When the Australian game development industry collapsed, Tantalus CEO Tom Crago had to try to make the best of a bad situation -- and he has. While major independent developers like Krome shuttered, and while publishers like EA and THQ shut down the studios they owned, Crago's Tantalus has splashed out into new areas.

Founded in 1994, the company had reliable work-for-hire contracts... until it didn't. But that hasn't stopped Crago. In fact, the developer is responsible for the upcoming Wii U port of Mass Effect 3, and has also signed an original title, Funky Barn, for the console. Need for Speed Shift 2 for iOS was also a Tanatalus project.

In this interview, Crago explains how he has been able to shift with the times -- starting with splitting his business into two studios with different names to better connect with gamers, exploring the mobile market, why he's got three Wii U projects in the works, and how he's treating his developers differently as the realities of the business rock the studios around him.

Tell me a little bit about Straight Right. I'm familiar with Tantalus but what's the deal with this newer label?

Tom Crago: We started the Straight Right label last year to sit alongside Tantalus, which is one of the longest-established game developers in Australia. Tantalus has been a real survivor, founded in 1994 and working on pretty much every major platform since our first game on SNES.

Like most developers, we went through some difficult times a few years back, and that forced me as the owner of the business to take a fairly critical look at what we were doing. One of the things I realized was that we had no real interface with the people who were playing our games. The Tantalus name was known and valued by publishers, but we were almost exclusively work-for-hire, and once we'd delivered the gold master, that was the end of the process.

So I wanted to build a label for our core and digital releases that stood a better chance at connecting with gamers. Straight Right is our attempt at that, and we're just getting started. We still use the Tantalus brand for our kids' and casual titles, and the two entities share a common pool of technology and resources at our studio in Melbourne.

Need for Speed Shift 2: Unleashed

You also have a background with iOS development. How has your experience with touch screen mobile devices influenced Wii U development and design? How was that transition?

TC: Our first title as Straight Right was Need for Speed Shift 2 with EA Mobile last year. That was our first iOS game too, although as Tantalus we'd done a lot in the racing space, including MX vs ATV, a couple of Cars games, and Top Gear Rally, which Nintendo published on [Game Boy Advance].

In terms of what we're doing on Wii U, that technology and acumen has also come from the Tantalus side of the family. Of course, with Mass Effect 3 on Wii U, we're heavily leveraging the work done by BioWare. We're very proud of the Wii U-specific features that will ship with the game, but a large part of our assignment is to replicate the ME3 experience on Nintendo's new console.

Tantalus actually began its life as a conversion house, porting arcade titles to Saturn and PlayStation. We worked with Sega Japan and Midway on games like House of the Dead, Area 51, and Manx TT Superbike. More recently we did Unreal II for Xbox. So there's some history there, and I guess it was that track record as a technology company that persuaded our friends at BioWare that we would be a good fit to bring their game to Wii U.

What are your thoughts on the Wii U, after working on it extensively?

TC: We have a long history of working with Nintendo platforms. And we really like the Wii U. Right now we have three titles in development, two of which will ship in the launch window. Obviously it's a tense time right now, as Nintendo iron out the final wrinkles before launch, but the experience for us to date has been very positive.

It's a powerful machine, easy to work with, and we genuinely feel as though the GamePad enhances the experience, especially on games like Mass Effect. The fact is, when you play Mass Effect 3 on Wii U, you'll be using that controller in a very different way to how you might have played the game on PS3 or 360.

The challenge for us, of course, was to make that control experience better and more intuitive. I'm confident we've done that. The fact that you can play the whole game on the GamePad is pretty cool too.

How did you end up doing so many Wii U titles?

TC: It's funny the way these things work out. Obviously we pursued the Mass Effect opportunity extremely aggressively. Once we signed that deal and started working on that game, we became pretty immersed in everything Wii U. We had a couple of other projects on the go, but ME3 was really the focus. And naturally, you're playing around with the hardware and you start to think about other ideas you have that might lend themselves to the console.

So we decided to put a bit of our own money into bringing something original to Wii U. That game, Funky Barn, has just been announced and will ship with 505 in the launch window. More recently Straight Right signed another deal for a Wii U title. It's another big one, and will ship in 2013. I expect it will be announced later this year.

