Texas-based developer Gearbox Software was founded in 1999, and started out working on titles such as Half-Life: Opposing Force and Half-Life: Blue Shift, while also developing the PC version of Bungie's Halo.

In recent years, the company has, relatively quietly, become a major development studio, employing 175 people and simultaneously creating several high profile games for major publishers.

Much of this expansion was initially due to the success of the company's Brothers In Arms World War II combat franchise, but the firm now has a raft of different games in development, including a Wii version of Samba De Amigo for Sega, next-gen sci-fi franchise Borderlines, a FPS based on the Aliens movie franchise, and the soon-to-debut Brothers In Arms: Hell's Highway.

Recently, Gamasutra got a chance to sit down with Randy Pitchford, the company's outspoken president, and discuss wide-ranging topics -- including what it means to own your IP - which the company does with Brothers In Arms - the strategy of staying independent, and who really won the last console generation.

The Old Days

I actually came down to Gearbox after QuakeCon '03 and saw Halo [for PC].

RP: Oh yeah, I thought you looked familiar!

With no air conditioning.

RP: Yeah, that was weird. What the hell? Yeah, we're in the building now. We have the top four floors and we knocked all the walls down and built them much more comfortably.

The same building?

RP: Yeah. We were on the 10th floor when you came. Now we have the top four floors.

Wow.

RP: And we just knocked down all the walls and made a really comfortable environment for us.

It sounds like you've grown a lot since '03.

RP: We're about 175 people now.

One thing I thought was interesting about your studio was that when Brothers in Arms came out, there was this feeling that there was nothing left to do with World War II. Granted, people are still doing stuff with World War II even now, but it kind of went off in a little bit of a left turn for people and it worked out.

RP: We took a risk there, for sure. A lot of the stuff before then, and I've had fun with it... in fact, it was because of Medal of Honor: Allied Assault that I felt that we could finally take the risk and do what we wanted to do in that space and know that there was an audience there. But it was a bit of a risk.

We didn't do the typical "make a Quake-style shooter and just dress it with World War II textures." We said, "Okay, what is that fantasy really about for us?" and did something a little bit different there.

Not just that. Maybe Ubisoft was a little bit of a different company when that happened, but I would think someone in that league would say... I can't impugn Call of Duty, because it is what it is, but I think part of the reason it came about was Activision looked at Medal of Honor and quite literally said, "We want that." You know what I mean? Granted, it's surpassed Medal of Honor now.

RP: Medal of Honor has been... between us and Call of Duty, they're having a hard time.

My point is that I'm happy but a little bit surprised that Ubisoft didn't also say, "We want that."

RP: We brought them the game, and Ubisoft has been a great partner. They've been happy to work with us, and we've been happy to work with them.

When we brought the game to them, we were playing it, and it was a smaller... it was not a complete version, but it was basically what we finished. They were able to see what we wanted to do and understood it.

The other thing is that they're a great company. They're not afraid to try things. They've got the Clancy brand, and they have a few different angles on that.

Some angles are more action-oriented, they've got the stealth thing going, and they've also got a more tactical angle with the Clancy brand. They understand that there are different flavors with these experiences.

And they're a big, publicly traded company, you know? But it's funny, I sit down with [CEO] Yves [Guillemot], and he plays games. He runs the show, and he's the top dog of the whole thing. I think that's neat. We've got that thing in common. He's able to respect things that are good for the sake of it.

Your company trajectory now... was Blue Shift your first commercial product?

RP: No. Blue Shift was, I think, our third. Our first thing was Half-Life: Opposing Force. We did a few of the Half-Life add-ons, and we helped bring the game to the consoles back in that generation.

You did the Dreamcast port, didn't you?

RP: Yeah. There's some folks out here in San Francisco who did most of the technical work, and then we did some help with that, and we created Blue Shift as new content for the Dreamcast version.

Then the Dreamcast went away, and we moved Blue Shift to the PC. You know, I have a gold master of Half-Life for Dreamcast. It went through certification. It was finished.

Yeah.

RP: They had printed the boxes and everything. It was awesome.

I've heard that. It's funny, because it's just another typical example of Sega being ahead of its time, but being unable to capitalize on it.

RP: Sega's awesome, man. I think the Dreamcast was a great system, but yeah, I think it was a little bit ahead of its time.

They had Quake III on Dreamcast with mouse and keyboard support and online --

RP: Can you believe that?

