Sega – embracing the independent model

Michael French speaks to European development managing director Gary Dunn about how the company has grown its set of studios and embraced the independent model…

Unlike the other Japanese giants which have managed to establish a foothold in Europe, Sega’s activity has been a rollercoaster of its own making.

While for instance Nintendo’s fate has been tied to its hardware, and Square Enix’s to distribution of some (or rather, two) core brands, Sega has moved to forge its own path, switching from format-holder to cross-platform developer with a varied output.

In time, its European operation has grown greatly, with an impressive investment in local talent. As well as signing up games by third-party studios (more on that later), Sega Europe’s development interests have expanded to include three studios – Sports Interactive and the UK and Australian offices of Creative Assembly. And the investment is set to continue, says Gary Dun, MD of Sega’s European Development operation.

“We’ve got, without doubt, some of the best development talent in Europe working for us,” he tells Develop, looking back at the growth of the publisher’s internal development in the past four years. But by Dunn’s own admission, aside from one high-profile blip (the aborted Sega Racing Studio), Sega Europe’s development activity has been “under the radar”.

CREATIVE ACCOUNTING

For Creative Assembly, the biggest change has been the addition of around 100 staff to its two offices. Around half of those have been hired for its Brisbane, Australia team, growing it from a small, outsourcing-focused eight-man team to over 50 staff and the development of the high-scoring Medieval 2. The Horsham, UK HQ meanwhile, now stands at over 120 staff (up from 60 when it was acquired by Sega in 2005), with busy teams dedicated to Total War games for both PC and new consoles.

Sports Interactive, meanwhile, has grown slower, but has still expanded by 25 per cent since joining the Sega family over two years ago. Its biggest step has been the development of Football Manager Live, Sega Europe’s first MMO, and an ambitious project that will take one of its “crown jewel” franchises into the online space, says Dunn.

The impressive growth of these has been due to Sega’s independent-minded views on how its studios are run. Or rather, left to run themselves, he adds.

Because while EA and Activision have both recently made much noise about how their studio model is in fact independent, it turns out Sega Europe was already doing it – just not telling the world about it.

“It’s an incredibly competitive market and what we’ve managed to do with these studios is nurture them – but not smother them,” says Dunn. “It’s taken a lot of investment, both human capital and cash capital to turn these studios into full-fledged, supported teams – but we’ve wanted them to keep their independence creatively.”

So Sega has paid for the studios to expand, offering support for things like human resources and aiding moves into new offices (all three studios are now in new premises), but tried to steer clear of creative meddling.

“We’ve integrated them into the infrastructure, but allowed their creativity to be pretty much independent. Anyway, trying to tell Sports Interactive how to make a football game or Creative Assembly how to make a strategy game would be pretty futile anyway.”

DRIVING LICENCE

Of course, you can’t talk European games development with Sega Europe without acknowledging one aborted effort – namely the Sega Racing Studio. Or, more accurately, the closed Sega Racing Studio which was opened to much fanfare in 2005, but cut drift and sold off to Codemasters earlier this year after just one game, an attempt to revive Sega Rally. So what happened?

“The only PR that been out about the closure of SRS has been a fairly negative one,” says Dunn, who is keen to redress the balance and make the short-lived studio’s achievements apparent.

“We wanted to look at our heritage racing IP and reinvent it. If you appraise what happened based on the game, I think we did very well.”

The game had generally positive reviews (its Metacritic is a respectable 75 average), but sold only moderately well, released at a time when next-gen gamers were more interested in Halo 3 and other more established racing franchises had sped back onto the scene. Does the studio’s quick opening and even quicker closure prove the independent model has its flaws when a publisher tries to pursue it? Dunn doesn’t think so, saying that in retrospect it was clear the attempts to update the IP – a move everyone at Sega believed in – was out of step with modern games.

“Where, as developers, we missed a trick was that driving games have become a lot like RPGs,” says Dunn.

“But we built a pure racing game, and the market and gamers’ tastes have moved on. They want to build a garage and collect cars, but Sega Rally has never been like that. It wouldn’t have been Sega Rally if we’d added those features in. So the game wasn’t a big stepping stone or evolution for the genre.”

