The barrier for entry to the lucrative multibillion dollar cross-platform gaming business may be too high for Irish firms and if the industry is to have any chance of future success clever niches in areas like casual gaming and other supporting fields must be identified.
Dylan Collins, the ex-CEO of Dublin-based Demonware, which was sold to the No 1 games company in the world Activision for an estimated US$15m, explained that original dreams of Irish games companies making cross-platform blockbuster games for sale in high-street stores may never be realised.
Demonware, which was formed by a team of Trinity College Dublin graduates, developed and sold off-the-shelf middleware that allowed games developers to add online multi-player abilities to their games. Demonware’s software was a driving force behind the success of games like the Call of Duty franchise and Rainbow Six.
But the question is would Ireland ever field a games publishing house that could make a top 10-selling video game. Unlikely, Collins said.
Why? “For a whole bunch of reasons. I don’t want to sound like a pessimist but the reason you may never see a console games publisher from this country make it to that level in the near future is simply the cost of making a triple A game like Grand Theft Auto for the Xbox, PlayStation and Nintendo platforms. It would cost at least €15m to €20m to develop. And if you want to factor in marketing and distribution, you could be talking the same amount again.
“A really good title out there with the potential to sell multimillion units would cost €40m to €50m to develop. Even amongst big companies like Activision and Vivendi, the pressure and costs of getting games to market are so high that they are constantly looking to increase capitalisation.”
But Collins said the opportunity is there for Ireland to make a contribution in a different way, as evinced by Demonware and Havok, whose physics engine technology powers many of the top 10 selling games and top Hollywood movies like The Chronicles of Narnia and The Matrix.
“As the games industry develops,” Collins said, “more and more peripheral opportunities will emerge. Basically anything that goes around playing a game – from marketing to customer support – publishers are looking at what they want to keep inside and outside their company. There are definite opportunities there, the video games industry is so wide.
Speaking to siliconrepublc.com previously, Havok chief executive, David O’Meara argued that Irish firms need to bring more to the table than just ideas for products like games. What is needed, he said, are management talent, financial discipline and a product management vision that could extend out over 10 years.
“Software and the creative idea are just one component. There’s no way Sony or Microsoft will bet their future on an Irish technology company just because it has a great idea. They would need to be convinced the idea has a 10-year life in terms of development, sales and product management,” he said.
Ray Walsh of Enterprise Ireland’s digital division agreed that the barriers to entry in the gaming business are prohibitively high but the success of animation companies like Jam Media, Magma and Cartoon Saloon, as well as mobile firm Zamano, show we have the basic premise right.
“The game is yet to unfold and the opportunity is still there. For example, in the casual gaming space, the barriers to entry are smaller.
“At the same time I don’t think the gaming companies of the future have to be in Hollywood or Vancouver. But they do need smart and savvy business people in the company, whether its technology led or animation led, to scale the business.
“They do need to define a roadmap and return on investment for investors. If the company has a good offering, a clear vision, they will attract those smart business people,” Walsh said.
Neil Leyden of the cross-border Digital Media Forum also agrees barriers to entry are high and says the niche opportunities can deliver, as proven by Demonware and Havok.
“There are going to be more opportunities in software and middleware, as well as audio visual , as areas like TV become more internet-based and IT focused. The casual gaming space could actually turn out to be massive in this regard.
“The opportunity is there,” Leyden surmises. “It’s just down to ambition, hard work and a clear vision.”
By John Kennedy