Q&A: What's next for Daybreak, now that Sony's MMO studio is on its own

John Smedley is a game company exec who seems perennially psyched about game development.

Back in January he spoke excitedly about seeing an "astounding" market for free-to-play games on consoles, noting that he and his team at Sony Online Entertainment had seen great success in porting the company's MMORPG DC Universe Online to the PlayStation 4 as one of its first F2P titles.

But in February news broke that Sony had sold Smedley and his team to investment firm Columbus Nova, under whose aegis the studio was renamed Daybreak Game Company. Shortly thereafter, Daybreak laid off a significant number of people, including long-time staffers who held senior positions on games like EverQuest Next.

Now Smedley is making the rounds to talk about what happened, and what comes next for the company formerly known as SOE. With a new name comes a new logo, a new office and new goals, chief among them making a show of turning the sale into a strength by spreading to new platforms and further embracing community development through Early Access. 

This week Gamasutra caught up with Smedley and Daybreak senior VP Laura Naviaux, who helps oversee the company's global sales and marketing agenda, to talk about the change to Daybreak and what it means for the company's game development efforts going forward.

An edited transcript of our conversation, which touches on everything from life under Sony to dealing with online toxicity and the role modders play in supporting game communities, follows.

Let's talk about what happened this year. What motivated the sale of SOE, and where do you go from here?

Smedley: We were always sort of a round peg in a square hole at Sony -- we were the PC game-making division inside the PlayStation company. So a few years ago when they were going to start trying to sell off stuff that wasn't their core business, one of the businesses was us.

So we went around for about two years, and Sony was very patient -- they waited until we had the right parnter to talk to, and the right fit, and we talked to a lot of people who weren't the right fit. Some of those places would have been horrible to work at, but instead we got the best of all worlds: to have investors that believe in us, and to build the company we very much know we can and want to.

So then why did you have to move offices and cut staff? Was it as simple as carrying too much cost and not generating enough revenue, or something more complex?

Smedley: It's that simple: Our costs were higher than our revenues. We had to right-size that. It was extremely hard. But in terms of the transition -- if I'm being blunt -- that was the only negative thing. That part sucked, and still continues to, because we still know these people. They're our friends, and we know the ones who are still out of work. 

So that part was bad, but every other aspect of [the transition] has been really terrific. It's hard to explain this, but...it's like the difference between renting a house and owning it. You treat your house a lot different than you treat someone else's, if you know what I'm saying -- there's a pride you take in it. Making the logo was a really big deal with us. Naming the company was a really big deal to us. It's very personal -- it's not just a corporate thing -- because this is where we spend so much of our lives.

What does the company look like now, from the inside? How big is Daybreak, and why are you moving house?

Smedley: We're about 250 people [in San Diego]. We're moving to the new office because...we hate this one. We're in Laura's office, which is on the edge of two streets, and every single day she has to watch a car crash. Literally. We're not making this up.

Naviaux: The nice thing about the new building is that we get to do the full buildout, so it's going to look like our own company. It will look, and will be, much more of an entertainment company, instead of what we have here, which we've sort of just made work.

Do you still maintain your satellite studio in Austin?

Smedley: We do, and we plan to do so for a long time to come.

So how does this transition affect your approach to game design, going forward? 

Smedley: Well, we got to carve out our own identity under the Sony brand, but...we were still under the Sony brand. That meant there was a level of care we had to exercise in many of the things that we did, because the name "Sony" was on the front of the building.

So I think you're going to see us become a bit more adventurous. We'll probably expose more of our developemnt that we otherwise would have at Sony, because as a smaller underdog company we have to make the connection with our users even tighter than a company like Sony. They've had so many years to build up the brand. We're going to go well over and above what you've seen us do to interact with our players.

Naviaux: This company now feels more like a startup. People do things with more enthusiasm, with pride and a greater sense of ownership. But I think we don't have all the challenges of a startup: we have existing revenue, existing IP, an existing product pipeline. 

Was it tricky to bring that IP with you?

Smedley: That was just part of the deal. Since we made the IP and ran it the entire time, that simply came with the company. What we're excited about now is the difference between someone else owning it, and US. It's our IP now, and it feels like it belongs to Daybreak. It doesn't feel like just another asset of Sony's, or something. It really matters to us.

I'd guess there must be more pressure on you now to consistently generate revenue -- there's no Sony corporate umbrella to fall back on.

Smedley: It may seem that way on paper, but in reality the pressure is significantly less for a simple reason: we can take the same game and spread across multiple more platforms than we could before. So not only are we profitable now, but that will make us much more so as time goes on. 

So you don't have maybe the same space to fail, but you have more options for ways to produce revenue?

Smedley: Yeah. Here's an example: Sony companies are run with a headcount. You budget your headcount, and that's what you have to stick to for the entire year. 

As Daybreak, we've already had a conversation with our new owners about whether we can go get new people if we need them. And it's absolutely an enthusiastic "Get the people you need to do the job." So we've already started calling back a number of people from the layoff, who are definitely our first choices.