Which seems to be a bit of irony for Sega Europe: in the years prior it had commissioned Sumo Digital to produce very well received new versions of OutRun, the success of which suggested a big market for other racing revamps. But Sega learnt the hard way a cruel lesson about build vs. buy and how to best treat its IP. The relative failure of Sega Rally pretty much explains the motivation to close the team down, despite having new projects pitched into it when the axe fell.

But Dunn is pragmatic: “It’s not an easy thing to do – so far none of the major racing franchises are new from this generation. And similarly, the decision to close SRS wasn’t one taken lightly either.”

STRIKE WHILE ITS HOT

And while the closure will have helped inform that independent studio model, and Dunn can take some solace in the fact that many SRS employees are now with his old employer Codemasters (or found work at the UK’s many other racing studios – there is no shortage of them, after all). Some other good did come of the closure, however, namely the establishment of the Sega Technology Group.

A unit of five former SRS coders, the Technology Group is according to Dunn a ‘Sega special ops’ unit, dispatched to any of its studios struggling with next-gen or new technology. So far, the team has travelled around the world, working with not just

Sports Interactive and Creative Assembly, but also teams in Japan and the US, either internal or external.

“At the moment, in modern times, you can’t afford not to have a special ops team like this,” says Dunn. “It’s also helped our external developers and our publishing team work better,” he adds, saying the team has been able to research new technologies as well as just turn up to projects and help them out.

In fact, the Technology Group characterises what Dunn describes as the “better and better investment choices” Sega Europe has been making and which has lead to an “unprecedented” growth of its development staff, recent studio closure or not.

That has included continuing to sign projects to the UK’s big independent studios, including Eurocom and Sumo (“very solid developers who do good work for us”), and an overall evolution of its European development strategy to create some key titles.

A HEAD OF THE GAME

One of those is the new House of the Dead title, developed by Kuju’s London-based Headstrong team. It’s another revamp of a classic company brand by a UK studio, but one developed for the Wii, proof in many ways that Sega seems to be moving with the changes. House of the Dead is designed for the new market of Wii players, perhaps unlike Sega Rally which was for the still undefined next-gen ownership when it was commissioned.

“Headstrong gave us a great pitch which impressed us, and they have great technology. Plus they have very good links with Nintendo,” says Dunn. “The game is a great example of working with an external partner. We had a clear view of what we wanted and Headstrong had some great ideas too.

“The key thing is that they are different markets in many ways, so the key is to play to the strengths of them.”

But despite the development money being spent on its internal studios’ headline PC efforts and a key Wii title, Dunn says that Sega will still address the high-end consoles. Creative Assembly has a respectable console game team, after all – with a sci-fi RTS on the way. However it’s clear that Sega, like any smart developer, will go where the money is and where the new opportunities lie. Sister division Sega America’s success on iPhone is a clear indication of how sophisticated the company has become, says Dunn.

But the company does plans to maintain its momentum in Europe and continue making those smart investments in developers across the continent.

“If you look back we’ve been strong supporters of the UK development scene,” he says. He’s not wrong: the recent Sega Europe softography, featuring the likes of Team 17, Bizarre Creations, and Zoë Mode, is partly s a who’s who of independent games development.

PROPERTYMARKET

And Sega is keen to sign more projects from independents, adds Dunn.

“We want to sign successful new IP – that might not sound like a lot, but it’s a big challenge. Especially finding the right new IP,” he says saying that specifically, the company is interested in “well thought out ideas that have some thought into where it would sit in the market place.

“I’ve seen too many developers make games and not think about who it would be sold too.“

That said, products that just tick boxes for marketers isn’t a priority, he adds, and the company has been happy to chase the unlikely projects.

“One of Sega’s aims is always to innovate and do something a bit different. Sometimes it doesn’t work, or doesn’t catch on with players – [Bizarre Creations’] The Club didn’t, but it’s one of my favourite games at the moment. But sometimes that strategy does work, and it works brilliantly.”

The embracing of the independent studio model for its internal teams has actually allowed for the company to have an eager focus when it comes to signing up games by actual independents, and spend time chasing or nurturing such projects, he adds.

Says Dunn: “We actually spend more time working with our external partners than we do the internal teams on a creative standpoint.”

And time seems to be on Sega’s side – most importantly, the company isn’t looking to just foster growth for the immediate future, but into the next console cycle and beyond.

Adds Dunn: “We’ve got what we think works for 2009 and 2010, but we want to be thinking early on upcoming new properties. We’re looking at what could be coming in 2011.”