The Secret Game Masters

The industry's brightest minds are here, but they don't all work at Microsoft

POP QUIZ: What are two of the most influential and respected computer and video game companies in Seattle? If you guessed Microsoft and Nintendo, try again. An equally correct answerwith potentially a higher point valueis Valve and Monolith.

Sure, the first answer is the obvious one. Microsoft and Nintendo make the Xbox and GameCube consoles, publish lots of games, and get the mass media coverage at events like last month's overwhelming Electronic Entertainment Expo (E3) in Los Angeles. But actual gamers and game-industry press waited in long lines to check out Valve's forthcoming Half-Life 2 or catch early buzz about Monolith's The Matrix Online. Yet both Valve and Monolith, developers whose games are published by others, are virtually invisible in their hometown of Kirkland.

The same might be said about Kirkland's Amaze Entertainment, whose top-10 best-selling Harry Potter and the Chamber of Secrets is piled high on pallets at Costco. Or Redmond's WildTangent, developer of online games and Microsoft's Xbox Music Mixer. Or Seattle-based Zombie Games, the creative minds behind the Spec Ops franchise.

Indeed, the Seattle area has a game- development community that rivals those in San Francisco, Dallas-Austin, or Los Angeles. The lowor nonexistent local profile for game developers is in part due to the looming presence of Nintendo and Microsoft.

"When two-thirds of the world's console manufacturers are in your backyard, you don't expect to get much local coverage," explains Dan Elenbaas, CEO and chairman of Amaze. Even Bellevue's Sierra Entertainment, a major publisher as part of Vivendi Universal Games, seems overshadowed by the two Redmond giants.

DEVELOPERS ARE QUICK to point out that it's a mutually beneficial relationship. Not only have the founders of Valve and WildTangent come from Microsoft, WildTangent CEO Alex St. John notes, "Big publishers like Microsoft, Nintendo, and Sierra are like VCs. They provide funding and marketing support to small developers to bring their products to market." Sierra, for example, releases games developed by both Valve and Monolith.

Another reason for the low profile: The games, not the companies that make them, are the brands that consumers remember. And the publishersfor which the local developers make the gamesencourage that association. "Publishers have traditionally been hesitant to push the developers as a brand or try to build consumer equity for a developer when that developer isn't owned by a publisher," says Gabe Newell, managing director of Valve Software. Developers, after all, can jump ship.

And some developers don't necessarily seek publicity. Monolith raised eyebrows a year ago when it issued a news release announcing The Matrix Online and bluntly stated, "Monolith Productions is not currently accepting any questions regarding The Matrix project at this time." It's not a tactic that tends to elicit warm-and-fuzzies from journalists.

But a convincing argument can be made that these PC and video game developers are the secret masters of the game universe. Valve's sequel Half-Life 2, due in September, is one of this year's handful of most-anticipated releases, while summer's Counter-Strike: Condition Zero and fall's Counter-Strike for Xbox Live are both hot, owing to Counter-Strike's reputation as the most popular online action game.

IN ADDITION TO summer 2004's The Matrix Online, Monolith's Tron 2.0 is due in August, a PC game sequel to the two-decade-old Disney movie. WildTangent's Xbox Music Mixer, which gives the Xbox something of Windows Media Player's functionality plus karaoke, comes out in November. Amaze just produced a game based on the Pixar hit Finding Nemo. And Zombie is building the big-budget Shadow Ops: Red Mercury for Xbox Live and the PC next summer.

"The industry is going through a shakeout right now," observes Zombie co-CEO Mark Long. "Production values are climbing along with the capabilities of PCs and consoles like Xbox. Publishers are making less games with bigger budgets." No kidding: Atari's Enter the Matrix game, released simultaneously with the second Matrix movie, reportedly cost $20 million. And it seemed that nearly every highly promoted new game at the E3 trade show was related to a movie in some way, be it Hulk, Lord of the Rings, or Pirates of the Caribbean.

Higher budgetsand more high-risk movie tie-insare slowly garnering more attention for local developers who play those kinds of financial games. WSA (formerly the Washington Software Alliance) kicked off the first meeting of its Gaming Special Interest Group on June 23. Warner Bros. last month reportedly invested several million dollars in Monolith. Though most of the developers are small, their effect on the health of the $8 billion game-software industry is huge.

The secret masters might not be able to remain secret much longer.

Frank Catalano is a tech-industry analyst, consultant, and author. He can be reached via www.catalanoconsulting.com.

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