Three items before we get into the real discussion.
ITEM: In 2010, Texas Gov. Rick Perry, in between campaigns for U.S. President, released a 34-second campaign video, “Texas: Open for Business.”
In the video, Perry promotes Texas' rising power to attract business and job opportunity, taking credit and touting his policies as part of that success. The first time Perry appears in the video, he's walking between aisles of cubicle workers that savvy readers might recognize are working on a video game. At 0:08, Perry leans over a marketing team member's shoulder, and you can see the poster for the project being described: Star Wars: The Old Republic.
Yes, Perry was at the BioWare Austin offices to shoot a campaign video about how great Texas was for job creation. SWTOR was one of the most expensive video game projects ever to ship, with more than 400 people working on it in some capacity when it shipped in November 2011. Most of them were in Austin.
Within six months of launch, more than 150 people were laid off, though most outside Austin didn't hear about it until executive producer Rich Vogel confirmed his departure in July 2012.
Texas: Open for Business, but still right-to-work. Also, MMO live teams don't need as many people after launch.
ITEM: U.S. 183, one of the main through-ways crossing northwest to southeast through Austin, has many office buildings overlooking the highway. One of them, a big black wedge located on the west side of the highway just south of the Arboretum interchange with Loop 360, has “ZeniMax” across the top, on both the north- and south-facing sides. It's got a white background and is lit up at night.
ZeniMax is the most prominent video game industry logo on display in Austin today. It's unlikely that most people driving past it know what it means any more than the other company logos at the tops of buildings along U.S. 183. It's also got a lot less branding as the parent company of Bethesda, makers of the Elder Scrolls and Fallout open-world role-action games.
In Austin, the building houses Arkane Studios, which began as an independent company but sold to ZeniMax in a deal to develop Dishonored; BattleCry, a new studio founded by Rich Vogel (see above) and many ex-BioWare Austin developers; and Zenimax Online offices that support the home office in Maryland that makes Elder Scrolls Online.
In February 2010, two years before the ZeniMax logo went up on the building, known in the complex as “Echelon II,” an angry aviator intentionally crashed a single-engine aircraft into Echelon I, the building immediately north of Echelon II. At the time, Echelon I housed federal offices for the Internal Revenue Service, and the pilot was angry about his taxes. The pilot and one IRS agent were killed, and the building was repaired by the end of 2011. The IRS has since moved elsewhere in Austin.
ITEM: Within 1 month of taping (NOT) THE END OF THE WORLD, the KLRU show I mentioned in the previous article, two studios in Austin closed. One of them was represented in the show: Vigil Games' parent company THQ declared bankruptcy and sold off its properties.
The other studio wasn't part of the show. Epic Mickey: The Power of Two was also released in 2012, but representatives from Junction Point's parent company Disney Interactive declined to participate. Junction Point was officially closed Jan. 29, 2013, one week after THQ declared bankruptcy and Vigil Games closed.
Both studios had been founded independently and entered agreements with publishers that led to their buyout and eventual closure.
There are lots of places to make a game in Austin, but it wasn't always the case. Ten years ago, between 2004-5, Austin's game-dev heart got cut out.
Origin Systems, shut down by Electronic Arts, its parent company.
Acclaim declared Chapter 7 bankruptcy and shut down what had been Iguana Entertainment, founded by Jeff Spangenberg, but had become Acclaim Austin. Employees came to work to find the doors padlocked by the landlords. The rent hadn't been paid.
Digital Anvil, founded by ex-Origin managers Chris and Erin Roberts and Tony Zurovec, shuttered by its parent company, Microsoft.
Ion Storm Austin, also founded by an ex-Origin manager, Warren Spector, shut down by its parent company, Eidos.
Between those four companies, 700-800 jobs were lost, at a point when there were (best guess) about 1,600 people making video games for money in Austin.
