It’s ‘game over’ for Oddworld’s creator Lanning

It's 'game over' for Oddworld's creator Lanning[Hosted by The Hollywood Reporter]

Date: 16 April, 2005
Interviewer: Paul Hyman
Interviewees: Lorne Lanning


By Paul Hyman

After four consecutive platinum hits, you’d think a video game developer would want to parlay his success into more elaborate — and profitable — next-generation titles. But the co-creator of the Oddworld universe has taken a look at the direction he sees that industry heading and he doesn’t want to play. Instead, Lorne Lanning, president and creative director of the award-winning Oddworld Inhabitants, is waving goodbye to all that and is taking his company to where he sees greater opportunities – to movies and TV. This month, he ended Oddworld games with a bang — by shutting down his 60-person San Luis Obispo, Calif.-based development studio and moving to the Bay Area. In a chat with columnist Paul Hyman, Lanning talks about the huge hurdles for game developers today, why he is all about protecting his original IP, and the reasons he believes he has a 2-1/2-year window to make his transition.

The Hollywood Reporter: Your games — beginning with “Oddworld: Abe’s Oddysee” in 1997 and continuing right up to your most recent, “Oddworld Stranger’s Wrath,” this year — have all taken place in the wacky Oddworld universe that you and [CEO] Sherry McKenna created back in 1994. They’ve all been solid hits, but this last one was frustrating for you.
Lorne Lanning: Yes, it was very critically acclaimed but it wasn’t advertised or marketed because Electronic Arts couldn’t get its PlayStation 2 port of our Xbox original to run and if EA isn’t on all SKUs, it just won’t promote the game. It was very disheartening to us that we could have a title with a user metric of 9.6 [out of 10], a game that was praised as being a fusion of filmmaking and video games in terms of being less ‘gamey’ and more story- and character-driven … and then to see that the largest publisher in the industry had no interest in marketing it regardless of how innovative it was.

THR: You told me pre-launch that it was a challenge to get support for “Stranger’s Wrath” right from the get-go and you attributed that to “sequel-itis.”
Lanning: It’s an industry-wide problem. As game production costs rise, publishers want more sure bets because with rising costs come rising risks. What we see is an industry which is rapidly discouraging innovation because people don’t want to take chances on more innovative types of titles.

THR: But your fourth “Oddworld” title was a sequel. Yet you still had a tough time getting a deal?
Lanning: It’s not like we alone had a particularly hard time; everybody is having a hard time getting a deal today. It’s not that different from taking your movie script around Hollywood. What are your chances of selling it to a studio and getting the financing? There’s no doubt that we got the deal because we had a history of successes. A track record is all-important in this business.

THR: Given the way that the marketing of that game turned out — which must have been a frustrating experience…
Lanning: Surely.

THR: … is that why you shuttered your studio?
Lanning: No. If you speak to any developer and they don’t tell you they have the same frustrations that I had, they’re lying. We closed the studio because of what the realities of the marketplace are. There is currently only one financing model in the games industry, and that is that the publisher pays for the entire game; it handles the manufacturing, the marketing, the distribution, the advertising, practically everything, much the way it used to be in Hollywood pre-United Artists. But, as the film industry matured, it took on a more sophisticated financing structure. Today, for example, studios don’t pay for a movie by themselves. They pay a percentage and then other parties pick up the other 66%; it’s usually a three-party investment package. But not in the games industry. And so, as a developer, you have limited options in terms of how many parties are actually willing to finance your games, what types of games they are willing to finance, and what are the terms you face as a third-party developer to get that financing. That’s not a very exciting climate.

THR: What does that mean for developers like Oddworld that have insisted on retaining the rights to their original IP?
Lanning: To this day, we own every IP we’ve ever created, as well as all the publishing rights — licensing, merchandising, game publishing, TV, and film. It wasn’t easy but, because we did it from day one, it set a precedent and we were able to sustain those terms through the different deals we did. As we look towards the future, that is not viable for developers to get those terms. Which means that if you’re going to get financing on a next-gen title, the publisher is going to own that IP. And, as publishers are currently the only ones financing games, those are the terms of the industry. So, if we were to continue building games, the likelihood would be that we’d be in the business of building other peoples’ IPs, and that wasn’t why we created Oddworld Inhabitants.

