January 28, 2007

What failed?

Let's start this discussion by defining the term that will be used throughout this post. Burn rate is the rate per month that a company spends money. This covers all expenses for this company, including rent, payroll, employee benefits, utilities, etc. Usually, this burn rate is split up between projects if a company is working on multiple projects, and is generally quoted on a per-head basis. For example, a company with a burn rate of $100,000 per month and ten employees is said to have a burn rate of $10,000 per head.

Now, I'm not going to be giving specific figures at all, but I'm going to try to lay out what was going on.

When we started on "SiN Episodes" in 2005, we were working on two other projects: "25 To Life" and an unannounced project. As a result, we were able to split the company burn rate between three seperate projects, two of which had milestone money coming in on a fairly regular basis.

At the end of 2005, "25 To Life" was supposed to be ending, and the staff on that project was supposed to split between the unannounced project and "SiN Episodes." However, the unannounced project was cancelled, so everyone in the company moved onto "SiN Episodes." This increased the burn rate significantly, because instead of only having 15-20 heads on the project, we had almost 40 heads on the project. However, it was helping bugs get fixed faster and helping to improve the overall quality of the project.

While this was going on, upper management was trying to sign other deals to work on concurrently with "SiN Episodes." Especially near the end of the project, we had many people who weren't being used to their full potential who could have easily worked on other projects. Unfortunately, having to continue to cover that burn rate led to cost cutting in other sections, like the five-figure testing budget and the even smaller marketing budget.

We were in final negotiations on one project when "SiN Episodes" went gold, so 15 people started working on "Episode 2," and the rest started getting up to speed on the new technology that this other project would require. "SiN Episodes" was selling well enough to fund those fifteen people during the development process. However, there was still the matter of these other 25 people. If enough money is coming in to cover the burn rate for fifteen heads, but your burn rate is forty heads, it isn't a good thing. This is definitely the case when you start talking about critical path items that cannot be shortened by throwing headcount at it, like the code merge.

Several project deals fell through. After five months, when a short-term development deal came along that didn't fall through, it required almost everyone in the company. The few remaining individuals were working on either new pitches to get additional projects, or trying to get alternate sources of funding to finish "SiN Episodes."

Obviously, the ending of this story wasn't a happy one. Ritual was acquired by MumboJumbo, and all signs point to the untimely death of the series. The sad part of this was that the first episode was a success. It sold well enough to pay for the burn rate for the team for the second episode...but not well enough to cover the remainder of the team. It's ironic that for all of the companies that died because of a commercial failure, this one was mortally wounded by a game that could have been considered a success in spite of itself. (Minor update: This may be premature, but my prediction on the fate of "SiN Episodes" may have been off by a small factor. Remember, I've been gone for eight weeks...)

Many people wondered why I was so harsh on the warez monkeys who grabbed illegal copies of the game. Well, if all of the people who pirated the game and contacted Ritual for tech support had actually purchased the game, it would have paid for the burn rate for two additional people from ship to date. That alone may not have changed the tide for "SiN Episodes," but it would have made the landing a lot softer for a few people...myself included.

14 comments:

fds said...

What sucks is that all of us fans were pretty much in the dark about the troubles at Ritual all through this time. As far as we could tell, things seemed about normal until people started leaving the company not too long ago.

Maybe there could have been a way for us to help. I'd not have minded buying a second copy of Emergence just to support Ritual. Now it's too late for that, I guess.

Asking your fans got to be a better way than pleading with pirates who don't listen anyway.

Michael Russell said...

If you are trying to sign a development deal, the last thing you want to do is advertise that you are weak.

It moves you from a position of strength to a position of weakness, and for many publishers, will actually drop you off their list because it plants seeds of doubt that you'll be able to finish the project.

GFree said...

Interesting read.

Looks like Ritual were damned either way when it came to presenting any information about their current status. If they spoke, the fans might have been more understanding, yet as you say, business deals would have had a power shift against Ritual. But by keeping TOTALLY silent about their position, fans have appeared even more pissed at the recent development, and from what I've seen the in Ritualistic forums, even the guys who I thought were ardent Sin fans are pissed at Ritual.

I'm honestly not sure if there was any way to "win".

Andrew Timson said...

As usual, Michael, thanks for sharing this with us. It's nice to know what happened; companies and franchises normally disappear without a trace. Even if we never hear from Ritual again, at least Sin went down fighting.

It's disappointing to see that Ritual was basically the victim of a series of bad breaks. At the same time, though, I'm glad to see that it's not their fault (unless whoever the contract negotiators were deliberately soured the deals)—and I feel somewhat better about the MumboJumbo acquisition.

It does bring up the question as to why, if the first episode was self-sustaining, they aren't continuing the development of the games under MumboJumbo. Though the loss of you, Shawn, and others would be felt, it'd certainly help decrease the ill-will that's currently being felt in the community if we could see some sort of closure brought to the arc the first episode began.

Apprentice said...

