XBOX CO-CREATORS GO BACK RISKY GAMES
Copyright 2002 www.eastsidejournal.com

[ May 10th 2002 ]

Like fighters in a video game, Kevin Bachus and Seamus Blackley - two gamers who co-invented and sold Microsoft Corp. on the Xbox console - plan to kick some serious behind with a new type of game development company they have formed. The company, Capital Entertainment Group Inc., is working to raise $45 million to $50 million in venture capital. With the money, the firm will not only find but fund the creation of what could be the next Tomb Raider or The Sims - cutting-edge games that are best-sellers now, but were shelved at first by game publishers who didn't want to take a risk.

The Seattle firm will not publish the games itself, but license them to major game distributors such as Sega Corp., which Blackley said has agreed to buy Capital Entertainment's first two titles sight-unseen. Blackley, the flamboyant Xbox technology officer who abruptly left Microsoft on April 22, said yesterday that he, Bachus and fellow game industry veterans Mark Hood and Eugene Mauro have opened CEG, as the company will be known, to address the way games are brought to market.

Typically, game publishers provide small game development firms an advance on future royalties in order to develop a promising game, which can cost from $2 million to $8 million or more to create. The developers don't get paid, Blackley said, until the advance on royalties is paid back. And, because of the expense, game publishers aren't willing to try their hand at anything they're not sure will sell, leading to a repetition of game types.

Acting as a sort of game-development "incubator" that can pick and choose which titles it will back - and kill projects that aren't panning out - Blackley, CEG's vice president for development, said the firm will provide game creators with more money up front and take the risk out of the process for game publishers. "As the cost of development has risen, average revenue has not. It's become harder and harder to take risks on a product," Blackley explained. That, he said, means game publishers "have to leave unproven products on the table." "Predictable revenue has become much more important," said Mark Hood, CEG's vice president for production. Hood is a 14-year veteran of Bellevue game maker Sierra On-Line.

The commitment to making each title a hit is a tall order that puts CEG in competition with game publishers for artistic talent - something larger publishers such as Electronic Arts may not like, said Steve Koenig, a senior analyst with NPD Techworld, a software and hardware industry tracking firm based in Port Washington, N.Y. Small publishers without a lot of cash for development may welcome the idea, Koenig added. "It may work in some cases, but a lot of game publishers want to control and steer the development of the game," Koenig explained. "It's a neat concept. It will be interesting to see how it plays out." CEG's partners say they have the experience to pull it off - and plan to support all formats, including games for personal computers, Nintendo's GameCube, Xbox and the console market leader, Sony's PlayStation 2.

Before Microsoft, Blackley was an executive film producer at DreamWorks SKG and a game developer -- and, in a previous career, a physicist. Kevin Bachus, who left Microsoft last year and is now the firm's vice president for publishing, has 20 years in the game industry, most recently co-inventing and securing funding for Xbox. The company's CEO, Eugene Mauro, founded 5-year-old Dotted Line Entertainment Inc., a game development company. Mauro has struck deals with a "who's who" list of major media companies and game publishers such as Disney, Electronic Arts, Activision and Infogrames and Activision.