Game Studio Flight From Microsoft A Sign of Troubles?

Newsweek's LevelUp blog continues to produce some highly interesting material. Today they have up a look at the 'flight' of game studios from Microsoft's corporate umbrella. BioWare's purchase by EA distances it a bit from their cosy relationship with Microsoft, as does Bizarre's purchase by Activision. Bungie's departure from the company itself goes without saying. So what does all this mean? Is this a sign of troubles in Redmond, or just more fallout from the huge undertaking required to get the Xbox 360 to the position it has today? "For us, the flight of the Killer B's is a clear indication that Microsoft as a whole is still shell shocked not only by the massive losses in the Xbox division, but also more importantly by the poor showing of Rare, which has to rank as not only one of the Microsoft's least successful purchases, but as quite possibly the worst acquisition in the history of gaming. Microsoft paid $375 million in cash for Rare, and based on the modest revenues from its ensuing titles--a Conker's Bad Fur Day remake, Grabbed by the Ghoulies, Kameo, Perfect Dark Zero and Viva Pinata--all they've got to show for it is that proverbial lousy T-shirt, completely stained with red ink."

Bioware? Bizarre?

[EveryNickIsTaken (1054794)]

Since when was either Studio owned by Microsoft? This is such a fluff piece for a slow gaming "news" week.

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[gorbachev (512743)]

Both companies had an exclusive publishing agreement with Microsoft Game Studios and were developing games only for the XBox and Xbox 360 platform.

Both companies will now be able to develop for other platforms as well.

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[Achromatic1978 (916097)]

Why, because when you get bought out all your existing contracts are voided? There was serious cash that changed hands for such agreements, and special access to resources. That's not coming without a contract that doesn't go away because you got bought out by EA.

Re:Bioware? Bizarre?

[tbannist (230135)]

No, it's definitely not a fluff piece. It's overanalyzing a trend of 3 items. And the point isn't that Bioware and Bizarre were owned by MS, but that they had close partnerships with MS and were making the games that sell 360s.

If they go platform neutral that's a large blow to Microsoft's Third Party development and the release of Bungie is a huge blow to Microsoft's internall developed games. Overwall it reflects poorly on the 360s continued success. It might be a blip or it might be the first signs of major trouble in Microsoft's games department.

To put it more bluntly, the idea is that if Microsoft were on the ball and interested in developing first part titles for the 360, they would have kept Bungie and bought both Bioware and Bizarre. As it is now, they are leaving themselves very much at the mercy of their third party games developers. Hoping that they will stick with the Xbox line of products. If the PS3 ever surpasses the Xbox in sales (I know, not terribly likely at this time), they could end up royally screwed.

Re:Bioware? Bizarre?

[powerlord (28156)]

You're right, it might be over-analyzing the trend (based on the number of points). It does look at an overlooked part of the picture though.

Nintendo has lots of development companies inhouse and exlusive ( http://en.wikipedia.org/wiki/List_of_Nintendo_developers [wikipedia.org] ).

Even Sony has been pretty consistent about maintaining worldwide developer studios ( http://en.wikipedia.org/wiki/Sony_Computer_Entertainment#Internal_organization [wikipedia.org] ). Leaving aside studios like Insomniac Games (Resistance:Fall of Man, Ratchet & Clank Series) who have "Close ties" to the studio.

MicroSoft has a much smaller stable of inhouse (and related) development companies ( http://en.wikipedia.org/wiki/Microsoft_Games#In-house_studios [wikipedia.org] ). They also have the split focus of providing games for the XBox 360, and providing games for Vista (though this is not mentioned). Any decrease in the inhouse development obviously puts more reliance on outside development, and as more and more games (especially from developers like EA) go cross-platform, its those in-house developers that help provide differentiation between competing products (all else being equal).

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[Tim C (15259)]

If the PS3 ever surpasses the Xbox in sales (I know, not terribly likely at this time)

You can say that again. I've not looked for a couple of months, but the last time I checked prices here in the UK I could be an XBox 360 *and* a Wii for less than I could get a PS3. I know cost isn't everything, but *damn*.

Don't dis

[Jeremiah Cornelius (137)]

!Viva Pinata!

That's the only reason my boy swaps the XBox on, in place of the Wii.

We are a market of ONE!