Sierra/Gearbox Software's Half-Life: Blue Shift

And they almost had Half-Life. And now, that's exactly where the market is. But at the time, it was not at all where the market was.

RP: Yeah, they were way ahead of their time there, for sure. They also had Samba de Amigo, which is one of the best games on the platform! When we first heard about the Wii, it was like, "Okay, there's these two things, and you move them -- and that's how you play with the Wii." And the first thing I thought of was one of the games I loved on the Dreamcast. Like, "Dude, we already have the interface. You can totally do that."

So we talked to Sega about it, and it was actually Marc Tardif, one of our biz guys, that was able to put that together and say, "Dude this is so obvious. We should do that."

He started talking with Sega about it, and it was kind of tricky, because it's a Japanese game made by Sonic Team, and we're a western developer that makes shooters. So we had to convince them, and we did. And it's working out great.

So that came from you guys? It did not come from Sega?

RP: No, we pitched them! We had to talk them into it. It was easy to communicate the idea. The hard part was, "Why should we be the ones who do it?"

Let me put it this way... I had the same idea. I loved Samba de Amigo on the Dreamcast.

RP: Who doesn't have that idea? If you loved the Dreamcast...

It's just obvious.

RP: Everybody! It's so obvious.

And I'm like, "Gearbox? Really?" With Blue Shift, a Halo port, Brothers in Arms... there's a certain trajectory, and then whoosh, you're going to veer off.

RP: Here's the thing, though, man. I play games. If you were to look at my Gamertag on Xbox Live, you'd see that I have like 58,000 Gamerpoints. And that's not from playing shooters. That's from playing everything. That's just the Xbox. I have all the platforms.

We're gamers. The industry will want to put us in a box, but we play a lot of games, and we love a lot of games, and there's a lot of dreams we have as game makers, too. It's a cool opportunity to make a sequel to Samba on the Wii.

And the guys working on it, they're awesome. They're really good. I wish I could be down there and actually doing some of the work, because that's a really fun little project.

Sega/Gearbox Software's Samba de Amigo

Do you feel as a business that it's useful to have that core competency with shooters? Does that help you sign deals? Does that help you as a development studio?

RP: I don't know. I think if you're a publisher and you're examining Gearbox, you might think, "Wow, they have a wide range." We're not like Bette Midler, we're like Pavarotti. We've got a wide range of what we can sing with. That's pretty neat. As long as we're capable of doing well with where we apply our range, then we're okay.

I think you look at Gearbox and you can see a couple of threads. On one hand, there's a lot of cool things out in the world that other people have made, and we like to get ourselves involved in those cool things. That's why we did the Half-Life thing, and that's why we got involved with Halo and why we're even doing Samba and other things that are peoples' properties. It's why we're doing Aliens now.

The other thread is building original things, and we're doing that too. That's Brothers in Arms and Borderlands, which is coming soon. I think that, from a business point of view, the sum of all that actually helps, because it shows that there's a range there, and there's an understanding of game making beyond just this one genre.

It's interesting. I was talking to someone with High Impact. They've done both the Ratchet & Clank games for PSP, and some of them are ex-Insomniac. What we were talking about was, to an extent -- there's a regionalization, or you think of regional competencies. I mean, in Texas, the two things I think of are shooters and MMOs.

RP: That's true. I'm in Texas because I once worked for Scott and George from 3D Realms on the Duke Nukem franchise. The last-gen one. Well, not last-gen, five gens ago. (laughs) The Duke Nukem 3D era. There's a lot of folks like me that are in Texas because of id, because of 3D Realms, and because of the shooter companies.

And the people who were at id, and some were at Ion Storm. Then the other thing down there was Origin.

RP: Yeah, in Austin, you have all these MMO companies. You've got NCsoft, and all the things that have come in the wake of Origin.

How To Grow

And then you have Trion. I talked to the guys from Trion, and they picked their locations for their offices based on the existing nature of the business in those locations.

RP: "We need to grow! Where are the people?"

They put an empty building across the street from NCsoft and said, "Hey, we're doing our server stuff here. Why don't you come work here?" And then they put an empty building across the street from EA and said, "Hey, we're making games here." And they put an empty building across the street from SOE and said, "Hey, we're making games here." The one next to SOE happens to be the one where they're developing an MMO, and the one next to EA happens to be other game development, and the one near NCsoft happens to be their server engineering.

