D.I.C.E. 08: Visual Fight Club

The D.I.C.E. Summit 2008 kicked off with a "Visual Fight Club," sponsored by Autodesk, in which games industry professionals took the stage to debate key issues.

Mitch Lasky of Benchmark Capital and Keith Boesky of Boesky & Co. led 'Round One,' and argued over the merits of consolidation - or lack thereof.

To begin with Lasky told the audience that he didn't think that consolidation kills innovation, and instead claimed the contrary — consolidation is necessary for innovation.

"Big companies don't innovate," he said. "Where is [innovation] coming from? It has got to come from the margins," he added, and went on to explain that consolidation helps fund the people at the fringes so that they will ultimately get their titles distributed.

Boesky agreed that innovation came from the margins, but lamented the need for smaller companies to go to publishers for money: "The only value I see in consolidation is access to capital. If we have access to capital somewhere else, we can build those things," he said.

Lasky pointed out the availability of private funding and venture capital as alternatives, saying that there are still people who will take the risks on innovation.

"Publishers will not stop funding outside development," he said, noting that for a company to achieve growth of 10 per cent annually they would need to find a game such as Guitar Hero every year.

But Boesky pointed out: "Guitar Hero can only be made by somebody outside of the system. There are people who want to make money. There are other people in it who are not there to make money but who just want to make games," he said.

Lasky distinguished between "fan-boy art projects" and business. "We are talking about returning to shareholders a multiple on their capital," he said, going on to state his belief that while some companies might be content to create the kind of titles they want to make without worrying about making money, they aren't in the game.

Boesky meanwhile remained focused on the lack of innovation from within large publishers, saying that it is all happening independently. "It's been ten years since something has been created internally by a publisher that became a [big] franchise," he said.

Specifically addressing EA's acquisition of Bioware and Pandemic, the two men had differing views as to the effect that consolidation would have on those developers.

Lasky's view was pessimistic: "They are going to be making Mercenaries and Mass Effect from now until the sun sets," he said, but Boesky disagreed: "By their mass, Bioware and Pandemic are in a good spot - they are already consolidated when they get to that size."

And he added his words of advice. "Leave them alone. They can still innovate. Give them a sense of security, but also give them a piece of the upside."

Moving on to the subject of innovation, Lasky explained that he thought the market has always rewarded innovation, but Boesky disagreed, saying that it is just now starting to reward polish: "Consumers are pushing back," he noted. "They are no longer just buying sequels."

Boesky then attributed the lack of innovation at larger studios to mitigating risk in order to hit numbers, but Lasky also attributed it to the kind of marketing that the videogame industry is accustomed to.

"Packaged goods marketing people are good at fighting over existing markets. They are not so good at finding new markets," he said.

Lasky pointed out that, in the early 1990's, there were approximately 40 different publishers and yet, in his opinion, that did not make the situation better or make more money available for developers.

To conclude both Boesky and Lasky argued that the benefit of consolidation depends upon what a developer is looking for - financial security or creative control - but due to the high development costs of console games that it was probably unavoidable.

"At this point, I think the console games business is closed unless you are willing to dance with the devil."