Saturday, July 15, 2006

Playground game design as a sustainable competitive advantage

There exists a perplexing multi-billion dollar mystery sitting in plain sight of everyone who works in the game industry. Some of the top franchises such as GTA or Sims do not experience the same competitive pressures as do other titles in popular genres. Also unexpected is that the companies that originally innovated with the creation of a new genre end up dominating. Something beyond your typical branding and IP ownership acts as a barrier to entry for new companies looking to cash in on popular new genres.


The urge to exploit these obviously successful genres seems impossible to ignore.
  • Open ended dollhouse genre opportunity: The Sims has sold over a billion USD of product (24 million copies including expansions) since its introduction.

    The Competition: A mere half dozen failed attempts such as Singles or Playboy Mansion.

  • Open ended driving genre opportunity: The last three versions of GTA have sold over 38.44 million copies, placing them amongst the most successful franchises of all time.

    The Competition
    : Around a dozen urban themed driving titles, most of which miss the entire point of the GTA design by removing the open ended gameplay and implementing linear levels. Most started development only in the last couple of years. There is an intriguing lag of years after the signals of market success for the genre hit the development community.
Compare this pattern to the RTS rush that happened a few years after Dune 2 was released. At one point, I remember counting over 60 different announced RTS titles. The same genre rush has happened with FPS, Match-3, Vertically Scrolling Shooters, Graphic Adventures, and most new successful genres throughout the history of the game development.

What prevents the typical genre gold rush from flooding the market with profit sapping competitors to the Sims or GTA?

Playground games
One of the few common elements that titles like GTA, Sims, or Oblivion sport is open ended gameplay where the player explores a large, complex playground and meanders about from non-linear adventure to non-linear adventure. The concept goes back to a couple of decades to early titles such as Elite, Nethack and Paradroid. Each of these titles focuses strongly on dynamic emergent gameplay over heavily scripted lineary experiences.

Such playground games are bloody difficult to build. They balance complex emergent gameplay systems that, by definition and design, lob crazy surprises at the development team all throughout development. With enhanced player freedom, there arises an inevitable stream of exploits, bugs and worst of all unbalanced boring game play.

The flip side is that playground offer unexpected competitive insulation from the typical cloning efforts of other development teams. A good playground game has a magic mix of gameplay that is both difficult to get right in first place and difficult to duplicate. The recent spate of high budget attempts on GTA may replicate the urban setting and adds better graphics and more explicit violence. But none of them capture the gameplay magic.

A unique sustainable competitive advantage
This unexpected quirk of playground games is a potential pot of gold. It turns out that any difficult to replicate process that yields a valuable product can be used to help make us more money. It opens up the possibility of milking new games longer without the threat of competition.

Any venture capitalist and most entrepreneurs are familiar with the concept of a ‘unique, sustainable competitive advantage.” Traditional economics teaches us that most highly profitable new products are converted into low profit commodities through competitive pressure.
  • A company releases a new product that meets a hitherto underserved market need.
  • The first mover, recognizing that they offer a unique product, charges a premium above and beyond their production costs. In situations where demand outstrips supply, the customers happily pay what my economics professor termed “greedy pig profits.”
  • Other companies recognize the sweet scent of profits so they duplicate the original product, add some of their own mild innovations, and typical offers a competing product at a lower price or with a bigger marketing budget.
  • The original company responds in turn, which naturally costs money. There is a bit less profit margin for everyone at this point.
  • After several cycles of increasing competition, you end up with a mature market in which each company is spending almost all their profits on marketing, distribution, and product improvements. The era of the greedy pig profit is at an end.
There are quite a few other potential endings to this classic tale. The one you most typically see in the game industry is one where the original company is often bankrupt, purchased or marginalized. A few bigger companies that can leverage economies of scale or market dominance take control of the new market and release a steady stream of moderately profitable products. They erect substantial barriers to entry in terms of licenses, strong branding, or high costs of entry.

Anyone looking at a new business (and most new game projects are new business projects) understands these dynamics. They know that a great new innovative product you make today will likely be cloned, rebranded and controlled by the competition tomorrow.

So as educated business owners, we must ask the dreaded question “What is our unique sustainable competitive advantage?” In essence, we need to figure out how we are going to break the inevitable capitalist cycle that drives those lovely greedy pig profits out of our business. What barriers to entry can you put into place now that buy you time to rake in more money for a longer period of time?

I suggest that complex emergent game mechanics are one mechanism that acts as a sustainable competitive advantage for new games. We've all been trained to appreciate typical stalwart strategies such as brand building and licensing. A title's game design, oddly enough, is rarely seen as a key business decision. It is one of those artistic details where ephemeral 'quality' matters, but has little impact on the bottom line. What if picking the right class of game mechanics could result in the creation of defensible franchise that profited your company with profits for decades?

