Remedy: "Single-player games are stronger than they have ever been" At Reboot Develop, CEO Tero Virtala examined the new opportunities streaming services will create for independent AAA developers

Matthew Handrahan Editor-in-Chief Thursday 2nd May 2019 Share this article Share

Companies in this article Remedy Entertainment

The next few years will be a golden era for independent companies with the capability to develop AAA games, according to Remedy Entertainment CEO Tero Virtala -- one kickstarted by new digital platforms backed by huge companies, all hunting for unique and exclusive content to sell their services.

Speaking at Reboot Develop Blue last month, Virtala gave a detailed account of a long period of transformation at Remedy, which started a few months ahead of the launch of Quantum Break and is still ongoing even now. Despite its strong reputation within the industry, by April 2016 Remedy had launched just "four big games, and two smaller ones" in the space of 20 years, all of them the kind of single-player experiences that the AAA industry appeared to be moving away from.

Change was needed, the company's management decided, and, "a small change was not going to be enough." After a deep analysis of its strengths and weaknesses, Virtala laid out a strategy that would take Remedy not just to its next big project, but to a sustainable future where it could make the games for which it is known, but in greater quantities, and with full ownership of the IP.

"Not everyone loves Remedy games, and that's fine with us," Virtala said. "We know there is a certain group of gamers that really likes what we do, and there is a certain part of the media that loves what we do. And also developers, who like to make the type of games that we do. We believe in what we're doing, and there are enough people who share that view."

"Not everyone loves Remedy games, and that's fine with us"

Virtala continued: "We want to keep making AAA games, they have to be ambitious, and we have to be able to do it faster than in five or seven years. At the same time, we want to create a future where we are in full control of our own destiny, so if we succeed or if we fail there is nobody else to blame -- it's because of the actions we have taken.

"We defined three key pillars: We continue making games that stand out in the market, that are built on the world's characters and stories, and that are action games. We also need to take those games in a direction that provides longer lasting gameplay, with new storytelling techniques."

Fuelled by the money raised through an IPO in April 2017, and some high-profile contract work on SmileGate's Crossfire 2, Remedy is now approaching the end of what Virtala described as the "first phase" of that transition. The actual end, he implied, will be the launch of Control later this year; a project that embodies the creative values for which Remedy is known, but also demonstrates new strengths in the way the company operates.

Control took three years to make -- around half the time it spent on Alan Wake -- and it was developed in tandem with its work on Crossfire 2's story mode. In addition, there are two other projects also in development at the Finnish studio, so it won't be five years after Control before we see another Remedy game.

"We've created two games faster than we've ever done before," Virtala said. "We have grown from 130 people to 220... We haven't launched any games in the last two years, and we've still been able to run a profitable business and, most of all, we have been taking care of our people."

What happens when Control launches, though, will be decided by two other questions Virtala posed to the Reboot Develop audience: "What is the market in which we operate, and what should our place be within that market?"

"The race is on for the Netflix of games... For the next two to three years, the big boys are going to invest heavily in this"

The market has expanded and changed in myriad ways since Remedy started on the path that produced Max Payne and Alan Wake. However, when its new strategy was laid out three years ago, there was no doubt that the company should continue to make "big screen games for gamers," with an emphasis on the console market.

"And the really good news is that there are positive developments on many fronts [in that market]," Virtala said. "The console platforms continue to develop strongly all the time. The PC platform, for the first time in history, now has a really strong competition among the online stores... The Nintendo Switch has proven to be a really lucrative and interesting platform for many developers."

Existing platforms have grown stronger and more diversified, then, but the more important development is the emergence of brand new ones -- specifically Google Stadia, and the myriad other streaming services from companies that will soon have a dire need for good content, and a lot of money to invest in acquiring it.

"The race is on for the Netflix of games," Virtala said. "We don't know how it's going to happen, when it's going to happen, if it's going to be subscription services... But the fact is that for the next two to three years, the big boys are going to invest heavily in this.

"And every single person knows that, in the games industry, to sell a new platform you're going to need unique and exclusive content. With these new platforms and new distribution opportunities, there is a wider reach for our games, and also wider partnership opportunities."

"In the games industry, to sell a new platform you're going to need unique and exclusive content"

Those opportunities are particularly well suited to the segment of the "big-screen games for gamers" market that Remedy occupies. The company's games are not in the very top tier of "AAA blockbuster game services," the natural habitat of multiplayer-focused products like FIFA, Call of Duty, Fortnite and Battlefield -- "a very black and white market," Virtala noted, "either you sell more than ten million units or you fail."

It is also not in the level down, "AAA blockbuster games," which are best represented by the likes of Uncharted and God of War. These can be single-player experiences, but they still need to sell at least five million units before they make a profit.

"When we were discussing with publishers three years ago, many of them were quite doubtful about what would be the [AAA blockbuster] single-player game's future," Virtala admitted. "Now, with the success of many of Sony's games, the success that Ubisoft has shown, we are seeing that single-player games are stronger now than they have ever been."

Virtala located Remedy's products in a part of the market he described as, "focused AAA games." Here, games have significantly lower budgets than the biggest AAA productions, and that affords some creative freedom to explore "more distinctive themes" through a "narrower feature set."

"But that narrower feature set is done in a really high quality way, and still provides enough gameplay time for the users," Virtala said, adding that focused AAA games can be, "full-price, and need to sell between two and four million units. If you are able to manage the development budgets, it can be a very profitable and lucrative market."

"Any one of you with the capability to develop AAA games, you're going to have lots of interesting opportunities"

Focused AAA games may prove to be the safest bet for companies seeking to drive users to their platforms with original content, Virtala suggested; a winning combination of high production values and distinctive voice, without the prohibitive costs of the most expensive games on the market. The question Remedy needed to answer to assess the size of the opportunity was one that investors often asked when it went public: "Who are your competitors?"

"We don't understand how many developers are out there, so we did a big study last summer," Virtala said. "We saw that, on Steam, there are about 22,000 games from over 5,000 developers. But we were mainly interested in Xbox One and PlayStation 4, so we studied every single game that came out from the launch of those consoles until the summer of 2018.

"What are the platforms? What is the selling price? What has been the reception? What developer? What publisher? A number of different things."

The research showed that around 2,100 games launched on Xbox One and PlayStation 4 in that time period, which were made by 1,250 different studios. When Remedy narrowed the crop down to studios that made AAA games of the three varieties Virtala described, it left only 250 games from 150 developers.

"Then we started breaking that down: 100 of those studios were owned by Microsoft, Sony or a publisher, so there were only 50 independent studios [that made AAA games]. Then we went even further; you have fantastic studios making racing games and sports games and remakes, but only 25 of these independent companies have story in an important role.

"And our estimate of how many of those seem to have the capability to create a completely new IP is about 15."

This leaves Remedy in a rare position; one of a surprisingly small group of developers that can create the kind of high-end, original IP that will be so valuable to the new wave of digital distribution platforms -- and one of an even smaller number with the independence to pick and choose their partners freely.

"Any one of you with the capability to develop AAA games, or AA games with the possibility to grow towards AAA?" Virtala said. "You're going to have lots of interesting opportunities."