RP: That's an interesting strategy. Usually, if I'm going to come to a new neighborhood, I'm going to try and find a way to be friends with everybody in the neighborhood. It's an interesting strategy. We'll see how that goes.

I have to say that I'm probably oversimplifying it.

RP: No, there's a lot of folks who think about all the publishers that start up studios, and part of the what they're thinking about is whether there's an existing base of talent there that they can draw from.

Almost zero projects currently in the industry, when they started, had the capability to complete with the resources they had. Almost every single project in the entire industry, when it started, knows that it needed to grow and get more people than what it had when it started. That's the reality of game development. Everybody's got to worry about how they're going to grow their talent base.

I've taken the approach in the Dallas area to support education. I think the bigger problem in our industry isn't how we're going to steal talent from each other. I think the bigger challenge that we face is that the industry is growing at a faster rate than new talent is being created.

We can always fight for the best talent, but that's kind of a self-defeating thing. We're not going to be able to serve the actual demand for interactive entertainment with the quality that we should be serving it. So what we have is a couple of good games and a bunch of crap with the way it's going now.

But if we can create more new talent than we need, then the best of that talent can thrive and all of the current games that happen can be great. I've been investing a lot in education. SMU is a big university, and they have this program called the Guildhall. You can earn a master's degree in video game making.

I was talking to Professor Lachlan MacKinnon, from the Scottish gaming alliance. He's the dean of the University of Abertay Dundee over there, which has the big program, and it's affiliated with Guildhall. He was saying that Guildhall's a good guarantee that if you complete the program successfully, you will get an industry job.

RP: That's been the result. No school can guarantee that, but if you look at their numbers, that's been the reality. In programmers, one hundred percent of graduates have gotten into the game industry since that program started. That's pretty wild, right? Can you imagine any other school having that stat for other industries?

I saw a Guildhall presentation at QuakeCon the year that I was at your offices.

RP: That was the early part of the program.

It was really interesting.

RP: I believe in that, and I think more of us in the industry -- especially those of us who can most afford to -- should be supporting education and should embrace academia. We're young at it now, and most of the schools are not going to be very good at it at first, but by investing in it and helping it grow, we can help those schools get better at it and create more new talent.

Because I'm telling you, fifteen years from now, the best game developer in the industry is going to be a guy who's not even in the industry today.

What do you think about the other end? Quality of life issues came to the surface a couple of years ago, and I think there's been some movement there, but one of the issues has been that there's a burnout rate, too. You can't retain people and grow them.

RP: I think that when you have... especially a lot of these publicly traded publishers. They have quarters to meet and financial goals, and they try to force the impossible in order to satisfy their shareholders. It's a big reason why I'm going to be independent.

I am independent, and I am going to continue to be, because I have two people I have to worry about. I have our customers, and I have our people. If we're in a marathon, and not a sprint, we have to care about our people. It's not enough to make an awesome game. You have to make an awesome game, and then be ready and excited to make the next one even better.

Maybe not for you specifically, but do you find that's a problem in the industry, that people do burn out and escape and talent does not mature?

RP: Burnout is a problem, and it can happen to anybody. Even in our studio, we've crunched. We care a lot about the results. Sometimes there's the reality of, "Wow, we're landing and we really want to make this better," and we're all working really hard to do that.

And sometimes, it's really interesting how people are. We're not saving the world. We're making video games. But we tend to take a lot of pressure on ourselves, because we all want to do a good job. For some people, that's a real problem, so things like burnout and disillusionment can happen.

It's important that we try and remember why we're doing it, and get back to playing games. Play the games and try to find ways that we can enjoy the process of making them.

Running an Independent Studio

It seems many independent studios end up getting gobbled up, and it's often said that an independent studio is one title away from closing.

RP: I probably would've agreed with that back at the beginning. In the beginning, we had one title, and we had to succeed there. And even succeeding there, we weren't sure that we were going to get our next title.

But today, I have an independent studio. I have a brand that's launched -- Brothers in Arms -- that's quite great. We're able to make money off of that. We're making more than we're spending, and we're creating new brands. Over time, we've been very frugal, and we've built a nest egg, so that we can be careful. We don't have to worry about any particular month.

You don't have to worry about churn so much? That's the problem. If contracts don't get signed at independent studios, they suddenly can't make payroll.