THR: Is this situation going to worsen as games become even more expensive to build?
Lanning: Absolutely. Costs are going up, but not because the quality expectation is higher. Costs are going up because of the design of the next-generation hardware. The code that just one guy used to write on the Xbox is now going to take five guys. It’s as if the movie camera that you started shooting with 10 years ago has improved some features and now you need 12 people to operate it instead of one. So you ask yourself, what is on the horizon as a content creation company, which is always how we’ve seen ourselves. We’ve always released our properties in video game form, but when you look at the terms and conditions of the next-gen platforms versus what’s happening in other media — like movies and TV…

THR: What’s happening in movies and TV that’s so attractive to you?
Lanning: Ten years ago, if I were trying to raise money for an all-CG animated film, not only would I have heard ‘it’s never been done before’ — since “Toy Story” hadn’t come out yet — but I’d be asking for a minimum of $120 million. Today, I believe I can make three times that film — meaning in terms of what’s on the screen — and I could do it for $35 million. So, as CG is evolving — becoming more efficient, more streamlined, more practical at a more reasonable price — we believe we can hit that $35 million price point with a CG film today, a film that we currently own all the publishing rights to.

THR: As long as I’ve known Oddworld, I’ve heard people asking you when is an Oddworld movie coming out.
Lanning: Which has always been part of the plan. And the reason why today seems to be the right time is that game technology is now moving in an opposite paradigm. Video game systems aren’t being designed to be conducive to development, creativity, or content. They’re being designed to be cheaper for manufacturing. If movie cameras were made that way, you’d have a rebellion in Hollywood. But this isn’t Hollywood and it isn’t a movie camera; it’s a videogame system and the public wants basically a $1,000 box but only wants to pay $150 for it. I’m not saying that anyone is guilty in this process, but this is the reality of the current climate for development in video games and where it’s headed. And because the costs are higher, more ownership needs to be seen on behalf of the publishers and, quite frankly, I don’t blame them. They can say, “Look I used to pay for video games when they were $6 million, but now they’re $16 million. And you know what? My shareholders are not going to like it if I fund your game, it’s a big hit, and then you take it to someone else. That’s going to hurt my stock. We need to see a path to ownership or ownership right out of the gate.”

THR: What is Oddworld’s next move?
Lanning: We have some fascinating opportunities. For instance, all the technology that we built for “Stranger’s Wrath” can be used to generate all-CG TV shows that surpass the visual quality of CG for TV today at just a percentage of the cost. You can understand the opportunities if, say, you look at India which currently has 70 cable stations and is discussing 700. The same in China. The same all around the world. When you look at the world market and how many more stations are being created, well, everything in entertainment needs content.

THR: Are you implying that, given the way the games industry is headed — with increasingly more expensive production — that developers like you who have original IP may abandon gaming and go into other forms of media because they can make more profit off the same tools?
Lanning: Currently there aren’t many game creators who have true multimedia IPs. Oddworld is kind of obvious that way. And so, for us, what we’re choosing to do is abandon 100% in-house development for games. Every time we pursued other opportunities in the past, we just wound up being completely consumed with the game productions because we just don’t have the bandwidth or the time.

THR: And you’ve chosen to make this move now because…
Lanning: Because we believe there’s a window that’s open for all-CG feature films and TV. And if we don’t crack it in the next 2-1/2 years, we’re not going to be able to. Our plan is to be a content creation company with someone else bearing the load of the actual production. We’ll stay focused on multimedia content, really solid concepts that would make great games, great TV, great movies.

THR: Using the Oddworld universe?

Lanning: Not necessarily. We’ve been cooking up other non-Oddworld stuff.

THR: Where is the game industry going in the next two years — in the same direction that prompted you to get out? And what will that mean for other game developers who are in the same situation? Will they get out too?
Lanning: What it means moving forward is more consolidation, fewer opportunities for developers to make money and own properties, and continued sequel- and license-itis.

THR: What then is your best advice to game developers? Follow your model?
Lanning: [Laughs] You know, we’re really brave and are willing to bite the bullet. We don’t look at our company and go, wow, if we sell it now, we could pocket big bucks. No, we’re saying we set this company up to build brands and create exciting entertainment and we’re not about to stay a slave to this just so we can put some extra money in the bank. So my advice is this: Follow what you love. There are some guys out there who just love game development. And if they stick to it, they’ll probably prosper — if they’re really intelligent and have the discipline and wherewithal to pull it off. This is still a lucrative career. I mean, the quality of life issue is an ongoing one and it really is a problem with no sign of real change on the horizon. But people still make good salaries. However, if you’re a third-party developer who wants to be a content creator and to control the destiny of that content, the game industry is not the place to be right now.

THR: So the moral is, what? Keep your eye on Lorne Lanning and then, when he’s successful at doing what he intends to do, follow suit?
Lanning: From your lips to God’s ears.