Can you explain a bit more about how you ended up with a deal to develop Mass Effect 3 on Wii U? How is development coming along, and what have been some design challenges?

TC: I love BioWare and have always wanted to work with them; those guys are my heroes. Nintendo and Epic were also involved in the early discussions -- both companies with whom we have a close relationship. So after a couple of months of relentless pressure on my part, I finally convinced BioWare that we were the right choice to nurse their baby. We spent a lot of time talking them through how we would approach the project and I suppose we were able to point to a few past successes. It was a real coup for us.

The game is pretty much done. We're fixing bugs at present, and applying that final layer of polish. In terms of design challenges, the biggest challenge, to be honest, was not screwing it up. It's a great game on its original formats and we needed to ensure we didn't break anything.

So from our perspective we turned to the hardware and asked ourselves what we could do with the Wii U controller that might elevate the gameplay experience. We handled the thing gently, and I feel like the stuff we've implemented gels extremely well. We made the power wheel interactive along with the level maps, and you can give orders to squad mates via the map on the GamePad.

You guys have been around for a long time, maybe it's fair to call Tantalus "old school." But in a way, Wii U and iOS aren't exactly "old school" platforms. How has that transition to new platforms gone for you guys, particularly as a developer in Australia, where devs have been struggling?

TC: We went through a tough period here in Australia. I think most people know that a lot of studios closed, both locally-owned and subsidiaries of publishers like THQ. The tide has turned though, and we're seeing new shops open all the time, increasingly focused on mobile.

From my perspective, I definitely waited too long to make that transition. Things were going well for us and, like a lot of people, I figured that business model was sustainable. At the same time I was looking at what my friends were doing, guys like Rob Murray at Firemint and Shainiel Deo at Halfbrick, and admiring the strides they were making into what, for me, was still a fairly confusing space.

My response was to try to buy those companies, but of course those guys were far too smart, and both studios went on to much bigger things. So eventually, and really in a quite conservative way, we started to change what we were doing and confront the new world.

You've also mentioned restructuring your business, rethinking your model, and interfacing with your staff different. Could you explain that more in-depth?

TC: In the space of a year, a while back, we went from being very profitable to losing a ton of money. This was a huge affront for me, as every one of my 12 years in this industry I had managed to turn a profit, and I had never had to let one of my developers go because I couldn't afford to pay them.

But then of course there was this perfect storm, with the financial crisis and the industry itself transitioning. And I was a total idiot. I figured we could ride it out, that I'd be able to sign new deals as I always had, and that we would be able to sustain our headcount. I felt a huge sense of responsibility to the people working for me, and then you have pride and ego playing their part in the process as well. And like a lot of studios, we held on for far too long.

I'm happy that our guys were able to stay employed for longer as a result, but ultimately you don't do anyone any favors by pretending the world hasn't changed. At the end of the day we were able to avoid massive layoffs, and there was no single "dark day" where we had to let a heap of people go, but over the course of a year our headcount reduced and absolutely there were some really rough days where I had to tell very talented people that we could no longer support them.

So in response to this I spent a lot of time thinking about how I could do things better, from a studio perspective, and I made a lot of changes. Fundamentally, and I realize this is a little controversial, I came to the conclusion that in an industry as volatile as video games, it's impossible to put your hand on your heart and say to any of your developers that their job is going to be secure for the next five or 10 years. I feel like anyone who does that is kidding themselves, and so I determined to be much more transparent about our business, both in terms of its challenges and its successes.

We pay our people more than before, but they know that continuity from one project to the next is dependent upon me finding another project, either something we sign or something we fund ourselves. So far we've managed to do that, and in fact we're hiring, and I feel as though being more open and realistic about the way this industry actually works is the right way to go. And our guys have responded really well to it. In fact, a lot of what we've done was at their suggestion.

Another thing I decided to do was acknowledge that in asking our people to wear their share of the downside of the business, they should also be entitled to some of the upside. Because of course sometimes you have a game that does really well. So we have an arrangement now where every year I share 20 percent of our profits with our staff. This is in addition to other bonuses and it enables me to be absolutely up front with everyone about how our companies are performing. I feel like it's a pretty fair system.