Many people wondered why I was so harsh on the warez monkeys who grabbed illegal copies of the game. Well, if all of the people who pirated the game and contacted Ritual for tech support had actually purchased the game, it would have paid for the burn rate for two additional people from ship to date. That alone may not have changed the tide for "SiN Episodes," but it would have made the landing a lot softer for a few people...myself included.
I've said it before and I'll say it again: That's what you'll get when you use a system that is notorious for being pirated. I strongly believe that the number of pirated copies would be a lot lesser then the current number if they had decided to ship the game onto a conventional CD/DVD format rather then using Steam.

Those same "warez monkeys" have proven that it is far less complicated to 'distribute' a <5MB large program (read: Steam crack) then distributing several 700 MB CD-ROM discs or one 4.7 GB DVD disc . . .

Morgan said...

Peter F. Drucker once said that there are only two functions of business: innovation and marketing. When you cut either function, your business will be troubled.

Droid said...

Piracy sucks, but it's always difficult to know whether the people who pirate would have bought the game or just skipped on the purchase if a pirated version was not available. Point being I don't think you can "count" on those purchases and therefore I'm not sure if the game could really be consrdired a success if it didn't cover those 25 people.

I never quite understood the decision to make an episodic Sin sequel. Ritual was already at a disadvantage by trying to get people to buy into a new style of game delivery, but they were also following up, let's be honest, an unpopular game.

The Half-Life 2 episode sold because it's directly following a recent, popular full game. At any other time it'd just be known as expansion pack. It already had a large, loyal install base entering the market.

With Emergence you had a tiny base of Sin fans, but beyond that you had to convince the gaming public that Emergence was:
1) a good game (middling reviews destroyed that).
2) enjoyable without having played Sin (which is wasn't because Emergence lacked any introductory exposition)
3) not a 'risky' proposition - meaning people like to know what the "experience" they're buying into isn't going to be cancelled after one episode leaving them unfulfilled.

Sad truth is that Ritual was never an exemplary game studio, they produced some decent but ultimately forgettable action games. If anyone was going to pioneer episodic gaming - it was not going to be them.

Andrew Timson said...

Point being I don't think you can "count" on those purchases and therefore I'm not sure if the game could really be consrdired a success if it didn't cover those 25 people.

Except those other 25 were never intended to be covered. Emergence paid for itself, and should therefore be considered a success. Failings of Ritual in other areas shouldn't tarnish Emergence's reputation.

I never quite understood the decision to make an episodic Sin sequel. Ritual was already at a disadvantage by trying to get people to buy into a new style of game delivery, but they were also following up, let's be honest, an unpopular game.

This may have had something to do with the self-funding; they were able to fund enough manhours to complete Emergence. But from the sound of things, they didn't have the capital to self-fund a "full" game.

As for Sin being unpopular... *shrug* I enjoyed it. But then, I didn't play it until it came with Emergence. [By contrast, I didn't play the original Half-Life until my roommate introduced me to it in 2003. Call me deprived. ;)]

Blight said...

Very interesting to hear this from you. I bought Emergence, it was my first Sin experience, and I was looking forward to another episode.

I wish you and the rest of the team the best of luck.

Douglas said...

I am saddened by the fact that Ritual had to go. SIN was a great game and I had a lot fun playing it.

On the not of piracy:
You can't really get rid of it. If someone wants a free game they'll get it. They can download it, borrow from a friend and possibly get a no-cd crack, etc. Just because people were able to get hacked Steam games doesn't mean if it was only on CD they wouldn't be able to get it. I mean heck you can get a movie almost the day it comes out in Theaters. DVD quality even.

Sendai said...

Looks like Ritual were damned either way when it came to presenting any information about their current status. If they spoke, the fans might have been more understanding, yet as you say, business deals would have had a power shift against Ritual.

Yes, but you have to respect a company that can keep it's internal disputes where they should be - internal to the company. A company that airs out its dirty laundry for all to see says to me the upper management messed up somewhere along the line and is laying the blame somewhere else.

Maybe there could have been a way for us to help. I'd not have minded buying a second copy of Emergence just to support Ritual. Now it's too late for that, I guess.

That's like saying you could help out Ford by buying two trucks from them. They made bad business decisions and they had to deal with that. A person can lay the blame on a newer generation of gamers not taking to SiN Emergence but it wasn't all that great, or at least not nearly as good as it could have been. Kids take to Halo like white on rice, for crying out loud. That game has the lamest combat next to Counter-Strike, whereas SiN's was actually damn good. Just the rest of the needed components for a good FPS were missing - ie, the protagonist was mute, storyline was bad, the progression of weapons were terrible, the enemies were all clones of one another, and overal the direction of the game sucked.

thewilde said...

One point-
This is the second Steam game I have bought and neither were able to work due to a long registration process and the impossible customer support. Bought the game, but now reduced to pirating a way around all the road blocks made for actual buyers. Thanks- no wonder Ritual went down.

Rudi said...

I completely agree with 'thewilde's gripe ... This is possibly a little of topic yet i think valid.

If i buy a game with my hard earned money... stick it into my machine with the serial code ready ... and for some reason it doesn't work due to complicated registration, i (a) get hugely angry with the development company causing ill will to further purchases, and (b) will use any third party program to get around the issues.

This comment is aimed largely toward stream.

Andreas said...

Worked right away for me. But yeah, RIP Ritual. Loved the games, though I bought them only recently. Serious downer what with the rest not being made.