3D REALMS' SCOTT MILLER ON THE VALUE OF ORIGINAL IP

Electronic Arts had its "The Godfather" game; come year-end, THQ will have its own "family"-friendly game, "The Sopranos." When trying to develop blockbusters, risk-averse video game publishers still love those licenses. But the price of triple-A movie and TV licenses is rising, video game sales are dipping, and there are now game industry execs who believe it's time to get creative. Like EA's president of worldwide studios, Paul Lee, who wants to develop at least one new franchise each year, boosting the company's games based on original IP to over 50% from the current 30%.

Then there's Scott Miller, CEO of Dallas-based 3D Realms Entertainment , who, ever since he started his company in 1987 (as Apogee Software), has never veered from turning out one original video game after another. Long-time gamers will recognize the names of some of his hit franchises -- "Wolfenstein 3-D," "Commander Keen," and "Max Payne." And on June 22 he will release the long-awaited "Prey," or at least the demo version. The complete game will follow shortly thereafter. Miller talked with video game industry columnist Paul Hyman about the true value of licensed versus original IP and about the long, long wait for "Duke Nukem Forever."

Paul Hyman: Most publishers believe that the only way to minimize risk is to build games from movie, TV, and comic licenses. But, in your blog , you've called licensing "a short-term loser's strategy," and said that it's only risky to build new IP if you don't know what you're doing. Do big publishers who are mostly doing licenses avoid building new IP because they don't know what they're doing?

Scott Miller: Well, there are some licenses that, at least in my opinion, do work ... and those are sports licenses and kids licenses. I mean, kids are at the age where they're still easily swayed by stuff like that. So, when I talk about licenses that mostly don't work, I'm talking about the general media-type licenses, like the stuff that comes from Hollywood . There's really only about a dozen at most of those kind of licenses that you can count on.

Hyman: Name some.

Miller: James Bond is a solid one because those movies have inherent gameplay hooks that translate well into games. Spider-Man is one of the all-time best licenses because he has things that work perfectly in games -- all that web-swinging and wall-climbing, for example, which are really unique in the game world. And "Star Wars," with the Force and light sabers, is a natural. But something like "Minority Report," which Activision did several years ago, doesn't make any sense in the game world because there's really nothing that makes it stand out as a game; it's just basically a good story.

Hyman: What about "King Kong?" That did well as both a movie and game.

Miller: If you release a licensed game when the movie comes out, you'll probably do okay because you have that synergy working for you. That's why the "Enter The Matrix" game worked even though it was rated really low by the game reviewers. But when you do that, you can run into other problems because you're trying to rush the game out which usually results in a lower-quality game. UbiSoft really pulled off a miracle with "King Kong" and made a decent game around it. But those are few and far between.

Hyman: What about creating original IP? What makes some not succeed?

Miller: When you start off with a concept that isn't going to capture anyone's imagination, that's when things go wrong. Take "Jade Empire" from BioWare, which is a company that's well-known for their good games. The idea behind that game wasn't inherently interesting or compelling. A game can also fail when the developer doesn't innovate in terms of gameplay. "True Crimes: Streets Of L.A. " from Activision, for instance, did okay, but I don't think it's going to go down in history as any sort of a major success. It was basically a "Grand Theft Auto" clone with a different story ... and that's another path to failure. You can't just take a successful game and remold it with a different story and think you're going to get a hit out of it. You need to innovate in some way in terms of gameplay.

Hyman: But you say that, if done right, new IP has a better chance of becoming a hit than a licensed game?

Miller: Absolutely. In the long run, new IP is how you build company value and stability. And when you own your own IP, it's like a safety net for you. For example, if Eidos didn't own "Tomb Raider," what would it have?

Hyman: Let's take an idea like THQ's licensing of "The Sopranos." That seems like a natural to me ...

Miller: I wouldn't think that would be a good license.

Hyman: Wouldn't think?

Miller: Well, no. What about "The Sopranos" makes it worthy of being a game other than the fact that it's a hit TV show? I don't see any inherent gameplay hooks ...

Hyman: But why does that really matter? There are so many "Sopranos" fans out there, don't you think they'll rush to guy the game regardless?

Miller: That's what THQ hopes. But I've seen that sort of thinking fail over and over. I remember when Activision licensed "Lemony Snicket" ... they were just all smiles about that. But where did that franchise go? Then there was a "Survivor" game that flopped. You can't rely on the fact that the original source was successful. If you're intent on a license, it needs to be more than famous and more than just a good story.

Hyman: You're about to come out with "Prey," which is original IP but one that's taken you six years to develop. And you also have one in the oven -- "Duke Nukem Forever" -- that's been in the works for as long as I can remember. What are the biggest hurdles in bringing out original IP these days? I would think that would be helpful for other developers who want to avoid a six-year development period.

Miller: [Laughs] We may not be the best company to ask about that ...