RP: My limiting factor is not money, and it is not opportunity. We have more opportunity than we can possibly take advantage of. Every publisher has been trying to lock us into certain things, because we do a good job.

We do a reasonably good job. I'm just saying that's the reality of the situation. A lot of folks want to come to us with work, and we've been able to be smart with our money. We have enough of it to spend. Our limiting factor is talent, so that's why we've been growing. We want the best game makers in the world to make the best games in the world.

Ubisoft/Gearbox Software's Brothers in Arms: Road to Hill 30

I know there's all kinds of studios in different positions, and when you're trying to build credibility, and if you're spending more than you're making, it's very hard. It's very hard.

But if you think about some of the big guys... look at Epic. They're independent. I'm pretty sure they're in the spot... probably even a little bit better than us. They have revenue from their games.

They're not making as many games as we are, but they have so much revenue from this engine license business that they've got. I'm pretty sure they're not worried about being one game away from going out of business.

Oh, Epic, no. But there's a wide variety of studios out there.

RP: There's also a lot of reasons as to why studios get "gobbled up", as you say. For some, it's an exit strategy. Like, that's actually their goal, that they're trying to be purchased. Maybe it's because they have businessmen running the business, and they're not interested in their creative goals as much as they are in the fiscal outcome.

There's other reasons. Sometimes there's partnership advantages. Sometimes they sell to publishers so that they can focus less on hustling for work, or making the business decisions, and just focus on making whatever game is asked by their employers.

You don't have an exit strategy, then?

RP: No. An exit strategy only exists if the thing you're doing is not an end, but a means to an end. For me, making games is the end. That is the point. Gearbox exists as a vehicle for myself and for the others at our studio to be creative and to enjoy it, be happy, and then to be successful and make money.

If we're going to do something that people like and does well, I think that should go to the creators.

It's interesting. I talked to David Jaffe, and he did start Eat Sleep Play with an exit strategy.

RP: Yeah. I haven't talked to him about that, but then, you're not creating something that's an end. You're creating something that's a means to an end and you're actually wanting something else.

This is totally me, probably, but I have a feeling it's a reaction to having worked for Sony and generating amazing amounts of money for Sony and maybe not getting the rewards that he felt were due.

RP: It's tricky. He's done some great things for Sony, but some of his projects were not cheap. God of War was a high-risk bet. When it comes to risk, Jaffe's risk was opportunity cost, and certainly some his talent and the talent of that team created the result.

But from Sony's point of view, they risked a lot of money, and they also risked opportunity, because they can only manage so many things. So they're entitled to some of that return.

I know I've heard Jaffe talk about how he wants to make more money than he is, and I think it's not surprising that there's many folks in the world that have a little greed as part of them.

But when I got in this business, there was no money in it, and I was racing at it, because it was fun, man. And before I was in the business, I was doing it for free, as an amateur. Just tinkering around with my computer and learning how to program and making text adventures and stuff.

If I could've known that I'd have enough to eat and have a place to live, and I could do that and have fun creating and playing in these virtual worlds, I could imagine doing that forever. So I tried to create conditions so that was true.

The EA Question

When you were speaking about partnership advantages, that's BioWare. I mean, you weren't necessarily intentionally talking about BioWare...

RP: BioWare's interesting, and they're another case altogether. They're created some brands, and they've worked with some brands out there, and they have a lot of things lined up. I think there's probably a few things going on there. None of us can know without...

Well, I'm just saying based on what they said. I'm not just wildly theorizing. I think it's also more for Pandemic's part, because they had already entered into a relationship with EA on Saboteur.

RP: Yeah, but they're also doing things with LucasArts.

I believe that Josh at Pandemic, said essentially a lot of what you just said. It was, "Why do we want to have to chase after the deal every time, and focus on these things that are not actually related to what we are doing?"

RP: Yeah, sometimes people make decisions along those lines. For us, I worry that that might be correct at that moment at that time, but it will become a risk if EA's goals do not align with your studio's creative goals, if you're owned by EA, for example. Or if you're owned by anybody, if their goals are no longer aligned with your goals, you have no flexibility.

Well, that's been the classic EA scenario, I think, over the years. For some studios.

RP: I'm always excited to beat up the evil empire or whatever, but on the other hand I have to give EA some respect. I love [the EA-distributed] Rock Band, and I thought Skate was really cool. I think they're starting to get some credibility back.