The naive look at the roll of game design in business
Many game developers imagine that inventing a great new game is enough. However, with most modern game designs, the core game mechanics can be duplicated relatively easily. There are fewer moving parts and their impact on the overall gameplay is clearly defined. Once there is a proven working example of the game design, the barriers to entry are quite low. Within a couple of years, consumers witness dozens of clones clogging the market. This is known as the "genre gold rush."

In a market where prototypes are often more effective than design documents, releasing a typical game is like hand delivering a blueprint of your entire company’s formula for success to the doorsteps of your competitors.
  • Blizzard stole the RTS crown from Westwood (who is now dead as an independent company)
  • Everquest stole the US MMORPG crown from the UO team (and Blizzard in turn stole the crown again with WoW.) The original UO team is now marginalized.
  • The various Sly, Ratchet and Jax titles now own the 3D platformer genre. Nintendo, with their original Mario 64 franchise, is rarely seen. This ‘innovate and move on in the face of competition’ is arguably a successful business strategy for Nintendo, but it still leaves a remarkable amount of profit on the table for competitors.
Wouldn’t it be nice to cut this cycle off at the knees? As a game developer, you ideally want to create a new genre and milk it for the next ten years without the threat of outside competition.

How emergent gameplay results in a sustainable competitive advantage?
This is exactly what has happened with GTA, the Sims, Oblivion and small number of other titles. By investing in a complex sandbox gameplay system, they’ve created a strong barrier to entry. Typical game development companies that thrive on cloning the works of others can’t get their heads around the formula. The reasons why the barriers are so strong is a fascinating lesson in the failings of traditional game design techniques.

Every post mortem that I’ve seen for titles with strong emergent gameplay in an open ended playground like environment discusses the long, convoluted development process. The Sims languished for years as Will Wrights personal project and originally was going to be an architecture simulator. GTA at one point didn’t have cars and involved killing zombies. NetHack has been in development for decades with the community adding quirky mechanics in a haphazard fashion to the system.

Some common themes include
  • Use of iterative design to polish and improve as the design goes
  • Openess to big design changes well after the typical preproduction stage.
  • Layering multiple unique gameplay systems on top of one another to form a complex choice space for the player to explore
  • Long development cycles that encourage the ‘ripening’ of new game design concepts.
These successful best practices also introduce the following entry barriers to traditional ‘clone and polish’ companies:
  • Design risk: The existence of so many different systems interacting in intricate ways means that simply cloning the mechanics exactly rarely results the same emergent behavior. There is an element of the butterfly effect involved. A minor difference in the city generation algorithm combined with a small change in car handling physics and certain types of jumps and stunts become highly unlikely. So the chances of your title containing identical moments of ‘fun’ as the original are highly unlikely.
  • Process and Team barriers: Initial versions of playground games are almost always developed using highly iterative, prototype focused processes. Many teams do a small amount of prototyping early on their development, but they are not set up or trained to manage an iterative process over the entire length of the project. Teams trained on “Plan and then Execute on a Production Line” often fail to have the personalities or experience to successful carry out an extended “Prototype, Riff, Critique, Expand” process.
  • Risk adverse publishers: Iterative design is messy and highly frightening to most risk adverse publishers. The metrics used in the industry today are such that when a project with highly emergent gameplay is meandering towards a destination, it is very likely to be cut. No one likes hearing about major game changes months before release, but that is how these emergent game systems evolve. “Oh, btw. We added a new driving system.” The publisher will inevitably ask “Why can’t you add three more levels exactly like the existing ones, render a great box shot and just ship it?” If the standard formula doesn’t work, then the game must be a bad egg.
It is a rather vicious cycle. Companies that look at cloning a popular genre tend to use risk adverse best practices like data driven development. Their goal is to reduce risk through upfront planning and detailed execution of the plan. These techniques are the opposite of what you need to build a new playground game. In iterative development, you are constantly learning from the emerging gameplay as it evolves on a daily basis. You tweak, evolve, build a little more until you have an enjoyable organic experience.

However, when the team judges the progress of a game based on how well it sticks to the production plan, they are often blind to finding and nurturing the magic moments that make a playground game function. The title almost inevitably suffers from an unexpected case of ‘crappiness.’ With the release at risk, a crack down by upper management ensues, often involving more detailed planning. These are ‘sane, reasonable’ best practices smother the processes necessary to create and balance a playground game. By trying to reduce risk, they actually increase their risk of market failure.

