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.