Bethesda's Sean Brennan Part One

For the past 12 months the key focus was Fallout 3, and only Fallout 3. We had a couple of other SKUs that we bought to market that we didn't really focus on. The issue in Europe was we were a new publisher, first of all. It was a big challenge because of the numbers we're expected to generate, and that the title deserved to generate, were quite significant. Even though we're well funded on the marketing side, it was a big fight on our hands to get this title in the top ten at Christmas time when you're competing with established franchises.

Fallout wasn't a franchise even though it's got the numeral, we perceived it as a new brand because the last Fallout product came out ten years previously, it was PC only and it wasn't necessarily a huge hit. So it was a big challenge to focus exclusively on that with a small team. Pleasingly, we did very well, and in the UK market to date we've sold through over 750,000 according to Chart-Track, and in Europe overall we're close to two million sell-through. That's some big numbers that we've managed to achieve on the title. What's particularly gratifying in the UK is that we've established relationships with all key retailers and the support we got from them was quite staggering.

Retailers were very, very welcoming, they went out of their way. Even the bigger companies like GAME, who didn't necessarily have to, were hugely positive and very supportive. If you look at what we achieved – the title went to number one, it was top ten hit. If you compare that to some of the other new brands in the market which didn't do as well, things like Mirror's Edge for instance, or Dead Space which didn't perform half as well as Fallout 3, and they were from one of the industry's top players, that was quite gratifying in a competitive market. Between the PS3 and 360 around Christmas there were around 15 titles that rated 90 or above, and retail only had to give us a small degree of support, but they went further than that.

I think Bethesda had a reputation for quality, and non-prolific in the number of releases. With Oblivion before Fallout, co-published with Take-Two and Ubisoft, I think that proved what we could do to a large degree. Fallout 3 was a continuation of that, they knew to expect the quality. But ostensibly we were a one product company and we got a lot of support.

Going forward the challenge for us is growth, and any company will say that, but we were zero a year ago. After a good year last year, this year we're gong to continue that and it's about expansion. We're expanding the team here – particularly on the publishing side. We've got 12 members of staff here at the moment and that figure is going to go up to about 20 people by the end of the year, and that's mainly in publishing.

But then the next challenge is to expand our presence outside the UK. The traditional pattern for a publisher to get in to Europe is to establish a UK office and then move to France and Germany and sell direct in those markets. That's not our plan, we're not following that strategy. The most important thing is to manage the marketing and PR of our products in every territory. So even before that, we're extensively involved in that process in every territory. We had local PR agencies, we had local media buying other territories, directly from here. The next stage of that process is to have marketing and PR personnel in those territories. When I was at Virgin we had 69 people in the German office and then reps on the road selling too. That's a huge overhead, and when you do that what tends to happen is you have a product release schedule, but product tends to slip, and quite frankly, shit happens, so you have this huge overhead that you have to cover. You go out and you try and sell distribution deals, and you try and pick up titles, and that pick-up mentality is a kind of anathema to a large degree. We don't want to replicate that model, we want to have a direct control over our marketing and PR in all the major territories in Europe.

What we would do, for example, is have a French office in Paris, and have a few marketing people there to control the whole process, to book media directly, PR and promotions etcetera, and then work through a distributor in that territory who will sell directly to retail. Even thought retail has become a lot more centralised in most European countries, you still need a fairly good team of around 10 people in sales and support for that sort of infrastructure to be successful. For us, the key thing going forward is product quality, and then it's down to the marketing and PR fundamentally. From a sale perspective, why reinvent the wheel? One day we may have to when we grow so large, but for the next few years, it's key to work with a distribution partner and establish long-term relationships.

It's more a function of the markets themselves and our type of product. Fallout 3 was very strong in Anglo-Saxon markets – Germany, and the Eastern markets – but it was also quite significant in the Italian market. It's more about the preferences of territories against the product line we're coming out with. Going forward we're still going to focus on what we're doing best, which is 360, PS3 and PC, triple-A products aimed at a more mature market place. We will make a couple of bets in other spaces, we'll make a couple of bets in the Wii space because we think that has huge potential for the right sort of product. But we must have that quality threshold there, that's really important to us. Anything we produce we want to be reviewed well, because that's our heritage.

One area we have flexibility is on the product side of things. We've been looking for product for Europe only. There's going to be one particular deal that we're going to be announcing soon on that side. Again, just to qualify the point, we don't need to pick up titles just to fill holes or fill gaps to generate revenues, because quite frankly we've got a load of money in the bank. We don't need to be constantly generating revenue gratuitously. Strategically, if we look at opportunities where we can publish titles in Europe that are high quality, if the rights are only available in Europe, we'll do that – and there are some deals we'll be announcing on that side of things soon. And then in general terms we have to take a global view with big brands. Our marketing strategies will be broadly similar on a global basis. It's that old cliché, think global, act local. We wouldn't take a different approach on marketing or price, because we're operating in a global village.

We need to grow as a company, and that's why we raised USD 300 million 18 months ago. And it's something we need to show a return for our investors over the next few years. But we'll grow in the right way. So far, in terms of the European development community, we really want to take that to the next level. We've signed the Splash Damage deal, and its first title with us is going to be shown at E3. We're not announcing the name yet, but it's a first-person shooter. That's a product that we believe is a genre-breaker, it's a real killer app. From a quality perspective we're pitching that along the same lines as Fallout 3. We've kept it under lock and key, there are so many innovative features in there we don't want to reveal them too soon. We've spent significant resources developing the title. And that's a great example of our European work.

We are looking at other [partners] in the UK and Europe, at a time when a lot of more publishers are taking more product in-house because they feel safer with such big budgets. We're working more with external development, which historically we've not been as good at as internal development. We're looking in Europe, and whether that is just acquiring products or acquiring studios, it's about whatever makes sense and we'll look at all possibilities. Certainly in the UK and Europe the next stage for us is that we've shown development how we can publish big global hits like Fallout, now we're in a situation where we want to develop relationships with key people and really expand the portfolio in that way.

The idea is to really get in a situation where we've got three triple-A titles a year. We don't have that this year, but next year we believe we will have three triple-A titles. You're right, that's three more than what we're used to. Clearly there will be titles that we publish that are not triple-A, but in terms of the big brands we want to develop going forward that's absolutely critical to us. We took the decision on Fallout 3, a year before it was due, to delay the title because we didn't think we'd meet that quality threshold. Unless we can get close to 90 per cent ratings, there's no point in us developing it, that's not what we're about. And the Splash Damage game will prove that point.