The most important question in video game development has nothing to do with making video games. Itâs a simple question that has stymied artists for centuries and put an end to countless creative endeavors: How are we gonna pay for this thing?
In early 2012, Feargus Urquhart, the CEO of Obsidian Entertainment, found himself unable to come up with an answer. Obsidian, a relatively small game development studio based in Irvine, California, had spent the past year working on a fantasy role-playing game (RPG) called Stormlands. Theyâd never made a game quite like this. It was weird, ambitious, and, most important, funded by Microsoft, whose game producers had decided they wanted a massive, exclusive RPG to launch alongside their next console, the Xbox One. Around fifty of Obsidianâs ~115 employees were working on the game, which meant it cost a lot of money. Which was fineâas long as Microsoft kept sending checks.
Urquhart had grown accustomed to financial pressure. Heâd been working in games since 1991, first as a tester at the publisher Interplay, then as a designer, then as the boss of the powerhouse developer Black Isle Studios, which a suddenly cash-strapped Interplay dismantled in 2003. That same year, Urquhart founded Obsidian with a few other Black Isle veterans, and they quickly learned that running an independent studio was like juggling dangerous objects. If they didnât have a new contract ready to go as soon as the last one had finished, they were in trouble.
Urquhart has thin, light brown hair and a stocky build. He speaks quickly, with the authoritative tone of someone whoâs spent decades pitching games. Over the years heâs played a part in creating some of the most beloved RPGs in gaming, like Fallout and Baldurâs Gate. While speaking on panels and to the press, heâs always candid about the difficulties of running an indie studio. âThe life of an independent developer is, every morning you wake up wondering if your publishers are going to call and cancel your games,â Urquhart said. âI wish I was more of a sociopath or psychopath and I could just completely ignore the fact that thereâs this guillotine pointed at my neck all the time. But I canât. And I donât think a lot of developers can, and unfortunately thereâs that constant threat, and that threat is used a lot. Itâs used all the time.â
On the morning of March 12, 2012, Urquhartâs cell lit up. It was the Stormlands producer at Microsoft, texting to ask if Urquhart could hop on the phone. Right away he knew what was about to happen. âItâs the text from the girlfriend whoâs going to break up with you,â Urquhart said. âI just got on the call knowing what it was going to be.â
Microsoftâs representative was frank: they were canceling Stormlands. Effective immediately, fifty of Urquhartâs employees no longer had work.
The producer didnât say why Microsoft was axing the game, but it had become clear to Obsidianâs top staff that development was not going smoothly. There was an inordinate amount of pressure, not just to make a good RPG, but to make a good RPG that could sell Xbox Ones. Stormlandsâ ideas had felt disjointed to Obsidianâs staff, and, at least from Obsidianâs point of view, Microsoftâs expectations were impractical.
As some former Stormlands developers described it, the game was full of ambitious âhigh-levelâ ideas, many driven by Microsoftâs vision of what should be in an Xbox One launch game. The Xbox One was all about the Kinect, a motion-sensing camera that could recognize full-body gestures, so what if Stormlands let you use Kinect to haggle with shopkeepers? The Xbox One would support âcloud computing,â allowing each playerâs console to interact with Microsoft-owned computer servers, so what if Stormlands had big, massively multiplayer raids that would let you meet up with other players on the fly? These ideas all sounded interesting on paper, but it was unclear whether any of them would work in a game.
Different people who worked on the game point to different reasons for Stormlandsâ ultimate demiseâsome say Microsoft was too ambitious; others say Obsidian was too petulantâbut everyone agrees that by the end, the project had gotten unwieldy. âExpectation after expectation after expectation got piled onto the game,â Urquhart said. âIt turned into this thing that everybody was scared of. I think in fact even we were scared of it.â
Urquhart hung up the phone, trying to figure out what this would mean for his company. The standard burn rate for a game studio was $10,000 per person per month, a number that included both salaries and overhead costs, like health insurance and office rent. Using that number as a baseline, keeping all fifty Stormlands developers employed would cost the studio at least $500,000 every month. By Urquhartâs count, Obsidian had already put $2 million of its own money into Stormlands on top of what it had received from Microsoft, and the company didnât have much left to spare. With only one other game in developmentâSouth Park: The Stick of Truth, which was having its own financial crisis thanks to the slow meltdown of its publisher, THQâObsidian just didnât have the cash to keep all those people employed.