Benefits entry barriers
Not having competition from the clone-meisters of the world has strong benefits for a company.
  • Time at the top: Obviously having a successful title that people love allows you to release a sequel. Without competition, that sequel is very likely to be a genre king. All the press, word of mouth and pent up demand from previous players translates into a much larger swell of people purchasing the newest top title in the genre. If you have the only option, you reap the benefits. Having a third or fourth uncontested genre king in a row results in major cash in your bank account.
  • Brand: Without competition, you have lots of time to establish your brand. The first Elder Scrolls title was a mild PC success, but nothing to write home about. Over the past decade, they’ve managed to build a substantial brand following that will be quite hard for others to erode with competitive products. If Oblivion II and an exact clone of Oblivion II were released simultaneously, Oblivion would blow away the competitor in terms of sales. At this point, the brand has established market power.
  • Team empowerment: Since the team dynamics are so important to the success of the franchise, playground teams generally are given great creative freedom by the publishers. Such teams are literally golden gooses that make or break the bottom line of those that are lucky enough to have them in their development stable. Designing what you want, when you want is not such a bad thing.
Problems with creating playground games
All this sounds great, but there are some more big reasons why more people aren’t making playground games. The obvious ones involve the same barriers to entry the stymie the clone makers. However, even when you are doing iterative development there is a high risk of failure. I’m reminded of Frontier, one of the sequels to the great playground title Elite. This was a game that had a lot of things going for it: brand, original developers, and proven concept. But it ended up suffering horribly in the market for a variety of reasons.
  • Bugs: Complex systems introduce crazy amounts of bugs. Stability is often an issue unless you architect the system to deal with rapid design changes.
  • Indeterminate development cycles: It is often difficult to know when to stop. There is always something new to add so development could literally go on for years. Reducing scope and remaining open to change is a hard balancing act for many teams.
  • Team dynamics: More than any other type of game, who is on the team matters. If your team doesn’t gel, the open opinion rich work environment will result in destructive conflict, not creativity.
The result is that many playground games fail. Very few have the resources or the right people on board to wade through the difficult times that inevitably crop up. Each one is a unique creative adventure that is just as likely to be stoned by an unexpected cockatrice as it to produce the Amulet of Yendor.

Conclusion
We live in a turbulent industry where developers move from team to team and project to project at an alarming rate. Stability lasts as long as your teams signed titles development and then all bets are off. As developers, we generally do not understand how to carve out a sustainable niche in the marketplace and build a lasting company around that niche.

Yet, companies are doing just this. They’ve built their own sustainable niches by inventing new genres that are easy to defend against competition. Bethesda, after many years of hard work, has a franchise that will feed them for many years to come. The old DMA, albeit much changed from those early days, still has years of GTA left in them. Will Wright, a quirky guy building quirky games, is in the position to infect much of EA with some of his iterative prototyping methodologies. He has shown the world’s biggest publish how to build a competitive advantage that was based off game design, not licensing and branding.

If there is one take away from this article, it is that building playground games is a sound business strategy. Building playground games is not easy and very often, you will fail. You need to build your teams around iterative design. You need the right people on board and the long runway necessary to ripen your title. Spending a decade honing a single concept is not uncommon. However, if you get everything right, you will have created a long lived, stable source of greedy pig profits.

There is the bigger picture here as well. If you pull it off, you've generated stable employment for your team. They don’t have to move across the country every couple of years to take up a new title. They don’t have to pull their kids out of school or take a job that isn’t what they love in order to avoid selling the house. Your team gains a small amount of freedom from the rat race.

This is a good goal and there are admittedly lots of ways to reach it. Playground games are one more sustainable competitive advantage to keep in your quiver. They can help you do what you love and still have a good life doing it.

Take care
Danc.


Appendix A: Lessons from Grand Theft Auto
Here are some quick notes I jotted down after looking through the post mortem that Edge did on GTA. Here are a few lessons that can be gleaned from Grand Theft Auto. I've witnessed many of these personally and also seen the same patterns pop up in other playground game post mortems.
  • Sticking with the playground concept
  • Slack: Time to experiment
  • Permission to experiment
  • Collaborative
  • Iterative game design
  • Willingness to trash the setting
Sticking with the playground concept
“They wanted something more convincing, more immersive. ‘Living’ environments seemed to be the answer”

The big concept driving GTA was to build a ‘living city’. The further they went down the path of development, the more this playground metaphor became the driving theme of the title. Instead of reducing the experience to a series of canned levels, they opened the world up to an entire city and made the mission optional.

If you are making a playground game, don’t give up on the concept because it is difficult and risky. You toss your competitive advantage out the door the moment someone says “Maybe we should split the game up into easy-to-manage linear levels.”

