How much success does a game studio need to stay alive?
Mauricio Alegretti
Game Industry Executive | Chief Technical Officer (CTO) at Ortiz Gaming | Founder and Investor at Industria de Jogos | Advisor at Guidepoint | Former Microsoft Xbox MVP | Game Development | Business Development
( vers?o em português deste artigo também disponível neste link )
Greetings, game developers and gaming enthusiasts!
This week, shocking news hit the gaming community: Microsoft announced the closure of the renowned studio Tango Gameworks, leaving many fans and team members stunned by the decision. Founded in 2010 by legendary game designer Shinji Mikami, the studio quickly became a prominent figure in the video game scene, initially known for its atmospheric horror games and immersive experiences, reaching its peak of critical and commercial success with the release of acclaimed Hi-Fi Rush, with a surprising shadow drop at the Xbox Developer Direct in January 2023.
The impact of the news is compounded by the fact that Tango was not the only affected studio, as Arkane Austin (Redfall), Alpha Dog (Mighty Doom), and Roundhouse Games (creator of the original Prey game when it was still known as Human Head Studios) were also shuttered.
In reality, this is just another piece of news joining a series of similar announcements in the market over several weeks, impacting everyone from independent studios like Keoken (Deliver Us Mars), which announced mass layoffs after failing to secure funding during GDC 2024, to giants like Square Enix, which recently reported a $140 million loss and project cancellations.
This raises significant questions about the current state of the gaming industry, especially for those planning to establish a studio or currently managing one.
Digital games are at the forefront of contemporary culture, with their ability to tell engaging stories, create fantastical worlds, and provide unique interactive experiences, earning them a prominent place in the entertainment industry. However, behind the stunning visuals and captivating gameplay lies a reality often unknown to the general public: the complexity and challenges of keeping a game studio operational, even after success.
The release of a successful game may be the culmination of hard work and creativity for a development team, but it also marks the beginning of a new journey filled with obstacles. Sustaining player interest, updating the game with new content, and ensuring the longevity of the community are ongoing challenges that require investment of time, resources, and creativity.
Financial pressure is immense, and game development is expensive and risky. Even after the launch of a successful title, studios often find themselves in a battle to ensure there is enough capital to fund new projects, pay employees, and cover operational expenses.
Furthermore, the release of a successful game often generates even higher expectations for the studio's next releases. The bar is raised, along with market and player expectations. This can lead to prolonged development cycles, where developers strive to meet public expectations and surpass past achievements while dealing with resource limitations and tight deadlines.
This pressure to replicate the success of a previous game can lead developers to feel trapped in a formula that worked in the past, rather than pursuing new ideas and innovations. And for independent studios, maintaining creativity and originality is essential to avoid stagnation and continue attracting players.
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Ultimately, if there's one thing the specific case of Keoken Interactive exemplifies well, it's that the gaming industry is incredibly competitive, with thousands of new games released each year, and even a studio that has achieved past success faces the challenge of standing out amidst a flood of new titles, finding funding for their projects, and maintaining a loyal fan base.
In the face of these challenges, paradoxical as it may seem, many game studios find themselves at a crossroads after the release of a successful title. Some capitalize on the moment and continue to create exceptional experiences for players, while others struggle to keep pace and, in some cases, end up closing their doors.
It's worth noting that, in the specific case of Tango Gameworks, Shinji Mikami - the studio's great creative force - had already departed at the end of 2023, having even already founded a new studio called Kamuy Inc. In an interview with the Japanese channel Byking on YouTube (transcribed into English by Automation and available at this link), Shinji explains that, after the studio's acquisition by Zenimax, his role was greatly reduced and he longed to return to producing games on smaller scales and teams.
I strongly suspect that this is the real reason behind Tango's closure - with the departure of its founder and primary creator, the company lost its direction and ceased to be of interest to its owners in the medium term. In other words, Microsoft probably didn't feel confident that another great game like Hi-Fi Rush, Ghostwire Tokyo, or The Evil Within would be produced without Mikami's influence.
In any case, all these recent developments serve as reflection and learning that our beloved gaming market is dynamic and exciting, but also financially ruthless and must be approached with care and planning. From my side, I extend my wishes that the creative talent that flourished at Tango Gameworks, Arkane, Alpha Dogs, and Roundhouse doesn't disappear with the closures and that the talented developers who worked at these studios carry their experience and passion into new projects and companies, keeping the flame of innovation alive in the gaming industry.
Keep gaming, and until next week!!!
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