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[Cheeko (165493)]

Make that 2. My room mate have been playing on and off for a few months now (and we're in our 20's). Its a great game for sitting down for 20 minutes and blowing off a little steam.

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[radish (98371)]

VP is awesome, first I got hooked then my wife did. One of those well reviewed but strangely under appreciated gems.

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[Jeremiah Cornelius (137)]

Thanks! We gonna look at it.

The story behind Rare?

[lpangelrob (714473)]

What happened with Rare? I remember when Nintendo announced that it had let Rare go from 2nd party Nintendo developer to Microsoft exclusive developer. I figured that would be the "white flag" moment for Nintendo.

They took with them the underrated Conker's Bad Fur Day series, anything Perfect Dark, Banjo-Kazooie (I think)... arguably the best games development studio behind Nintendo itself. What happened?

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[Senjutsu (614542)]

Rare had been making increasingly crappy games for Nintendo even before they left the fold. Star Fox Adventures was an atrocious pile of crap.

Re:The story behind Rare?

[twistedsymphony (956982)]

They took with them the underrated Conker's Bad Fur Day series, anything Perfect Dark, Banjo-Kazooie (I think)... arguably the best games development studio behind Nintendo itself. What happened?

They neglected to take with them most of the developers that made those titles so great... IIRC most of the core staff behind Rare in the Nintendo days now work under Free Radical which hasn't done much beyond the "Timesplitters" series, though not a blockbuster franchise, it's certainly more well received than Rares offerings over the last 5 years. They're also the ones behind the upcoming game: Haze...

When Microsoft bought rare, all they really bought was the name and some semi-popular franchses. Honestly the games they've made for the DS have probably made MS more money than the Xbox branded stuff they're put out. I'd be impressed if they've even as much as made half of the original investment back at this point.

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[Fozzyuw (950608)]

the "Timesplitters" series, though not a blockbuster franchise, it's certainly more well received than Rares offerings over the last 5 years.

Sadly, TimeSplitters was and still is an excellent game series. The game play matches, or not passes, that of GoldenEye for the N64 and the story was super fun and humorous. Sadly, I never meet many people who knew this, despite them saying how much they loved GoldenEye.

Cheers,
Fozzy

Let's jump in the way-back machine-reality check

[gmezero (4448)]

Here is how I called in 2002 and I'm sticking with my statement! [gamezero.com]

You can read the whole post there, but in short I closed with: "While I hate to see a core group from Nintendo go over to the hands of the soulless boys and girls of Microsoft... deep down I almost hope that Rare actually continues it's pitiful slide into the hole of mediocrity and takes MS with them... but that would be hoping for to much I guess."

Or you can read one of my many posts on the subject [slashdot.org] on this very site.

Maybe that's actually playi

Rareware

[Applekid (993327)]

Microsoft paid $375 million in cash for Rare, and based on the modest revenues from its ensuing titles . . . all they've got to show for it is that proverbial lousy T-shirt, completely stained with red ink

They seemed to do pretty well when they were playing nice with Nintendo. I wonder what is it Nintendo was doing for Rare that Microsoft isn't, or what Microsoft is doing that Nintendo didn't.

Re:Rareware

[Sciros (986030)]

Nintendo made them DO STUFF. I remember reading something in 2001 where Rare complained that Nintendo was "working them too hard" or something along those lines. Well, at least they had something to show for it. And by "something" I mean games that set new standards in their respective genres, from Goldeneye for FPS's to KI for fighters to DKC for side-scrolling platformers, and everything in-between. Rare kept the N64 afloat because their games were semi-frequent and they all were pure awesome.

Now it seems Rare has gotten lazy, and MS let that happen. Nintendo's probably been laughing their butts off at all this. AS IF Rare could have made $375 mil for Nintendo if they'd been this lazy releasing games for GCN.

Re:Rareware

[badasscat (563442)]

They seemed to do pretty well when they were playing nice with Nintendo. I wonder what is it Nintendo was doing for Rare that Microsoft isn't, or what Microsoft is doing that Nintendo didn't.

And yet there was a reason Nintendo was willing to part with them. Remember, Rare was not an independent company - MS bought them from Nintendo.