Feargus Urquhart gathered Obsidianâs other four owners and went to a Starbucks down the road, where they spent hours huddling over a big list of names, trying to figure out whom to keep and whom to let go. The next day, Urquhart called an all-hands meeting. âIt started out fine,â said Dimitri Berman, a lead character artist. âPeople were joking around. Then Feargus came out all dead looking.â
Choking back tears, Urquhart told the company that Microsoft had canceled Stormlands and that Obsidian would have to lay people off. The staff trickled back to their desks, wondering which of them were about to be escorted out of the building. For hours, they all just had to wait there, nervously watching as Obsidianâs operations guy prepared severance packages for those who hadnât made the cut. âHe comes around with a manila folder, and he walks around, and he tells you to pack your bags,â said Adam Brennecke, a programmer on Stormlands. âAnd he escorts you off the premises and he sets up a time when you can come back and get your belongings. Heâs just walking around and youâre thinking, âDonât come into my office, donât come into my office.â Youâre watching him and then you see and youâre like, âFuck, there goes one of my friends.ââ
By the end of the day, the company had been gutted. Obsidian laid off around twenty-six of the people who had worked on Stormlands, including one engineer who had been hired just a day earlier. These werenât incompetent or inadequate employees; they were beloved coworkers. âIt was fucking terrible,â said Josh Sawyer, the director of Stormlands. âIt was horrible. It was probably the worst day of my career. . . . It was the biggest layoff I had ever seen.â
Since 2003, Obsidian had survived as an independent studio, bouncing from contract to contract as its staff took freelance work to keep the lights on. The company had been through brutal cancellations beforeâlike Aliens: Crucible, a Sega-published RPG whose demise also led to big layoffsâbut none had hurt this much. None had left Feargus Urquhart with so few options. After nearly ten years, those remaining at Obsidian were starting to wonder: Was this the end?
Four hundred miles north, as Urquhart and his crew tried to recover from catastrophe, the staff of Double Fine were popping champagne. Double Fine, an independent studio in San Francisco led by the illustrious designer Tim Schafer, had just found a way to revolutionize the video game industry.
For decades, the video game industryâs power balance had been simple: developers made games; publishers paid for them. Although there were always exceptionsâventure capitalists, lottery winners, and so onâthe bulk of video game development was funded by big publishers with deep pockets. Publishers almost always had the leverage in these negotiations, which could lead developers to agree to some rigid deals. For the role-playing game Fallout: New Vegas, for example, the publisher, Bethesda, offered Obsidian a $1 million bonus if the game hit an 85 (out of 100) on Metacritic, a website that aggregates review scores from across the Internet. As the reviews started pouring in, the Metacritic number swung up and down several times before finally settling at 84. (Obsidian did not get its bonus.)
Traditionally, independent studios like Obsidian and Double Fine had three ways to stay afloat: (1) finding investors, (2) signing contracts with publishers to make games, or (3) funding their own video games with war chests theyâd hoarded via options one and two. No decent-size indie studio could survive without relying at least partly on money from outside partners, even if that meant dealing with cancellations, layoffs, and bad deals.
Double Fine had found a fourth option: Kickstarter, a âcrowdfundingâ website that had launched in 2009. Using this website, creators could pitch directly to their fans: You give us money; weâll give you something cool. During Kickstarterâs first couple of years, users of the site were hobbyists, hoping to earn a few thousand dollars to shoot short films or build neat folding tables. In 2011, however, the projects started getting bigger, and in February 2012, Double Fine launched a Kickstarter for a point-and-click adventure game called the Double Fine Adventure.
It shattered every record. Previous Kickstarters had been lucky to break six figures; Double Fine raised $1 million in twenty-four hours. In March 2012, just as Microsoft was canceling Stormlands, Double Fineâs Kickstarter concluded, having raised over $3.3 million from 87,142 backers. No other crowdfunded video game had earned even a tenth of that. By then, Obsidianâs staff were all paying attention.
With Kickstarter, a developer wouldnât have to rely on any other companies. Independent studios wouldnât have to sign away the rights to their intellectual properties or give up royalties to big publishers. Instead of pitching to investors or executives, game developers could make a case directly to fans. The more people they could get on board, the more money theyâd make.
The crowdfunding revolution had begun.
Back down in Irvine, Feargus Urquhart and Obsidianâs other co-owners started talking about their next move. They still had South Park: The Stick of Truth in development, but they knew that wasnât enough. If South Park ran into more trouble, or if they couldnât find a new project when it was over, the company would simply run out of money. Obsidian needed to diversify. And even after laying off so much of the Stormlands team, the studio still had two dozen developers who needed work.
Thanks to the Double Fine Adventur...