I thought with [Medal Of Honor] Airborne, they were kind of missing the point there, but I think especially some of the things that came out of the EAP group at the end of the year is some good stuff, man. I was totally addicted to Burnout Paradise. I'm loving that too, you know?

Were you at DICE?

RP: Yeah, I went to DICE.

Did you watch John Riccitiello's...

RP: I didn't, but a lot of people told me about it later.

It was a very interesting speech, I think. Talking to some developers, I did encounter some cynicism about it.

RP: What was the takeaway of this?

For me, or from people in general?

RP: Both.

I think that the concept of the city-state, which is that their successes, both creatively and, actually, commercially, and with keeping their studios functional, has been to allow them to operate on their own culture and their own wavelength and produce the titles that they want to produce, and that if anything, the culture has to seep into EA corporate and not out of EA corporate and the studios.

RP: I think if that was a statement from John, then that shows some learning that they've done. There's some examples where they've done the opposite and that hasn't worked out so well, like with Westwood and Origin and whatnot.

It's interesting, too. Maxis is an interesting thing. They've pretty much absorbed Maxis, so who's affected who there? That's really interesting. It's kind of a symbiosis.

Those are the same examples he used for both scenarios. I talked to some guys from EA DICE. They had an event with EA to show off the two Battlefield games and to show off Mirror's Edge. DICE is very happy with where they are right now.

RP: They're able to do some cool stuff. I'm sure that makes sense for them, and that's why they did that.

I like our independence, but I can always imagine scenarios that would make sense. I think that if the right people came to Gearbox with the right proposition... the thing is, I'm not chasing that. We're able to chase our own goals, and we're doing it quite well.

The Strength of Owning Your IP

Something that's another business concern -- do you retain IP rights to Brothers in Arms, or is that Ubisoft's IP?

RP: Yeah. Brothers in Arms is a Gearbox brand, and Ubisoft is an exclusive publisher for us for that brand. They are for now, and we have such a great relationship with them that I believe that we'll be doing that with them for a long time.

Most of the publishers ask us about that, and try to see if there's an opportunity for them to get in there and buy it or something, and I say, "Look, they're a great partner, and I really love working with Ubisoft on it."

They've taken some risks with us, and they've done a lot to help, too, because they have a great marketing team and a great sales team. The U.S. guys are great, and the European guys are great.

I love the relationship. I think that it takes a lot of coordination and effort to do what we do. It's not just like, "I make a great game!" and everything else is easy. What they do is hard, too. There's value there, and I think it's smart for us to remain committed, and they're committed to us.

Something of concern is that if an IP is owned by a publisher, even if it's made by an external developer, then the publisher can make decisions on other titles using that IP by alternate teams, and that's probably not always the best...

RP: You're talking about Call of Duty, right?

Maybe I'm talking about Call of Duty or something. (laughter)

RP: Yeah, that's kind of interesting. I don't know about that. I haven't talked to any of the Infinity Ward guys about that. I wonder what they feel about what Treyarch is doing there. I think Treyarch is doing a good job helping Activision monetize the brand.

But it must be frustrating for Infinity Ward when they might have more creative interest there or everything because they're not participating in the monetization of the brand by the other studio. I guess. I don't know.

Activision/Infinity Ward's Call of Duty 4: Modern Warfare

It's funny, because Infinity Ward brought Call of Duty 4 up to modern combat. COD5 will be the next Treyarch one, and move back to World War II. It seems kind of weird.

RP: I think the Infinity Ward guys are great shooter developers, and I don't think they imagine themselves as World War II guys. I think they imagine themselves as great shooter guys. I think if Activision said, "Hey, we're willing to give you 20 or 30 million bucks so you can make a sci-fi game and let's try to beat Halo," I think they'd be excited about that.

By the way, I loved Call of Duty 4. I thought it was a brilliant, fun, fast kind of game. But if I had to read between the lines, I bet some of that was, "Look, guys, we've got to do Call of Duty, but can we do this as a compromise? It's a little bit different, but it's still taking advantage of the brand you helped us build."

There's probably some of that there, and those guys are such pros that they're going to do a great job with it, but I can also guess that they probably want a little more.

I mean, they don't have the freedom we have. And what could they do if they did? Think about what Bungie did. Why did they do that? What does it take for them to be able to do that? What did they have to give up?

I find that amazing.

RP: It's a miracle, isn't it? And that's all creative, right? Because why would you do that? There must be something about that freedom, that liberty you have when you're independent.