Rare's output was dropping for years before the sale. In their last three years of development for Nintendo, they released five home console games: Donkey Kong 64, Perfect Dark, Jet Force Gemini, Conker's Bad Fur Day, and Starfox Adventures. Of those, only Perfect Dark could be called a legitimate hit. (DK64 sold well as a pack-in game, but it wasn't what you'd call a top quality game.)

A lot of people were pretty shocked at the price MS paid for them. This isn't just a 20/20 hindsight thing - many people said at the time that it was a dumb purchase. There were some hardcore hopefuls who thought otherwise, but this was not a purchase that was universally praised at the time.

And while this doesn't really apply to a studio like Bungie that's buying themselves, whenever one publisher is all too willing to dump a development studio onto another publisher, you have to ask yourself why. It's always a big red flag, and it seems obvious now that Nintendo knew something that MS didn't. Not about how to run Rare, but about how far Rare had really fallen.

Was M$ forcing them to make new games vista only?

[Joe The Dragon (967727)]

Was M$ forcing them to make new games vista only? and the game coders do not want to piss of people who still have XP.

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[Oldsmobile (930596)]

This was actually what I was wondering. DirectX10 could be the problem as well. Vista so far seems quite unpopular and forcing gamers to it isn't going making anyone happy.

So?

[coolhandlucas (1174225)]

Microsoft failed to keep first- and third-party developers happy? THAT'S news ... The BioWare thing is a tragedy, but lack of console exclusivity is the least of my worries there. I don't care what console it comes out for, if I see "EA Games Presents Mass Effect 2009" I'm getting out the torches. The Rare deal was a stupid decision that was more about keeping the brand away from Nintendo, and it's old news anyway. As a fan of Bungie since the first Marathon, I am absolutely ecstatic that they're going in

Is Newsweek still owned by Microsoft?

[Trelane (16124)]

That about says it all. Does Microsoft still own Newsweek?

Xbox Losing Money?

[Cheeko (165493)]

This article came off very strange. It seems like trying to create a story out of nowhere.

Last I heard MS was already making a profit on the 360, due to the cost coming down quicker than expected. Yes they took that billion dollar charge, but as I understand it each one sold is still profit at this point.

Add onto that some pretty killer titles in the last year and MS has made some cash. Halo3 alone would offset any losses in the last year I would assume. (Short of the charge).

If you read the statement Bungie released on their website it sounds more like what MS did was pull lots of companies into the fold, in order to foster the growth of its image as a gaming company. Now that they've established their beachhead, they can let those companies go sink or swim on their own merits.

I think Rare is the perfect example of why MS is letting the studios go (though still in publishing agreements for many of them). With a good partner relationship MS doesn't take on the risk of a studio starting to turn out poor quality product. At the same time, its become a large enough, established enough player, that those publishers will pay attention to MS, even if they aren't subsidiaries.

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[king-manic (409855)]

Last I heard MS was already making a profit on the 360, due to the cost coming down quicker than expected. Yes they took that billion dollar charge, but as I understand it each one sold is still profit at this point.

You heard wrong. The billion dollar allocation for RRD problems with the existing retail models pushed their possibility of profitability into 2008. Each machine is sold at a profit but the division itself is still in the red due to warranty issues. If you factor in the extended RR of D warrant

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[Cheeko (165493)]

Yeah, but I made a specific point of talking outside the bounds of the charge. In corporate terms you write the charge off once and then operate based on profitability and margin past that quarter. While the overall cost of R&D + the charge won't be payed off until 2008, as long as the system remains profitable on each sale, that investment will eventually be paid for. Admittedly it means in a year instead of today, but they are still turning a profit on the systems (I'd call that gaining money, even

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[powerlord (28156)]

Yes, but as you point out:

Nobody seemed to read into MS's decisions to acquire and spin off PC studios, and that was all because MS is in a singular place in the PC gaming market.

The reason this is interesting is because the console market is NOT like the PC market where "MS is in a singular place".
There is actual competition in the market, and exclusive titles (usually developed by in-house publishers), is one of the key differentiators between one console and another.

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[Cheeko (165493)]

I'd argue that only Nintendo tends to do most of its exclusives out of in house shops. Most of the major Sony exclusives aren't Sony shops, they are simply partners that Sony set up publishing agreements with. Which is the same situation MS is in with Bungie and a few other independent companies.