Slack time
“But, fortunately, Dailly had been working on another, unrelated idea.”

There are two types of risk. The first is execution risk, which is the risk that a project will not be completed. The second is design risk, which is the risk that you’ll complete the wrong project. Most companies focus on reducing execution risk by having tight schedules and detailed planning. Unfortunately, this is often like driving a fast car in the wrong direction.

Design risk requires the time to generate new, potentially better ideas. If you are driving your team 80 hours a week to check off the 2045 little items on the Gant chart, they will never have the time to come up with something better. It just won’t happen.

They need slack time to play and come up with their own ideas.

Permission to experiment
“If we’d stuck to the original design, GTA would have flopped.”

The other aspect of design risk is an openness to incorporating new ideas into the product.

If you don’t have the ability add new stuff to the project, the team’s creative spring will dry up and the design risk for the product will shoot through the roof. In GTA’s situation, not only was the team onboard, but the producer was comfortable with the experimentation as well. The team was given another 12 months to get the title right.

Collaborative design
“The one thing that everyone agrees on is that they didn’t make Grand Theft Auto, but that’s not strictly fair: the other thing that everyone agrees on is that everybody made Grand Theft Auto.”

Often, a purely production oriented studio will rely on a command and control style management structure with strong role boundaries in place to prevent any disruptive discourse. Suggestions are required to go through proper channels with titles such as ‘Lead Designer’ or ‘Producer’ acting as strong gatekeepers that prevent most ideas from making it into the project. By ensuring that individuals own decisions, you guarantee that there is someone to blame if things get out of hand.

You end up with a carefully structured dance of petitioning the higher powers in order to ensure that a feature makes its way into the development pipeline. The nobility of the team that best plays the political games has the most say in the creative process. Most of the effort goes into navigating the system or complaining about the system instead of thinking up new ideas. In order to reduce distractions, many managers inadvertently implement rules that disable the creative engine of the team.

An alternative is the use of small teams that openly share ideas and are jointly responsible for making sound decisions. The team takes ideas from any source and builds upon them to reach a superior solution. To keep the creative engine burning hotly, everyone must be able to contribute to the design.

“I sat through heated design meetings, which resulted in tears. Screaming, punches and arguments were common.”

When you are practicing collaborative game design, a passionate team must figure out processes for embracing and dealing with substantial ambiguity. Successful team strategies for dealing with conflict will often result in confrontations and arguments. Ideally, you get passionate conflict that causes people to think through, question and defend their ideas.

There is no one answer to dealing with this inevitable conflict. Each team ends up setting its own norms and the teams that gel successfully are another difficult-to-replicate competitive advantage.

Iterative game design
“One of the programmers came up with a routine that had pedestrians following each other. This led to the idea of a line of Krishnas following each other down the street and then, once we had all experimented with ploughing through them all in one go, the Gouranga bonus became an obvious addition.”

The core of the design process for GTA involved an iterative prototyping cycle
  • Try out an interesting idea
  • Ask “Are there any interesting situations that the player finds themselves in?”
  • Build reward system around the interesting situations. Expand promising systems to allow the player to experiment in those areas further.
Again, this is quite different from the typical design bible that drives most production oriented companies. The team explores, prunes and expands upon the gameplay space instead of following a rigid production schedule.

Willingness to trash the setting
“Many ideas and approaches were bandied about, some quite different to the final game”

Often games are pitched with a particular setting such as a “Vampire action game.” Changing the setting requires big changes to the design document, the plot and the art resources. By risk adverse publishers this is typically considered a Very Bad Thing.

One of the fascinating things that happens with iterative design is that the setting changes as you go. GTA switched settings from being a gang warfare title to a zombie game to a car jacking convict game. As you try out new mechanics, they map onto different settings. Since the focus is on polishing the game mechanics, setting takes a back seat. As your game mechanics evolve throughout the game, so does the setting. The results are often unexpected and quite delightful.


References
The Making of Grand Theft Auto
http://www.edge-online.co.uk/archives/2006/06/the_making_of_g_1.php

Playground worlds
http://onlyagame.typepad.com/only_a_game/2006/06/early_playgroun.html

Game sales
http://en.wikipedia.org/wiki/Computer_and_video_games_that_have_been_considered_the_greatest_ever

Definition of the term ‘genre’
I refer to game genre as a group of games having similar game mechanics. Unlike movies or books, two games in the same genre can have completely disparate settings but still share the same mechanics. For example, Starcraft and Warcraft both use RTS game mechanics and therefore in the same RTS genre, despite one having a fantasy setting and the other having a science fiction setting.