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OC’s Gaming Roots Run From Early Versions to VR

Orange County’s influence in the video game industry traces back decades, from trailblazing studios in the early 1980s to today’s innovators of virtual reality.

Game play and graphics have undergone as much change in that time as the constantly shifting sector itself.

Remember “Pong” and the pixilated characters that dominated Atari games?

The idea that we could be seated in a virtual theater with friends scattered across the globe or walk on the surface of Mars from the comfort of our living room was pure science fiction merely a few years ago.

With the help of developers and engineers around the world, Irvine-based Oculus VR Inc., which didn’t exist two years ago, is making that a reality.

The technology impressed Facebook Inc. founder and Chief Executive Mark Zuckerberg so much that the social networking giant threw down $2 billion in March to buy the startup founded by another boy wonder, 21-year-old Palmer Luckey.

Menlo Park-based Facebook and Zuckerberg want to connect as many people as possible, eliminating borders and other geographical and topographical obstacles.

Old Playbook

In many ways, the social strategy is a page borrowed from the script penned by executives at Blizzard Entertainment Inc.

The Irvine-based company, established in 1994, aimed to reach the masses through role-playing fantasy games. It released the first installment of World of Warcraft more than a decade ago, spawning a franchise hit and spinoff titles.

The game has lost a significant number of subscribers over the years as players moved to other entertainment, but more than 6.8 million subscribers pay $15 to log on every month, facing off in epic online battles as two fictional races fight for control of a fantasy world.

It remains the largest multiplayer, online role-playing game in the world, a genre Blizzard helped create, define and foster.

The unit of Santa Monica-based Activision Blizzard Inc. posted sales of $1.1 billion last year and operating income of $376 million. It employs 1,900 people behind its iron-gated headquarters near Irvine Spectrum and 3,800 companywide, according to Business Journal research.

The company’s lineage traces back to 1991 under Silicon & Synapse, which was launched by University of California-Los Angeles alumni trio Mike Morhaime, Allen Adham and Frank Pearce, who renamed it Blizzard three years later.

Training Ground

Many of their early employees, like Creative Director and 17-year Blizzard veteran Rob Pardo, lead designer on the Warcraft and Diablo franchises who recently left the company, earned their gaming stripes at Interplay Entertainment Inc. in Irvine.

Brian Fargo, who founded Interplay in 1983, likened his role at the time to a dean at a small college churning out engineering and programming talent “practically since they were kids.” Many would later set the foundation for an industry cluster here that would ultimately evolve into a global gaming hub.

“I’m really proud of what we accomplished,” said Fargo, who grew up in Corona del Mar and is considered a godfather in the history of Southern California gaming. “We had just a wonderful environment. It was like family. Nothing has been as good as that.”

Stanford University graduate Michael Boone discovered an 18-year-old Fargo when the latter was stocking shelves with his own games for first-generation PCs at a ComputerLand store across the street from John Wayne Airport.

Boone, who later found bigger success making erasable bulletin boards, electric candles, and shaving cream, acquired Fargo’s startup, Saber Software.

Fargo, 19 at the time, was hired to lead product development on a 3-D golf game for Boone Corp.

He launched Interplay a year later.

The company teamed up with Morhaime and Adham in 1992 to create “RPM Racing,” Silicon and Synapse’s first game.

Interplay grew to become a major industry player, building on the successes of several Star Trek titles, the “Fallout” series, “Baldur’s Gate” and “Dungeons & Dragons,” among other releases.

Universal/MCI took a 45% stake in the company in 1994, fueling expansion and an initial public offering in 1998 at the heart of the tech bubble.

It topped $120 million in sales in 1999, employing more than 600 people at the time.

Poor management decisions led to its downfall as losses mounted, ending a 12-year run of profits, according to Fargo.

The company entered new gaming categories, with some marginal successes but ultimately spread itself too thin, Fargo said.

“The lack of a focus was the biggest error. All of a sudden, nothing worked across the board,” he said.

“We should have just stayed with our core group of gamers.”

A $35 million investment by Paris-based Titus Software moved it closer to seizing majority control, which it did in 2001.

The fallout led many programmers to embark on their own ventures.

Offspring

“When they ran into financial trouble in the late ’90s, those people started breaking away and forming studios of their own, including Obsidian, Shiny, Troika, Hijinx and others,” said Matt Scott, chief executive of Little Orbit LLC.

The Santa Ana video game publisher’s first hires were from Interplay.

Little Orbit is on pace to double revenue this year to $50 million with its most aggressive rollout strategy to date, releasing “How to Train Your Dragon 2,” based on the DreamWorks blockbuster; the company’s first mobile game, “Falling Skies Planetary Warfare;” “Planes: Fire & Rescue,” based on Disney’s successful feature film of the same name; “Violetta,” based on the tween telenovela from the Disney Channel; “Adventure Time: The Secret of the Nameless Kingdom,” a spinoff of the popular Cartoon Network show; and “Cartoon Network: Backlot Party,” where players get an adventure-filled, behind-the-scenes look at the studio.

OC’s success in the gaming industry has led to several acquisitions in recent years beyond Facebook’s eye-popping purchase of Oculus.

Amazon.com Inc. boosted its presence in Orange County this year with the acquisition of Irvine-based video game maker Double Helix Games. The world’s largest online retailer also has its Amazon Game Studios unit here and in Seattle and San Francisco.

Aliso Viejo-based Gaikai Inc. was acquired in 2012 by Sony Computer Entertainment Inc. for $380 million. Its technology was coveted by the gaming unit of Tokyo-based Sony Corp., the maker of PlayStation as the foundation of a cloud-streaming service. Gaikai also had an established roster of customers, including Facebook, Bentonville, Ark.-based Wal-Mart Stores Inc. and YouTube LLC in San Bruno.

Oculus Chief Executive Brandon Iribe was Gaikai’s chief product officer at the time of the deal.

Blizzard’s and Interplay’s influence lives on through newer companies, including publisher KOG Games in Irvine and Aliso Viejo-based Carbine Studios Inc., founded by Blizzard alumni in 2005.

Carbine has gained industry accolades at recent conventions and in trade publications for its upcoming multiplayer online game.

“Legacy companies like Interplay’s Black Isle Studios and Blizzard Entertainment have left a remarkable impression on the gaming world,” said KOG Chief Executive Eugene Kim.

The unit of South Korean-based KOG Corp. that recently expanded operations at the Irvine Spectrum was established in 2010 as a joint venture to bring the online action game “Elsword” to the Western market under the brand Kill3rCombo.

During those formative years, the industry had a lot of infrastructure buildup in OC to support demand for video game talent, Scott said. That included UC-Irvine, considered a top-tier computer science school that has long embraced video game programming.

Talent, a strong base of IT specialists, and ideal sunny weather in a suburban setting led KOG’s executives to choose OC over other locales.

The company staffs customer support personnel around the clock, so a safe working climate was paramount, Kim said.

“This provides the best environment for both gaining useful information about how to succeed and grow,” he said.

“Orange County is home to some of the best talent in the gaming industry.”

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