Talking at the SXSW ScreenBurn Beta Festival in Austin earlier this week, Junction Point Studios founder Warren Spector, whose work in the past includes noted titles Ultima Underworld, System Shock, Thief, and Deus Ex, exposed some extremely interesting personal experiences with alternative funding for games at the panel "Can Austin Become the Hollywood of Games?"
The panel, which was subtitled: "Austin's game industry rates as the third largest in the US. How can it expand into a powerhouse outside of the LA system, as Detour and Troublemaker have done in the film world?", and also featured Amaze's Rodney Gibbs and BioWare Austin's Gordon Walton, saw Spector explaining just what had stymied his attempts to finance development directly, explaining: "There was a deal several years ago in movie financing called Silver Screen Partners. A bunch of investors get together for a tax break, that all goes into financing a slate of [movies]."
He explained: "There were some... powerful guys in Los Angeles, who had ties to the Bank of America, and bonding companies, and German investors, and Hollywood studios... and I hooked up with them, with the idea that they were going to pull together four of five big name developers. And they had them... They had a group of German investors. They had the bank - two banks, actually - ready to go. They had the bonding company that had already done their due diligence on the developers, and they were ready to sign on."
However, Spector noted, there was a major issue: "The thing that turns on the money spigot on a deal like that is guarantee of distribution, okay? And in the movie business, that's a studio saying, 'Yes, I will put this on a screen somewhere.' And then the money spigot opens, money flows to the guys making the movie, and those guys have creative control and money. And it's really cool. They get to own the IP, and it's a great deal."
But, according to Spector's experiences, the problem is control over IP and publisher influence, in the current market, as he continued: "The equivalent [of a distributor] in the game business is - and I'll try not to swear here: a bleeping publisher. The guarantee of distribution has to come from a bleeping publisher. And the publishers don't want this to happen because they lose control over the IP, they lose control over the financing. They lose control over me. And nobody wants that."
Warren explained that, after the major publishers presumably passed on the concept: "So what happened was, there was a publisher...I call them 'third world publishers'. There was a little publisher that really wanted... the little publisher that could, you know? 'I think I can, I think I can.' They really wanted to get over that mountain and become a big deal. But they didn't have the war chest to finance five twenty million dollar games. They were stuck making five million dollar bets. And you can't compete in the AAA space for that kind of money. You'll get destroyed."
And so, unfortunately, after this publisher "..said, 'We're in, we'll publish this stuff', all the money guys, after a while, looked at that publisher and said 'We don't believe they can actually distribute this stuff.' and the money guys pulled out. And guess what? I'm back looking for a publishing deal."
Spector's comments came as part of the larger SXSW ScreenBurn Festival, for which Gamasutra will be featuring highlights over the next couple of days.