The difference now is we can do that in real time, so we're much more nimble. And I mean, Columbus Nova doesn't get involved, even a little bit, in game design. That's not what they're here for. 

I've read the Reddit threads where people are asking about what it means to have a private equity involved in games like this, and...I mean...private equity companies are all over our industry. They own or partially own most of the companies in our business, or at least own a large stake in them through public investments.

So from our perspective, the boss hasn't changed: it's still the public. And that's exactly how Columbus wants it: they want us to keep our players entertained.

So what's the biggest risk, going forward?

Smedley: Fortunately for us we're blessed with a lot of good games that are generating revenue, so we're in good shape on that front. But certainly, losing the Sony name -- while we're excited about Daybreak, losing the Sony name means we have to now do a lot of work to open doors that the Sony name would have opened for us. 

That's true in the press, that's true in many places. So for example, to your question about whether we can do the same things as Daybreak that we could at Sony -- that's a very interesting problem for us.

Now we have a company that's behind us, but that is outside of the business. So when we want to do something, a new business thing, we have to actually justify and make a business case for it. And honestly, that's a very good, very positive discipline. But at Sony, there was nobody in the PC space with us -- we were kind of on our own with that. 

I don't know; I think the concerns that I have, have more to do with our ability to execute than anything to do with the business move to Columbus Nova from Sony. It's hard to tell the difference, other than that we have more freedom now.

From a design perspective, Daybreak seems to be embracing Early Access. Do you think SOE's history as a massively multiplayer online game developer, with regular community interaction, patch notes and the like, resembles your workflow on Early Access?

Smedley: I think it does. Early Access is a very interesting era of game development, as far as I'm concerned. We have the crowdfunding aspect to it, but in general what you've got is people taking money for something before it's done. That's the truth. That's what we're doing, that's what everyone else on Early Access is doing.  

However, most of what I've seen -- I'm going to say seventy-five percent of Early Access SKUs I've seen on Steam -- I think the developers are good, and are going to deliver.

But we do see some where it's very obvious that whoever's making it is just in it to make a quick buck, and doesn't care about supporting it. I think the larger studios like us have a much better ability to deliver on their promises in Early Access, and I like that ability.

How has your game design workflow changed over the last few years, as the company has evolved?

Smedley: Not really specific new processes, but what I would say is that we're opening those processes up. What that means is, people see your stuff -- this isn't ten years ago, marketing-wise. I can't imagine, ten years ago, describing a product that was out but still "in development" -- people wouldn't know what to do with that. 

This is the norm now; people are used to seeing stuff earlier, and what I think that's done is sort of educated our playerbases and given them a lot more insight into the creation process itself. I think that's a real positive for the industry, making our developers much more well-known and getting them to interact one-on-one with the playerbase.  

I know that, as a fan, I can imagine that when I was growing up, if one of the game companies I followed did that, that would have been awesome. The fact that we and other game companies are doing that is a good shift for the industry.

Naviaux: Because we've been doing games as a service for the better part of 16 years, we have a really good understanding of how to manage these processes and be transparent. You really have to make a commitment when you do Early Access, and through things like our roadmap, and Reddit, things like that, we're committed to the players being part of the process.

That's not easy for all companies to wrap their heads around, and once they do it's a whole other challenge to invest that information back into your work so you can actually pull off weekly patches that match the desires of your community.

So how do you feel about the state of online discourse? John is a very public figure, and I wonder how you've learned to deal with online toxicity.

Smedley: It's a mixed blessing; you better have a really thick skin. Lots of things that we think are seemingly innocuous, or that people are going to love, wind up blowing up in our faces. And because we've been so open about it, we're openly showing them a new feature and they're like, 'We didn't want this. We didn't ask for this. You're an idiot for showing us.' 

You get that, and just simply have to accept that when you're this open, that's one of the consequences. You're going to get feedback, both good and bad. We've just embraced it. For me, that has meant some good things and some very bad things.

But the good outweighs the bad. And I mean that from a very public point of view. 

Game development is opening up, to be sure. I wonder what your thoughts are on Valve's recent attempt to launch a payment system for modders who want to charge for their work on Steam Workshop?

Smedley: I followed that whole thing extremely closely. I believe Valve is right in the first place, and there's a time for modders to make money. In fact, I'm very proud of the fact that our most popular mod, Battle Royale, from the very beginning we started sharing revenue with the guy that made that. It was important for us that he gets a piece of it, because it's his baby.

So I think it's the future, the inevitable future. I watched the whole overreaction, and I say overreaction, because I fail to see how this is ever bad as long as it's a choice. I hope this issue comes up again in six months. Maybe it's like gay marriage or legalizing pot -- there's a time and a place for it, where the industry needs to catch up. I think this will come up again, and I hope it does, because I strongly believe that creators are the lifeblood of what we do. Making sure that they can monetize that, if they want to, is an important thing.

I vote with my money every chance I get. I'm a huge Dota 2 player, and I buy the Workshop stuff every chance I get. It's a good feeling, and that modders should be excluded from that makes no sense to me. They should be first in line, in my opinion.