"It's down to having to be in the top 10 to actually turn a profit"

Avalanche Studios is an increasingly rare find in the games industry, an independent AAA gun-for-hire, juggling multiple projects with multiple partners. This is a particularly big year for the company, as it sees the launch of two major titles: Mad Max (published by Warner Bros Interactive Entertainment) and Just Cause 3 (published by Square Enix).

Just Cause 3 is the first game from Avalanche Studios' New York location, originally established in 2011 with a remit to focus on original IP. A sequel to Avalanche's flagship franchise may not fit the "original IP" vision, but it might be reflective of how difficult the AAA space has become for an independent studio. Speaking with GamesIndustry.biz at last month's E3, Avalanche Studios New York GM David Grijns painted an imposing picture of the industry at present.

"The hits-driven aspect of the business is becoming more hits-driven than ever. Effectively what we see is an arms race between the top studios in the world to invest ever-increasing dollars into larger and larger product development cycles."

"It's more stratified than ever," Grijns said. "It used to be the top 10, top 50 titles would generate, say, 90 percent of the business. Now it's down to having to be in the top 10 to actually turn a profit. The hits-driven aspect of the business is becoming more hits-driven than ever. Effectively what we see is an arms race between the top studios in the world to invest ever-increasing dollars into larger and larger product development cycles.

"We're a relatively small, privately held independent studio working specifically on open-world games," he continued. "Those productions tend to get more expensive as time goes on and demands increase, everything from online components to social networking to smartglass and every sort of integration. Now of course it's VR, right? Are you going to do a VR version of your game? For a studio like ours, we're 250 people--160 in Stockholm, 90 in New York--it's a lot of time, effort, resources... It's an ever-growing pressure to deliver with the biggest and the best in the business."

That explains why Avalanche has experimented with other markets. The company has released mobile games, downloadable console titles, and even scored a free-to-play PC hit with The Hunter, but Grijns said none of those markets is any easier for indies at the moment than the AAA space. That's not to say Avalanche is done experimenting, or content to stay the course without adapting.

"I think we're going to continue having a strong work-for-hire business, which is working with our clients to continue to do big AAA projects, but we'll also look to diverge into self-published titles as well," Grijns said. "The Hunter is part of that. We market that title on our own. That's a market we're also interested in putting more investment in. So we're going to continue with AAA, but we're going to have a better balance between both owned IP and self-published titles as well as the work-for-hire."

"One of the things that's very important to us is obviously maintaining a strong work-life balance in the studio, right? We don't ever want to become a factory."

That future will bring challenges of its own, of course. One of the biggest ones Grijns anticipates will be maintaining its own unique culture, though it sounds like Avalanche is adamant about not turning into its competitors.

"We have no plans to suddenly become an internal studio," Grijns said. "Remaining fiercely independent is definitely in the company's DNA. One of the things that's very important to us is obviously maintaining a strong work-life balance in the studio, right? We don't ever want to become a factory. But I think the most important [thing] for us is to continue to be able to attract the best and brightest talent in the industry."

That last bit is a particular concern for Avalanche New York. Grijns said he's deeply proud of the team he's assembled there, but he's had to do it without the benefit of a thriving local development scene. However, that could change.

"The New York scene is not really growing as quickly as we would like," Grijns said. "If the studio is successful, there is sort of that genesis moment where one studio can help launch other studios. The people that work for us, perhaps in a few years' time, will go off and start their own studios. Those studios will feed back into our studio, and all of a sudden you have that ecosystem of game development that New York has never really had. And that's what's got to change. The city itself mostly needs to recognize that games are just as important as film or television, and perhaps some of those same financial incentives that places like Montreal or Toronto enjoy could be fostered in New York as well."

When Just Cause 3 launches, it may provide just the spark the local scene needs. After all, the chaotic sandbox of the Just Cause series seems like it was built from the ground-up for today's YouTube and Twitch video sharing culture, even though the first installment debuted back in 2006. Even the sequel is five years old now, so the market may be particularly primed for a next-gen update.

"It's a tricky one. I think [paid mods] sort of goes against the spirit, in some ways, of what a mod should be."

"We didn't go into it thinking, 'How can we build a game for YouTube, Twitter or Instagram?'" Grijns said. "We just thought, 'How can we build a better sandbox experience?' And by building a better sandbox experience, that then triggers this need to share. 'Hey, look what I pulled off! I bet the development team didn't even know about that.' And actually in a lot of cases the development team doesn't know about that. And the way that gets distributed is through all the social media means that didn't exist in 2010 when we released Just Cause 2."

Even without built-in sharing functionality, Just Cause 2 capitalized on the current trends. Grijns said it still boasts 500,000 active players, thanks partly to an active YouTube community posting seemingly endless series of videos chronicling new discoveries in the games, and partly to a fan-made multiplayer mod for the game. Avalanche has been in discussions with the team responsible for that mod about making a comparable multiplayer version of Just Cause 3, but there's nothing official just yet.

If anything does come from those discussions, it might not be a mod at all. Grijns said Avalanche wants to embrace the modding community, but Just Cause 3 won't ship with mod tools. And when asked about the topic of paid mods that exploded with Valve's aborted experiment for Skyrim, the developer demurred.

"It's a tricky one," Grijns said. "I think it sort of goes against the spirit, in some ways, of what a mod should be. From the publishing side of the business, it's obviously an interesting revenue stream, but it's not something right now that we're officially supporting."

Just Cause 3 is set for launch on Xbox One, PlayStation 4, and PC December 1.