Ben Gilbert: belief

Transcript context

…I remember I was just coming into graduating college and getting into media investment banking at the time, people were thinking like, oh man, games are going to be like Hollywood. This is a Hollywood movie-style money. The dynamics are really similar here. This is going to be great. It turns out though that Hollywood is not that good business in the industry, and why is that? It’s super capital intensive. Gears of War 1 was a red herring for a bunch of reasons. It was a launch title with the 360. Microsoft handled so much of the promotion and marketing. When Epic ends up doing Gears of War 2 and then Gears of War 3, the game sells roughly the same amount. Maybe not quite as much in terms of revenue, but their margins end up shrinking significantly down to 30%, 40%, and they’re having to tie up all this huge amount of capital in the investments in developing these games and then marketing them. Tim and Epic realized this is not as interesting as we thought it was. Time to get out. Also, it started to show the tension between the developer-publisher model. For folks who haven’t listened to the EA episode. We talked about this on the Activation Blizzard episode. The developer is the creative. Think about it as the director on down on a movie set where you’re the one having the brilliant ideas and executing on them. The publisher is the investor. They’re fronting the money. They’re doing the marketing. They know how to businessify your creative efforts. The issue is, when push comes to shove like it did after maybe Gears of War 3, Epic wanted to do a multiplayer-only version. They said, look, we think multiplayer gaming is the future. Hint hint, nudge nudge to where they are today. Online is right around the corner, starting to become a thing. And Microsoft was like, no, we don’t care. We want to move more 360s.…

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