Partnering and software alliance are VERY common in the Enterprise market, a market MS knows all too well.

I just see this as MS applying much more of a software/IT market philosophy to its gaming division.

As any H

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[powerlord (28156)]

Interesting idea, but you do realize that, traditionally, MS, being on the software side has always owned many of its own important completer apps (Windows, Office, MS-SQL, Dev Studio), so its interesting to see them take the other approach in this case. It implies a different culture, as well as an awareness of a different situation (although arguably the Windows monopoly on x86 could be argued as comparable to a hardware platform such as that from HP, or IBM).

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[Blakey Rat (99501)]

Also, is Viva Pinata doing poorly? I was under the impression that, while Rare had a few bombs after Microsoft acquired them, Kameo was pretty good and Viva Pinata is pretty excellent.

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[MenTaLguY (5483)]

The problem is that Microsoft decided not to advertise Viva Pinata, in favor of spending their advertising budget on e.g. Gears of War and Halo 3. It's a good game, but most people haven't even heard of it, and correspondingly stores didn't exactly give it priority for shelf space either.

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[Blakey Rat (99501)]

Don't they have a Saturday morning cartoon which is basically nothing but advertising for the game? Not that I watch Saturday morning cartoons, for all I know it was canceled after one episode...

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[MenTaLguY (5483)]

Huh, I'd never heard of it, but it looks like you're right.

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[DeepHurtn! (773713)]

One (potential) quarter of profitability does not come *close* to touching the $7B+ losses they have incurred over the lifetime of the Xbox project. From a business perspective, the Xbox has been a disaster for MS. The shareholders should be in revolt; MS has been pissing away *their* money, and the stock price over the last 10 years reflects that. I mean, a billion here and a billion there, and all of a sudden you're talking about *real* money, even for MS.

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[Shadowlore (10860)]

it sounds more like what MS did was pull lots of companies into the fold, in order to foster the growth of its image as a gaming company. Now that they've established their beachhead, they can let those companies go sink or swim on their own merits.

And how is this demonstrative of good behavior?

Seriously, what you are describing is essentially the use of other companies' mojo, name, ability, image, etc. until said attribute was ascribed to MS, then let the used up company go "sink or swim" after taking thei

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[Stormcrow309 (590240)]

Considering three facts:

A. Microsoft has never given up on a flagship product line

B. They have more cash reserves then their competition

C. Their developer's network treats third party like gold

I don't think we will be seeing Microsoft leaving the market any time soon. We might be in denial, but at lease we are not delusional.

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[king-manic (409855)]

Considering three facts:

A. Microsoft has never given up on a flagship product line

B. They have more cash reserves then their competition

C. Their developer's network treats third party like gold

I don't think we will be seeing Microsoft leaving the market any time soon. We might be in denial, but at lease we are not delusional.


A. is not entirely true. They have discontinued unprofitable products [wikipedia.org]. The distinction "flagship" might be the dividing line. But strictly speaking they have discontinued products.

B. T

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[Kalriath (849904)]

Your option B there seems to indicate that Sony should have dumped its gaming division long ago. A few years back, it was $17 billion in the hole - I would say that if companies were that unwilling to accept short term loss, we probably wouldn't have any consoles at all - Sony would never have released the PS3 (or likely even the PS2), Nintendo may have just closed up shop entirely, same with Sega, and Microsoft would have just dumped the entertainment division.

Like Sony and Nintendo, they can see that the

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[Breakfast Pants (323698)]

Nintendo sells it's consoles at a profit (though admittedly they didn't always).

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[powerlord (28156)]

Just a few quick points:

A. Windows ME (granted they has Win98 to fall back on, but they gave up on ME and abandoned anyone who went to it). (although they are releasing a new version of the Zune)

B. Definitely true.

C. Don't know, but considering some of the rumbles from Nintendo and Sony, that may not last as a differentiator.

You're right, they probably are not going to leave the market, and the 360 has already sold more units than the Zune (lots more, I know), but the real question is, can they keep up

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[Stormcrow309 (590240)]

Windows ME is not the product line, it is either the Windows product line or the client/server product lines, depending on how you segment it. Yes, they have dropped products and even product lines (Bob, shutter), but their flagships, such as windows, sql server, exchange, etc... they will not likely drop. Sometimes they have renamed product lines (Backoffice). The only exception I can think of is DOS.

