WITH EPISODIC GAMING, EVERYTHING OLD IS NEW AGAIN

The next big thing in PC video games may be episodic content, but don't try to convince any gamer older than 35 that they're witnessing anything new. Back in the day, Scott Miller made a name for his Apogee Software by publishing so-called shareware games. The first third of titles like "Kingdom Of Kroz" in 1987, "Commander Keen" in 1990, and "Wolfenstein 3D" in 1992 were handed out as freebies, meant to hook gamers and persuade them to buy the second and third installments.

This last month alone, two AAA developers have gone a similar route and are expecting the video games industry to embrace the concept big-time. Valve Software released "Half-Life 2: Episode One" on June 1 with Episode Two scheduled for the Christmas buying season and Episode Three for the second half of 2007. Meanwhile, three weeks earlier, Ritual Entertainment came out with "SiN Episodes: Emergence" with the next two portions similarly on a 6-8-month timeline.

What's different is that, this time around -- in an age when games are considerably larger than when they fit on one or two floppy discs back in 1987 -- there are no free lunches. Each third of both games, including the first third, has an MSRP of $19.95, although there may be premiums or discounts for gamers who eventually buy all three episodes.

Other developers have similar projects in the works: San Rafael, CA-based Telltale Games is reviving its legendary "Sam & Max" franchise with the first episode of a comic adventure series in the fall, while Santa Monica, CA-based Trilogy Studios is focusing on releasing part one of "Daybreakers," a first-person shooter, in early 2008.

What's all the hubbub?

Developers say it's all about digital distribution, which has enabled them to sell their wares on the Internet without being forced to deal with such profit-trimming middlemen as publishers and retailers.

Before digital distribution, it wasn't cost-effective to divide up a full game and rush to market with, say, one third of the game three times. Doing so would triple the costs of duplicating the CDs, manufacturing the boxes, and distributing them to retail. But with digital distribution, all those expenses vanish -- there are no CDs, no boxes, and no physical distribution.

Both "Half-Life 2: Episode One" and "SiN Episodes: Emergence" are being distributed by Valve's Steam content delivery system, which makes it a snap for gamers to use a credit card for almost instant access to the two first-person shooters.

"The other driver of episodic content is the sheer complexity of creating games today in terms of current technology and the size of the production teams," says Gabe Newell, president of Bellevue, WA-based Valve Software, which has built its considerable reputation on its "Half-Life" franchise. "Episodic is …

… a new way of bringing the size of these projects down to a much more manageable and lower-risk size than they've been lately."

The cost of creating a full-size video game has skyrocketed from $3 million to $5 million a few years ago to $15 million to $20 million, and it takes a team of 30 to 100 designers an average of two years to complete. But a bite-size episode that's one-third the length can be built for about one-fourth the price because code from one can be repurposed for the next. And the teams of 10 to 15 designers finish up in less than a year.

"With the larger, monolithic sort of investment, no one is willing to take risks on building anything new," notes Newell, "which is why everyone is creating sequels and making games from movie licenses. But the episodic formula will mitigate the financial risk and allow more innovative projects that please the gaming community."

The developers will know exactly how pleased that audience is because they expect to get instant feedback from gamers, which will enable them to put more of what fans want into the next episode and eliminate what they don't want.

Newell claims to have already received about 2,000 e-mails from fans in the last two weeks, and every single one was read by a team which determines what information is helpful for improving the subsequent portions of the game.

"For instance, we thought that everybody would understand what was going on with a specific character," he explains. "But, from the feedback, it was clear that we needed to do a better job. That's a real opportunity for us to improve Episode Two, and something we ordinarily would only have learned with a monolithic product after the game hit the store shelves and it was too late to change anything. This way, we're not betting the entire company on a two-year project that we eventually learn isn't what people want. You can call Episode One sort of a glorified test for Episodes Two and Three."

"We're watching all the online forums and taking advantage of the fact that gamers are very vocal, very opinionated people," reports Richard "The Levelord" Gray, a co-founder of Dallas-based Ritual Entertainment. "Not only are we getting their critiques, but word-of-mouth is spreading online about our 'SiN Episodes: Emergence,' and that, of course, is the best kind of marketing."

Additionally, producing episodic games enables developers to provide their fans with content much more frequently. "Gamers don't want to wait two years for the next iteration of a game -- they want new stuff to play. Now we can give it to them by releasing one-third of the full game every six to eight months," Gray adds.

