Xbox Co-Creators' CEG 'Middleman' Venture Fails

Thanks to the San Jose Mercury News for their story revealing that the 'gaming middleman' venture Capital Entertainment Group has closed its doors. The article explains that CEG's founders "...included Seamus Blackley [now heading to CAA as a games agent] and Kevin Bachus, who were part of the team that created the Xbox at Microsoft and persuaded Bill Gates to spend billions in a bid to unseat Sony as the dominant player in video games." The founders started CEG "...to solve growing rifts between game developers and publishers. CEG planned to develop high-quality games with established developers. It would then take those games and pitch them to game publishers and share in the cut if the games were successful." But funding wasn't forthcoming, since "...in the end the VCs didn't want to try their luck in risky hit-or-miss games." Will there ever be room in the market for an "independent production company" like CEG?

Comments

Will there ever be room in the market?

[PainKilleR-CE]

Will there ever be room in the market for an "independent production company" like CEG?

I think the problem is that CEG wasn't a production company at all. They were simply trying to fill the same role for developers that agents play for actors or managers play for musicians, and the industry isn't quite setup that way, yet. If it starts to move in this direction, it'll be more likely that the publishers will establish the role of agents, putting people out there to look for game developers, rather than having game developers pitch directly to publishers as they do now, and since the agents will be an arm of the publishing company, the cut the agent takes will be extra padding in the publisher's bottom line.

Only once this system (which is more or less a scam) is in place would an independent company have it's place, and only then if that company had made significant in-roads with the publishers. It only becomes a production company (of sorts) when they've got enough developers under their wing and when they can maintain developers by making single-title deals with publishers (rather than multiple-title deals which are fairly common with successful developers).

Even at that point, you have to find ways around the economic problems with the games industry, realizing that most titles fail and that games are getting more expensive to produce every year, and, as an independant production house, publishers aren't likely to sign off on your projects until they're fairly close to completion unless you have a very solid team in-house that has released some very strong titles and has been very consistent about doing so. The music industry's getting hammered by bad economics, and the movie industry turns out a lot of crap to try to deal with it's economics, so moving to a model with more 3rd parties involved in games, where the economic problems are really just starting, doesn't seem like a sound idea.

That being said, having one of CEG's founders move on to CAA seems like just about the perfect move for both him and CAA, since they need people with a better idea of how the games industry works, and it essentially gets him a little closer to the job he was setting up at CEG in the first place.

In the middle of what?

[imperator_mundi]

It looks like the businnes idea of the former CEG was to be the link between game publishers and developpers...

By outsourcing game production to professionals at CEG, game publishers could relieve themselves of the production process and focus on sales, distribution and marketing.

well if publishers give up the control of the content and the quality of the game they turn themselves into merely box distribution companies, and eventually they'll disappear the very first day after the game distribution channels will really go on line... so why the hell should the publishers be willing to give away the part of their businness with the highest added value?

Sturgeon's Law

[Anonymous Coward]

The thing about this industry I still don't get after a decade of being intermittently exposed to/involved with it, is that while there's much more creative game development going on now than 10 years ago, the games all still mostly suck and lose money. They just do it in 3D these days.

"Fun" has become ever more elusive as the amount of content continues to explode. Everything is either the same as everything else or just plain f'ed up and wrong. For the record, the last game I liked were Rise of Nations and Crimson Skies: High Road To Revenge so I don't think I'm, ya know, too old and jaded to appreciate the occasional bright spots just yet.

But in closing, what exactly does Seamus Blackley know about fun anyway? This is the guy who gave us the Waterworld of video games, Trespasser. On the other hand, he's a master of self-promotion, so making him an agent might turn him into the Kid Notorious of the video game industry. I knew CEG would fail from the day I heard about its formation. The business model or should I say the "magic lottery" of the video game industry just isn't ready for a Miramax Studios.

Re:Sturgeon's Law

[*weasel]

Trespasser may have been patently unfun - but he obviously knew something about console design and specification.

The xbox, hands down, has the best hardware package for consumers and the most attractive tools for developers.

any negative statements you may have about him, you have to grant him that much. the only things they could've done better, was streaming media capability from network shares -> xbox -> tv/audio (mp3/divx/avi/etc), and using the -standard- usb interface for controllers/memory devices. (even with the xbox-specific plug it would've been fine. why did they bother to change the specs?)

I just hope people don't confuse CEG for an actual independent game distribution channel.
as you pointed out - it seemed more like a john romero-type cult of personality for sale.

Seamus Blackley

[Anonymous Coward]

Jeebus I can't for the life of me understand why people even bother talking about him. He has done nothing and yet some how manages to stay in the headlines. Blackley is all talk and very little of anything else.

So God V2.0 failed?

[Anonymous Coward]

Go figure - Who would have thought that such a brilliant idea (Only make hit games!) would fail?

Doesn't make sense

[realdpk]

When I think of a VC-financed business, the last thing that comes to mind is "independence".

I'm sure there's room in the market for independent game developers, and independent publishers, but if they're going to be backed by VC they're either going to be forced to sell out, or forced to go under, after their first hit or miss respectively.

Re:Doesn't make sense

[PainKilleR-CE]

Independent, in this case, refers to independence from the publishers (and developers), ie they're not a game publisher, so in theory they could've worked with any publisher.

They were trying to play a role currently being played by both the publishers and the developers and sit in the middle somewhere. Whether or not it was a good idea, on the other hand, depends on whether or not developers or publishers felt they really needed something like that.

