The score doesn’t look good now, but Orange County’s entertainment software makers insist the game is far from over for the sector locally.
Thanks to new video game consoles and the growing popularity of games played over the Internet, local developers are counting on a rebound from their largely sluggish performance of the past few years.
Interplay Entertainment Corp., OC’s largest game developer, is appealing to Nasdaq officials to keep its shares listed on the exchange, while other local game makers have been acquired by outside companies or have just gone away.
“There is much less concentration of game companies in Orange County,” said Yoshi Maruyama, vice chairman of Square Electronic Arts LLC, a Costa Mesa-based joint venture between Japanese console game developer Square Co. and Redwood City-based PC game powerhouse Electronic Arts Inc.
Orange County’s reputation in the $7 billion a year games industry is part of what brought the venture here four years ago.
But a lot has changed since then. The industry underwent a grueling downturn in the mid-1990s and has seen consolidation in recent years.
Both trends have played out in OC, which just a few years ago counted two top 10 publishers in its ranks: downtrodden Interplay, and Virgin Interactive Entertainment, which back in 1997 counted $250 million in annual sales.
Virgin’s distribution business now is part of Interplay, while Redwood City-based Electronics Arts bought Westwood Studios, a former Virgin studio that still employs 35 in Irvine.
Positive Signs
Still, signs of life abound. Irvine’s Blizzard Entertainment,which owns some of the most successful game franchises in the market including the “Diablo,” “Warcraft” and “StarCraft” series,has added about 40 people in OC over the past year.
And the University of California, Irvine last year created a gaming studies program some say could boost the local workforce, one of only a few across the country.
“Orange County is definitely an important player, without question,” said Paul Sams, vice president of business development for Blizzard, which is part of French media titan Vivendi SA.
OC’s role in the industry comes half by its proximity to the Los Angeles entertainment industry and half by historical accident. Interplay founder Brian Fargo is a longtime OC resident, as is his childhood friend Allen Adham, co-founder of Blizzard.
“The industry’s very incestuous,we tend to congregate around each other,” said Cal Morrell, Interplay’s vice president for marketing. “If you look out 10 years from now, you will see the next permeation of high-tech entertainment in the Orange County area.”
Emphasis on Wider Audience
But changing tastes among fickle game players have taken their toll in recent years. Hit games are critical. But unlike record companies and movie producers, game developers wager not only on what hits they can create, but also on what game systems will deliver the widest audience.
The transition to a new generation of video game consoles,computer devices that link to television sets and offer dazzling graphics and sound,could create new opportunities for a struggling segment of OC’s otherwise booming software industry.
Until recently, Interplay had focused on the PC game market, which limited its growth as console games skyrocketed. While hedging its bets with games for all the major console systems now, the company has devoted most of its non-PC efforts to industry leader Sony Corp.’s PlayStation and PlayStation 2 machines.
Industry Boost Expected
Interplay’s Morrell predicts a brief dip in revenue for the industry as a whole as developers are weaned off of older platforms and focus on new consoles this year and next. But he said the changeover ultimately will boost industry sales.
Sega Enterprises Ltd.’s Dreamcast has failed to reverse its fortunes in the console market, but Sony Corp.’s PlayStation 2 has sold well overseas and is expected to be an instant smash when it makes its U.S. and European debut in October. Japan’s Nintendo Co., meanwhile, has scheduled the release of its newest gaming system for the end of the year.
Square, which so far has developed solely for the PlayStation, will make the transition to PlayStation 2 by concentrating on a few titles and by launching an online gaming effort using the newer platforms’ Internet capabilities. And even Blizzard, which has concentrated exclusively on PC games in recent years, plans to re-enter the console market with several PlayStation 2 titles.
Online play is expected to become another significant push for game developers as console makers include the ability to go online in their systems.
While few have figured out how to make money from online games so far, all of OC’s biggest developers say they plan to enter the online multiplayer arena soon,if they haven’t already.
Blizzard operates Battle.net, a Web site that sets up matches between players over the Internet. Blizzard also is looking into the so-called “massively multiplayer” experience like Sony’s “Everquest,” which allows hundreds of players to play in an imaginary universe that continues to evolve even after players log off.
The Internet has become mature enough to support online gaming, despite previous failures, Morrell contends. More of his company’s upcoming releases will have online features.
GameSpy Industries Inc., a Costa Mesa company that makes software that helps PC game players find matches online, hopes to get a piece of the console market by licensing its technology to game makers to include in their releases. (See story above).
And though Square’s Maruyama won’t give details, he said his company plans a “major” online gaming venture soon.
Newer console systems and online gaming could be just the boost OC’s gaming industry needs to regain its former glory, according to Blizzard’s Sams.
“Both areas have really bright futures,” he said. n