Gray has a long history with episodic content, having worked for Scott Miller at 3D Realms in the early '90s creating the long-running "Duke Nukem 3D" series. It was this background plus the availability of digital distribution that got Gray and his team thinking about reviving the old business model.

"This isn't rocket science. It's such a simple concept, like sliced bread, that I don't think people recognize the beauty of it," he describes. "For me, the best part of it is the quick turnaround. I mean, why wait until you're done with three episodes? Why not just release the first one and get it out there?"

It's also a concept that Phil Harrison endorses and has publicly called for developers to consider, referencing the "water cooler" effect of episodic TV shows like "Lost" and "24." In his keynote address at the 2005 Game Developers Conference Europe in London last year, the executive VP of Sony Computer Entertainment Europe said: "Our industry should move away from putting 20 hours of content onto a 5-gigabyte disc and shift to a model which embraces more of an episodic delivery of content, just like TV. We should look to our games to become more like soap operas."

Trilogy Studios chose to mimic the TV business with its forthcoming game "Daybreakers," having observed that industry's skill at creating new IP and launching it quickly through pilots.

"No one in TV signs 26 episodes up front," says Rick Giolito, Trilogy's president. "You build a pilot, get it out to the consumer and if the response is positive, you build more. That's what we intend to do -- stay in close touch with the gamers who will tell us what they like and don't like. We'll be able to tune our games according to their feedback -- just like a TV series. Our goal would be to release an episode once a month."

Ritual's Gray, too, likes the TV metaphor. Like the wildly popular "24" show, each of the three episodes of "SiN" ends in a cliffhanger and each third of the game becomes more intense.

"We also have the opportunity for spin-offs, just like in TV, if we hear from enough gamers that there's one character, for example, that they really like," he explains. "We could do a whole spin-off on that character."

And while producing a TV-like weekly episode may be too much for one game company to handle, Gray suggests that if enough companies go episodic, there may be a new episode of a variety of games coming out every few weeks. "If enough of us do this, there'll be a steady flow of games. Not the same game, of course, but that doesn't really matter, does it?"

However, some developers may want to wait until the concept is fully understood by the press and retailers; misconceptions have been a hurdle for both Valve and Ritual to overcome.

For example, reviews have been critical of the length of "Half-Life 2: Episode One." The Web site GameSpot, for instance, complains that it is "incredibly short, featuring only four to six hours of gameplay. It's over before you know it."

"Yes, it was designed to have 6 to 8 hours of gameplay," agrees Newell, "which is great value for the $19.95 gamers are paying [compared to the typical $50 for a monolithic game]. "I think the game-reviewing press needs to decide what is a good set of metrics to critique an episodic game. It's like they're seeing their first situation comedy on TV, are trying to compare it to 'Gone With The Wind' and are complaining about its 30-minute length and the fact that it only uses three camera angles."

Because Valve and Ritual have chosen to cover all their bets and sell their episodic games through brick-and-mortar retailers in addition to digital distribution, they've needed to explain to the stores why the games carry an MSRP of "only" $19.95. Typically, games sold at that price-point are known in the trade as "value-priced" or "budgetware" -- usually the quality equivalent of movies that have gone "straight to video" -- and they are placed on low, not-easily-accessible shelves.

But eventually everyone -- the retailers, the reviewers, the gamers -- will grasp the concept, say Valve and Ritual, and that's when other developers and publishers will follow suit.

For the moment, publishing giant Electronic Arts is handling the retail sales of "SiN," which Ritual's Gray perceives as a good sign: "EA saw such a bright light at the end of this tunnel that they went ahead and partnered with us," he explains.

Valve's Newell perceives the current spurt of episodic gaming as part of an experiment to determine how this sort of content works best.

"We've chosen to do it one way -- with each of three episodes being released every 6-8 months -- but I'd be interested to see how other people try doing it," he says. "There's no reason why games couldn't be split into more episodes or released more frequently. And if our customers say they'd like to see us turn the crank more often, that's certainly going to drive our decisions. For us, this is a first step."

He predicts that other game makers will be at a strategic disadvantage should they decide not to try episodic gaming.

"Those people who continue with only large-scale, non-episodic products will find themselves further and further behind in terms of both innovation on gameplay and technological innovation," he says. As for his company continuing with episodic gaming, so far he likes the concept a lot.

"For us," he adds, "being able to do things in smaller chunks has been a godsend."