Looking at the financial statements, MSFT current assets are 40 billion, most of it in cash, short term in

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[powerlord (28156)]

Actually I meant Lotus-1-2-3, not Lotus Notes, and yes, I'm aware that Sybase had sucky customer service (BTW when did I mention Sybase? :) )

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[DDLKermit007 (911046)]

Another poster covered your statements quite well. About the cash reserves point...Your looking at the total reserves. Microsoft would dump the Xbox division long before they had to sink even 1/10th of their reserves. Same goes for Sony. Nintendo on the other hand is the only player who has staying power here no matter what happens with around seven billion in reserves. They flat out have no choice. What are the going to do? Live off Pokemon forever? Videogames are what they do, and even when they are last

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[MightyMartian (840721)]

Oh, give the XBox crowd a little longer, so you can enjoy providing the requisite "I'M SHOCKED, I TELL YOU, SHOCKED!!!"

Endless cash.

[Fantastic Lad (198284)]

The goal behind Microsoft isn't simply to do business as its primary feat of social engineering.

Subversion of the masses through electronic drugs is the primary goal. If Microsoft dies, then it will be replaced by some other machine designed to make people dumb and slow and distracted.

I'm sure all the MS employees, however, don't see it this way. But they're just expendable cogs in the works of a greater force.

Among the best things I ever did for myself was to throw out my television set, to stop playing

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[Fantastic Lad (198284)]

Don't go drawing silly conspiracy theories and backhandedly painting yourself as superior simply because you don't enjoy things that other people do.

Silly? I'm just looking at the results of the forces which have been playing upon society and drawing conclusions which, yes, I believe do infer intent, though not probably from the standard sectors people might assume. --But wherever it stems from, the old patterns still work; Bread and circuses, and all that. And even in the event that there is no delibera

Nonsense

[ThirdPrize (938147)]

More like 3 stories makes a conspiracy. How many of those companies were EXCLUSIVELY with M$? One maybe? Sounds like PS3 scaremongering.

Re:Stick A Fork In The Xbox, It's Done

[Pojut (1027544)]

Troll that you may be, I will respond anyway.

First, my non-fanboy credentials. I own an Atari 2600, Jaguar, NES, SNES, N64, Gamecube, Wii, Gameboy, Gameboy Color, GBA, DS Lite, Genesis, Game Gear, Dreamcast, PS1/PS2/PS3/PSP, Xbox, Xbox 360, and a fairly up-to-date gaming PC.

That being said, my 360 BY FAR has provided me with the most enjoyment and gaming time this generation. I myself haven't experienced a RRoD, however two of my friends have...and you know what? They got them replaced and continue to buy games for the system. Why? Because it's a fun fun FUN system.

The controller feels great and controls tightly (aside from the horrendous d-pad...but no system really has a decent d-pad anymore), the first party/exclusive games are fun and replayable , the graphics are fantastic on an HDTV (and still look damn good on an SDTV), and the interface is fluid and easy to use.

The hardware itself has it's obvious issues for some people, but overall it is a damn fun console and if mine ever went belly up, I would replace it in a second.

Re:Stick A Fork In The Xbox, It's Done

[DDLKermit007 (911046)]

Sure, the system gets the most play from you, but if it doesn't make the company boatloads of money like EVERY system Nintendo has ever made (outside of the Virtual Boy, which I think they broke even on). Investors tend to get a little pissy. They don't care if you personally like the system. They want MS to make them as much money as possible in as short a time as possible. MS, and Sony both keep fucking up, and I wonder just how much longer both will keep this game up. The crazy thing is the top competitor both companies want to beat is winning, by not competing with them!

I'm no fanboy either, hell I love the 360, but the gaming division at MS is taking on a ton of watter. Gota face reality that the 360 may just be the last console MS puts out.

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[CelticWhisper (601755)]

In all fairness, he did say "This generation." I'd be interested to know how it stacks up overall against, say, the Dreamcast or GBA. Obviously not just in the graphics department, as while I love my DC, the 360 would mop the floor with it and the GBA is not a contender for obvious reasons, but both systems have had some fantastic and unique stuff to their credit.

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[nightgeometry (661444)]

But... does netcraft confirm it? (Sorry, couldn't resist)