Games: Award-winning studios struggle to finance projects – 12/16/2023 – Tech

Brazilian studio Rogue Snail, which launched the game “Relic Hunters Legend” in partnership with Netflix after six years of development, laid off 17 employees in the month following its publication.

Founded by Marcos Venturelli from Rio de Janeiro in 2014, there was no shortage of evidence that the studio was enjoying its glory days, with contracts with large North American companies and the announcement of its game at the Game Awards, equivalent to the Oscar for video games, with more than 2 million of views on YouTube.

Inside the company, however, the atmosphere was one of apprehension. At the beginning of 2022, when “Relic Hunters Legend” was already entering its fifth year of development, the studio began negotiating a new secret project with a major international publisher.

As the agreements progressed, new hires were made, leading the studio to reach the 50 employee mark – something unusual for Brazilian game developers.

However, in March 2023, Venturelli and his partners were caught by surprise with the sudden cancellation of the project and the cut of funds to Rogue Snail.

At the same time, global industry giants began to carry out mass layoffs, such as Take-Two, Amazon (both on its streaming platform Twitch and its games division), Riot, Microsoft and Electronic Arts – in the latter alone, 800 lost their jobs in the beginning of the year.

With the resources needed to sustain accelerated growth being cut, the pressure fell on the “Relic Hunters Legend” development team, which would require a massive launch to cover the company’s expenses.

“It was like working with a gun pointed at everyone’s head,” says Venturelli, who considers 2023 the most difficult year in the studio’s history.

Launched in September, the game had a lukewarm reception, resulting in mass layoffs, carried out, according to Venturelli, with transparency and dialogue with employees. “We did this maneuver to stabilize the situation,” he says.

When “Relic Hunters Legend” began development in 2016, “Destiny,” the game that inspired it, was still popular.

However, over the long period of development, other commercial successes directed the sector towards different genres.

“That’s the difficulty of doing things at a disadvantage,” explains Venturelli. “If we had already had enough resources at the beginning, we would have finished much sooner. We have to assemble the plane while it is already flying.”

The Minas Gerais studio Long Hat House, which had international success with its praised metroidvania (action subgenre inspired by “Metroid” and “Castlevania”) “Dandara”, did not deal with layoffs, due to its small size – it has six people –, but is having difficulty financing its new project, which has been under development for two years. “We thought that after ‘Dandara’ it would be easier to get resources”, says Lucas Mattos, co-founder.

The new game, a modern RPG with current themes, inspired by the urban culture of Brazilian metropolises, not yet officially announced, was rejected by international publishers.

With the unavailability of foreign capital, the solution was to resort to the notices of the Paulo Gustavo Law. However, with an offer of just R$300,000 for the development of a complete game, a value considered low by industry standards, the team had to submit a smaller and simpler project — a setback in relation to the game they had been developing and to “Dandara” itself, released in 2018.

Without new financing, the studio survives on profits from the sales of “Dandara”. “We held back so as not to expand, not increase salaries and our own quality of life”, says Lucas. “If we had followed the standard path and expanded, with foreign capital, today we would no longer be able to do so.”

In the opposite direction, Brazilian developer Pocket Trap, which already had a TV cartoon based on one of its games, “Ninjin”, managed to close an agreement with a publisher in 2023 for its new project, but not without tribulations: it took contact with more than 20 foreign publishers.

They closed with a company smaller than the company that financed their last game, “Dodgeball Academia”. “It’s not just quality, fun and charisma that counts,” said Henrique Alonso, co-founder of the studio. “They want the game to fit into what they expect as a low-risk investment, which is very difficult to find in games.”

According to Carolina Caravana, vice-president of Abragames (Brazilian Association of Digital Game Developers), the current crisis in the global games industry is a reflection of the reduction in investment in the sector after the Covid-19 pandemic. “People once again have other in-person leisure and entertainment options and have less free time at home to play.”

In this scenario, larger companies, which were operating at an accelerated pace to meet increased demands during the period of social isolation, are the most affected.

In Brazil, which has few large studios and is strong in outsourcing – outsourced production of specific parts of large international projects –, there has not yet been a widespread crisis, explains Caravana.

However, when it comes to financing, the story is different: 60% of Brazilian game companies are financed by international private capital. “If they stop investing, this also impacts Brazil’s industry.”

The phenomenon, which affects growing companies with medium-sized projects, such as Rogue Snail and Long Hat House, once again limits the Brazilian industry to low-budget and reduced-scope projects.

Pedro Falcão, narrative designer and part of the board at Rogue Snail, believes that the situation contributes to brain drain, and complains: “the whole world can make great games and we can’t?”