 percent for helping to conduct a nonprofit's auction on the Web. The big question: Will that be enough to turn cMarket into a for-profit enterprise?
Scott Kirsner is a contributing editor at Fast Company. He can be reached at skirsner@verizon.net.