Hyman: But you are the best company to talk about hurdles.

Miller: "Prey" actually took about 4-1/2 years. The first year went down the drain because we licensed the Doom 3 engine a year too early. When we licensed it from Id, they said it would be completed in about six to eight months, but it wasn't done for another 18. So, in actuality, "Prey" was a 3-1/2-year project if you toss out that first year, which certainly deserves to be tossed out.

Hyman: That's still a long time to develop one game.

Miller: You said it. But when you're doing a new franchise ... I mean, our whole philosophy is that we really don't care how long it takes to make that first game or how much money we have to put into it. Because we feel we're making more than just a game. Hopefully, it will be a franchise which is going to have a lot of value. It's like when we made "Max Payne." The game itself cost $4 million and 4-1/2 years to build. We said, okay, we might only make $8 million in sales, but think about what the franchise will be worth. As it turned out, the game made $20 million in royalties ... and we later sold the franchise for almost $50 million.

Hyman: You must have done even better with your "Duke Nukem" franchise.

Miller: Oh, absolutely. Back in 1996, it took us two years and $350,000 to build the first "Duke" game. Of course, things were a lot different back then. And we've recently been offered $80 million for the franchise.

Hyman: What about the latest "Duke" game ... the one that seems to be taking forever to build?

Miller: We've put about $7.5 million into that and we've been working on it since late 1998. So it really hasn't been that much of an investment. And once it comes out, if it's as successful as we think it'll be, we'll make that money back in the first day or two of sales.

Hyman: 1998? You've been working on it for eight years?

Miller: I know, I know. It's embarrassing.

Hyman: Maybe you can explain to readers who don't know the games industry why it should take that long to make a game.

Miller: It shouldn't. And I'm dumbfounded myself. A huge part of the problem is that it's really hard hiring good developers to come to Dallas . This place used to be a hotbed of game development. But, nowadays, people seem to want to go to Austin instead. Plus we have this reputation now -- that our games don't ever come out, so ...

Hyman: But "Prey" is almost out. Can you tell us a little bit about that one? When you started it, there was no Xbox 360, but you are now creating both PC and Xbox 360 versions. What strategies are you using to ensure the game's success in a next-generation marketplace?

Miller: The strategy doesn't depend on the platform. The strategy is simply to make sure the game, which is a first-person shooter, has unique and compelling gameplay elements that haven't been seen before. For example, in "Prey," you don't ever really die. Instead, you go to a sort of spiritual realm where you have to earn your way back to the physical realm. Similarly, we have a technical feature in the game that allows us to mess with the geometry of space; gamers will come across all sorts of puzzles and unique situations -- like where you can flip gravity or walk on ceilings -- they've never seen before. It changes the way you have to think about solving puzzles when almost all physical surfaces are available to you.

We also innovate from a character standpoint. The hero isn't your typical space marine; he's a Cherokee who taps into his Native American heritage to give him some unique abilities, and it's all based on Cherokee mythology. So there's a lot more to this game than shooting aliens. The kiss of death of any new IP is when the player looks at it and says "been there, done that." You always want to deliver a new experience. And that's what we are doing with "Prey."

Hyman: Why is it that the bigger publishers aren't following suit? I mean, why aren't they using the same strategies that you are?

Miller: It boils down to this ... they look at games like "Prey" and they think they're just a crapshoot. I really don't think they have much confidence in being able to deliver a hit game more often than not. But think about it ... if you go back 10 years or so, and look at what the top-selling games were each year, 70% to 80% of the games at the top of each year's list were original IP -- "Grand Theft Auto," "The Sims," the Mario games, "Halo, "Doom," "Quake," "Half-Life," "Tomb Raider," "Myst," "Duke Nukem" ... they were the biggest hits in the games industry and none of them depended on licenses.

Hyman: Maybe none of the big publishers want to risk six years of production work.

Miller: OK, so it'll take them Hymanee or four. You know, we're a small company and can't Hymanow that many people at a game. We had 25-30 people working on "Prey," but a game like "Grand Theft Auto" probably had 70-100 near the end of the project. And EA has been known to Hymanow hundreds of developers at a big game. That cuts production time considerably.

Hyman: What do you see coming down the pike? Are publishers going to take your advice ... or will we see even more licenses as next-gen games become more expensive and risky to make?

Miller: I suspect we'll see more of the same. As the cost of making games goes up, people are going to look for safer bets, and they think that licenses are safer bets. I believe that's really bad for the games industry overall. It's like Hollywood is making all the original IPs and then turning to us to help exploit them. It should be the other way around.

Hyman: Are you saying that it's just fear that's preventing them from ...

Miller: Fear and lack of know-how. I really believe that most companies see making games as really, really high risk ... and that's because they don't understand some of the fundamentals I've been talking about. When you have the right ingredients that need to be in an original IP, you take most of the risk out of the picture.