Austin is not immune to boom and bust. Every time there's a major layoff, either due to studio closure or not having another project ready to go when the first ships, another enterprise is ready to start up. In 2005, it was BioWare Austin, and also Midway, which had purchased Inevitable Entertainment, a company founded by ex-Acclaim executives. (Midway declared bankruptcy in 2007, owing in no small part to the office they had chosen to occupy in Austin – but that's another story.)
It's easy to blame great expectations for less than successful games for the cycle, or on the supposed incompetence of local managers, and those aren't blameless. But another factor is the notion that to make a “big” game, people in Austin have to sell their company to someone not based in Austin. Often, not even in Texas.
Why is this? Well, it's not unique to video games. In 2012, Australian company Atlassian bought Austin-based HipChat, and established an Atlassian office in Austin. Less than a year ago, Kentucky-based Heaven Hill Brands bought Austin-based Deep Eddy Vodka.
Austin prides itself on “startup culture”. Austin Startup Week is well-promoted, and startups from within and outside of Austin will come here for SXSW, especially the Interactive section, for hype purposes. In May 2013, President Barack Obama visited Capital Factory, a software-as-a-service (SaaS) incubator located downtown at the top floor of Austin Centre. Further north, Tech Ranch Austin offers co-working and office space for startups, and several more co-working spaces have popped up around the city, including WeWork.
But what's the goal of a startup? I sometimes wonder how many products of startups couldn't have been made within the environment of an already-established company. The reply I usually get leads me to think it's a combination of reasons:
The attitude of the startup founders, who think they can do things better on their own and want to prove it.
The dis-incentive within established companies to foster new product creation in a way that motivates their employees.
The presence of investors who would rather buy in to new companies with less monolithic or varied purpose than established companies.
Brett Hurt, co-founder of Bazaarvoice and serial entrepreneur based in Austin, makes the argument in a 2013 blog post that Austin is “mostly stuck in a first-stage entrepreneurial mentality.” Instead of moving on to the phase of a company where a world-class product can be created, the company's novelty is celebrated, perhaps to the city's detriment.
Hurt argues that a lack of mentorship is a key to why Austin entrepreneurs can't move forward. He also argues a point I hear lots more often – the lack of capital.
There's money to be had in Texas (I think) but there are few who know how to get at it. There isn't a venture-capital tradition in Austin in the way there is across California, and more than a few startup game devs I've known on the search for money often get told they need to move to Cali to find it. But that would mean buying into Cali ways of thinking, which Austin folks would rather avoid.
Maybe the always-ahead, always-disruptive mentality of Silicon Valley isn't the way Austin wants to be, Hurt says, but that doesn't mean there isn't something to be learned from the Silicon Valley way.
Yes, Silicon Valley is decades ahead of us in terms of IPOs and the ripple effects felt from those. Mentorship is plentiful because there are just many more experienced people there - the entrepreneurial knowhow is decades ahead. And so is the capital. There is much more competition for it, and Valley investors have to really hustle to get in the best deals. So any given night in Silicon Valley you can go to a "teaching event" where an entrepreneur, investor, or group of them are presenting (trust me, I went to so many of these events when we lived there) - that hustle leads to more of those events, which helps more entrepreneurs think bigger - or second-stage - versus stay stuck in a first-stage frame of mind. And as discussed, second-stage outcomes produce more jobs and economic impact, which puts Austin "further behind" if you think about us "catching up".
So if we're talking about creative or technical-minded people who see an opportunity to make a new, special kind of software product, see little opportunity to get the job done at established companies but lack solid guidance about how to run a business that leads to that product being created and brought to market, we might be talking about people trying to make video games.
Texas is open for business, and there are plenty of game developers in Austin who would rather not move. Whole companies have been founded of people who used to work at Vigil and BioWare, just like there have been companies made of ex-Origin or ex-Acclaim devs. As long as there are talented people who don't want to move, there remain opportunities for leaders who can bring them together to make something great.
If only there were more leaders like that located in Austin who wanted to stay in Austin. The ones who could make the right deals, run teams well, and make sure the office rent was paid on time.
It's a good problem to have. I'll come back to that. Thanks for reading.