What little I know about Bungie and Microsoft suggests it was impossible to engrain the Microsoft culture into Bungie in a truly effective way. They operated in a certain way within the corporate structure of Microsoft.

RP: It's funny when we talk this way, because the reality is you have individuals. There's people. Every person has slightly different motivations and slightly different interests. It's the sum of those who start to feel certain things.

Maybe if you're a guy, maybe if you're an artist on the Bungie team, there's the legitimate fear, "I'm might be working on Halo for the rest of my life if I keep doing this." What's funny is that there's other people in the industry who would kill to work on Halo just once, you know?

But for those of us who get into this and do a great job, we're creatives. We're not one-trick ponies, and we need that. We love caring for the things that we care about, but we also need to do more than one thing sometimes. I think that was part of what happened with Bungie, and I think it will be interesting to pay attention to Infinity Ward.

And you're asking about working on brands. I think there's been some examples where Ubisoft and Gearbox have collaborated. You know, their Shanghai team helped bring the game to the PSP. I think that was pretty nice, for PSP people to get a chance to play the games if they didn't own any other platforms.

But one of the interesting benefits that Ubisoft got from us owning the brand... like I said, people have asked to buy the brand, but some folks don't know that we own it, and you know what they ask me to do? They ask me to make something like it for them, or ask me to work on the brand that they already have. If I didn't own that brand, and they offered me a lot of money, that would be an interesting question, but because I care, right?

Brothers in Arms is mine. It's ours at Gearbox. So there's no other decision than to care for it and love it and do what we can for it. So by us owning the brand, Ubisoft actually has an advantage. They have loyalty that's automatic. It's not purchased. I'm loyal to my brand, and as long as I have a good publishing relationship with Ubisoft and they're publishing these games, then we can trust that we're both committed to each other.

Ubisoft/Gearbox Software's Brothers in Arms: Hell's Highway

If someone controls something... that's how Call of Duty happened, essentially. It was essentially people doing Medal of Honor, and for whatever reason, they were not happy.

RP: I've heard that story from a lot of different folks who were involved in it from different angles, and it's a very interesting story. I should not be the one to tell it. It's actually deeper, too. If you were able to dig into some of the folks at Activision -- you probably wouldn't be able to -- but there was another game that they were pursuing that didn't happen.

They all wanted to make a war game, and then you had these guys show up almost out of the blue that had just done Allied Assault, and it was like this perfect... I'm not really the one to tell that story, but some folks have learned enough about it from different folks that they're starting to piece it together.

And maybe someday later, it will be comfortable for us to tell some of these stories. Now, there's some risk involved, because there's real business going on that matters a lot to a lot of people, and some of these people get concerned of the details if business gets out.

Everyone I've met in the game industry is smart enough to know when to shut up, I think.

RP: I don't agree with that. (laughter) There's lots of fun examples I see where someone hasn't been smart enough to shut up and we get to enjoy it all on the internet.

Yeah, fair enough.

RP: I love it every time it happens. But I appreciate you suggesting that I might be smart enough to shut up. (laughter)

You're making an effort.

RP: That's true. I'm making an effort, and I'm not that good at it, either. Sometimes I talk too much.

You're talking about creativity and how you have a freedom to do the creativity you want to do as an independent studio. The industry is at this crossroads right now where we all agree that we'd like to get a little more creative, but we're not quite there yet. Do you feel that Gearbox is in the same place? I mean, you've done a very good and interesting World War II game.

RP: I did that, and I've done a few other things. I think that we're not even in the vicinity of being done. I think that's true of Gearbox and the whole industry. I mean, look. We're also trying to make relevant games. If I'm an entertainer, my mission is, "How many people can I reach, and to what extent are they gratified by what I offer them?"

So I can make an art film. I can make a game that five people play. But I'm not succeeding as an entertainer. In order to pass that test, I've got to spend some money, and if I'm going to spend money, I've got to make decisions where I can be sure that I'm not going to be spending more than I make, otherwise I won't get to do it again.

I don't disagree. I think it's naive to say, "Why aren't there more art games?" The answer to that is exactly right. This is a business, and this is the entertainment industry.

RP: I think there's great ways to do it, though, and I think you'll even see some examples of that from us. And there are always things that we bring to our games. There was a safer decision we could have made with Brothers in Arms, for example, and we took some risk there, because we wanted to try some things that hadn't been tried yet, with respect to squad combat and tactics, and we wanted to see if we could explore that.