On the other hand, yes, being backed by VC does make them more likely to go under or get sold out fairly quickly, especially after so much VC got burned up in the 90's.

*scratches head*

[jermyjerm]

I don't know from marketing, but I really don't see how companies like that will ever be crucial to the industry. Is marketing such a problem that it would be worth sharing profits with another company to solve?

I think the industry is set up now so that gamers will find the games they want to be playing without a huge focus on marketing. Buying a console is an investment, no matter how small to some, so it seems that the buyer would want a good return on their investment in the form of quality game titles; thus, they'd go out of their way to find them. Also, game culture on the internet creates a huge amount of word of mouth. While this all applies to more "hardcore" (for lack of a better term) gamers, there are already franchises there to attract the casual gamer's attention, with more being created all the time, and the amount of buzz created by the blockbuster titles is enough to attract the casual game buyer.

I guess what I'm trying to say is that no matter how much a company markets a great game (like Ico for instance), it will never be appealing to the majority of gamers, and a company that just copies a model used in the film industry is doomed to fail, because the same principles do not apply to games. People can essentially watch the same movie over and over again, but it takes a lot more to keep games fresh than to change the actors or systematically alter the plot.

Re:*scratches head*

[PainKilleR-CE]

I don't know from marketing, but I really don't see how companies like that will ever be crucial to the industry. Is marketing such a problem that it would be worth sharing profits with another company to solve?

It's not really about marketing unless you're questioning the existing model (developer goes to publisher, who takes care of marketing, distribution, and usually financing the project). They were trying to play the part of a go-between for the developers and publishers, isolating the developers a bit more from the management of the publishers and isolating the publishers from overseeing the projects so much. In theory, it should work in such a way that a production house has a stable of good developers and a knowledge of how they work and what it would take to get a project off the ground and to a final state. This production house could then go to the publisher either with a completed game asking for the amount that it cost to produce plus some additional fees and negotiate the contract for any profit on the title (which is pretty much what a developer does now if they have a finished product they're shopping around). Alternatively, they can shop around ideas with a solid plan in place to produce a new project and try to get a publisher to fund it, which is actually how most games are produced today (except that with the producer the developer again wouldn't have to do this).

Ideally, the producer has a good group of developers working for them and a good understanding of how those developers work, and can turn out higher quality titles on a better budget than independent developers (or developers beholden directly to their publishers), because the producer would be the interface between the two, meaning that developer resources aren't wasted on dealing with the publisher and the publisher may have better assurance that the details are being overseen by the producer.

The real problem is that in order for something like this to be successful, a production house actually has to be trusted by well-known high-quality developers, or the developers have to form the production house themselves with solid managers (and lawyers) to make sure they don't have problems like G.o.D. Games or Ion Storm. Those managers also have to be wary about signing multi-title deals just for the sake of gaining funds or security for the company, as this would make them further beholden to the publishers, leaving the developers in the same position as always (feature creep and rushed releases are commonly attributed to publishers and marketing). In other words, it would have to come out of a group of development houses that can afford to fund their own projects or already have fair leeway with their publishers in terms of development times and features. Needless to say, the companies with the most money and say over their own development are also the least likely to actually need a production house, which is where the problem comes in with the whole idea. The only real benefit the whole thing would have would be to allow new developers to come into a rather large production house and get their feet wet, and eventually add to the development team after they've gained experience. Unfortunately, it also means that new developers would end up spending a long time doing small-time work on big projects before they could work on any ideas of their own, and the bigger a production house gets, the longer that time period can stretch.

CEG, EGO

[superultra]

Will there ever be room in the market for an "independent production company" like CEG?

Geez, I hope not.

The website isn't a testament to games. It's a testament to the guys in the company. Give me a break. I visited the CEG page the moment Blackley left MS and thought the same thing I do now: these guys aren't about the games, they're about themselves. Every interview I've read with these guys is about themselves. CEG, at least to me, looks like nothing but a four man ego circle. Blackley should've taken the funds and handed them instead of guys like Warren Spector and Will Wright, so as to create an "independent production company" completely unlike CEG.

What about GOD?

[MBraynard]

Gathering of Developers started off this way and seemed to do pretty well. A G.O.D. for console games would be pretty cool if they could get off the ground; I'm not sure why anyone would bother with a 'middleman.'

Useless

[presearch]

Many, many phone calls and emails to CEG went totally unanswered.
Couldn't ever talk to -anyone- there.
A total waste of (probably someone else's) money and time.

It's too bad

[DaveCBio]

That the antigonism exists between devs and publishers. The goals should be the same, but I am sure this kind of conflict exists in other entertainment industries as well.

This is a shame...

[DigitalSpyder]

CEG represented what could have been a glorious new age to the developer-publisher relationship.

The reason behind it's inception IIRC, was that developers were getting shafted by publishers who were reluctant to fork over money for production of a product without basically gaining complete control over the product being developed.

CEG was there to try and help guide new startup development companies by providing initial funding and middleware to develop games to construct a suitable demo, which could be then used to present to publishers to acquire additional funding to create the completed game. The fact that the devs have an existing arrangement with CEG and a working demo would give them more leverage over the publisher and their rights in the deal, which is what is truly needed in order to encourage developers to try and create truly unique games and IP. Anyone who says the fall of companies like CEG is a good thing I really don't think understands what it means.

This is really tragic. I hope people keep trying because the existing developer-publisher relationship really isn't working as best as I can tell.