Usually, when we think about the promise of a game, we pick some aspects of it that we can relatively count on, but we will also take some risks in places that we think are interesting. I think Borderlands, for example, has some exceptionally interesting and high-risk prospects and promises to it.

It's a shooter, but it's introducing some RPG elements, and half a million guns. How do you do that? The idea of having an environment with all that stuff in where it does feel like, "Wow, I can get better stuff and improve my character and get better guns and equipment and armor and skills."

That really hasn't been done yet in this genre. So we have to take some risks there and figure that out.

2K Games/Gearbox Software's Borderlands

It's not as safe as Call of Duty 4. It's not. Call of Duty 4 is fun and brilliant. And there's a few risks there. They gave us the AC-130 mission. We all watched the YouTube video and now we got to play it. That was cool. Good for them for doing that. They didn't have to do that. They'd probably make the same money, but they did it. So, good for them.

Those kinds of things are where they can safely go. Maybe we're a little riskier. Maybe we'll make a little less money, but we're still reaching lots of people, and we're doing all right.

Did you see Gore Verbinski's DICE keynote?

RP: I missed it, no. They had me in so many meetings at DICE that I missed some of the good ones.

One of the things that I really took away from it is when he said, in making the first Pirates of the Caribbean, they have the dailies shipped back to Disney, and the people at Disney who are looking at the dailies said, "Holy hell, what the hell is Johnny Depp doing? Is he gay? Is he drunk? What's wrong with his performance?"

And of course, the key to the movies is Johnny Depp's performance, actually. And Gore Verbinski's point is that you can make a big, slick production, but it has to have that nugget of something genuine and something different that ties it together. I see that with Brothers in Arms, in the sense that the squad tactics angle... it's a gameplay nugget rather than a performance nugget, but do you know what I'm saying?

RP: Yeah, thank you. I agree with you. I did not see Gore's speech, but I think there's a lot of wisdom in that idea. We can break down the word innovation. If everything is insanely innovative, we'll all reject it, because it will be so weird that we won't even understand it. If everything is exactly the same, we'll also reject it, because we'll have already had it before and we're bored with it.

The key is making decisions about what we're doing that's familiar and comfortable and twisting it and breaking it a bit so we can be surprised or refreshed by it, and excited again. We don't blindly leap off the building. We take careful steps toward things that are exciting that are on the horizon.

The more risk-averse you are, the more careful your steps are, but the more comfortable you are with risk, then you get things like the Wii, right? You get some things that are familiar, but there's also something totally new or an angle that you didn't expect or imagine.

The Real Story on the Consoles

I think the Wii probably couldn't have happened if Nintendo hadn't been on a downward trend.

RP: (laughs) Maybe. It's nice to believe that a company that... by the way, I don't agree that they were on a downward trend, but I do agree that they wanted to reach more customers than they were reaching.

Depending on how you look at it, Nintendo arguably won last generation in terms of return on investment, if you think about how much they spent, versus how much they made. Microsoft was in second place in installed units, but their balance sheet was largely...

They had one profitable quarter, I believe, with Xbox 1.

RP: They were like a billion and change in the hole with Xbox 1. Sony was profitable late in the PlayStation 2's existence.

They were very profitable, though, because they had such an install base and so much software, and they were selling the software so well. Nintendo, though, in terms of return on investment, might have been in the best spot.

I believe Nintendo only had one quarter of loss during the Gamecube. Then again, of course, the GBA was a big contributor during the Gamecube era.

RP: The GBA was great. The DS was great when they launched it. The Gamecube itself, they're making money on their games, they're making money on the hardware, they're making money in every single place. Meanwhile, everyone else is losing money.

Sony and Microsoft both initially lost money on hardware and had to spend the marketing on top just to get it installed. Then they had to make it up over time with software. Microsoft is still trying to make it up.

They're finally getting to the point where you can actually look and see, I think, some consistency.

RP: Yeah. They're having positive quarterly balance sheets now. We've seen a couple of those. By the way, I love the Xbox 360 platform. I'm a big fan of it. But -- taking a step higher.

Nintendo had some goals there, so they took a risk, and it's nice that they took a risk instead of doing the same thing. It's only by taking a risk that they were able to have a chance to succeed. If they had done the safe thing, they probably wouldn't have succeeded.