ISV Q & A : Nic Watt on Nintendo, R18+ classifications and gaming software

Nic Watt, founder and creative director of games and application software developer, Nnooo, is on the cutting edge of the industry. The Independent Software Developer's sales model is entirely around digital downloads for the iPhone, Nintendo Wii and DS. He speaks to MATTHEW SAINSBURY about the future of digital distribution and the broader gaming software industry.

Can you give me an overview of Nnooo and your background?

I’ve been in the industry for about 10 years now. I was working at Electronic Arts in London, and my partner got offered the chance to come to Australia, so we made the decision to move out here. It was at that point I sold some property I had in the UK, and decided to make the jump to running my own small games company.

It was around about the time that the small downloadable titles were starting to come to market. Microsoft had just launched Xbox Live Arcade, and I thought the future of these small downloadable games was quite exciting. Particularly from a small company point of view, it was something we could achieve.

What are the advantages of downloadable titles over a full retail release?

For us, the one thing I wanted to do was to make the games I wanted to make. When you work with a really big company, such as EA, that becomes very difficult, because you’ve got to go through so many different stages and there’s so many approval mechanisms. Quite often, the people higher up in the company have their own vision for the kinds of games they want to have made.

Also, the hard part of making a full retail game is it costs a lot of money – when you start up a new company, it’s very difficult industry for people to give you $5, $10 or $20 million to make a videogame unless you’ve done something like make a Halo or World or Warcraft in the past.

My partner works in business, and we chatted a lot and it seemed to be a good idea to try and keep costs low, and to keep control of the finances ourselves rather than get venture capital startup money. I really wanted to try and see if we could achieve something with a relatively small budget and grow from there. Creating downloadable titles is a really exciting process – you’ve got a much shorter turnaround for creating a game. A big project like GTA or Halo will normally take 3-5 years to make, and in that time you’re investing a lot in technology. It’s not until the last year that it all comes together and you’ve got an amazing game.

That’s very risky because if that game doesn’t sell well, then you might not make your money back, or you might be waiting a year or two to make a return and you might have to make a lot of your staff redundant in the mean time, which is something you see in the games industry a lot.

I’ve got an end game that I’d like to make in the future, but all the games we make up until that point are stepping stones in technology. So instead of just waiting four years and then bringing one product out, we can instead make lots of little products along the line and they’re going to contribute towards the bigger product.

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Do you see downloadable games and applications replacing retail in the future?

I do think downloadable will become the future of the industry. I don’t know whether it will happen in the next console generation or it will be a couple of console generations before they’re solely download services, but it’s definitely going to become developer’s main focus in the future.

Part of it is it makes piracy a lot harder. If you look at the Xbox 360, because the whole console is permanently online, and Microsoft can detect if you’ve hacked pirated games and therefore ban you from Xbox live, the user then has to decide whether he/she wants to download games and play them online, or pirate them. If I’m pirating them, I’m losing out on all this amazing other stuff you could be doing with the console. I think that’s very clever and I think future manufacturers are really looking at that.

And then you’ve got the other side of the situation where video game shops trade in a lot of games – you can go in with an old game and they will sell it again. For EB and JB Hi-Fi, it’s great because they’re selling the same game twice – they pay Nintendo for the original copy and then buy it back from the user and sell it again for a good profit – so they get almost twice as much money. But the games developer and publisher only make one sale. A lot of the publishers want to stop that market.

What are the sales like for downloadable games and applications?

I’m not quite sure why, but console manufacturers are very strict on us releasing figures, but as an example, EA announced they sold 20,000 units of a Burnout game on Playstation Network in its first month of release, and we’ve done comparable figures in less than a month for MyNotebook Blue [one of three notepad applications developed by Nnooo] on DsiWare. That’s as specific as I can be.

So that’s considered a success for a download title?

Yes, definitely. We needed to sell less than 20,000 units to break even across the whole line of MyNotebooks – Blue, Red and Green for development costs, so within two weeks we’d paid back development costs, and now we’re well past that.

What are some of the difficulties with operating in a new market such as downloadable games and applications?

Budget is really difficult. And it’s making sure – especially at the outset – that we have a product we know we can achieve and get out within a time limit, and that we don’t spend all the money at once and have to close the company down. If you’ve got enough experience and know what it is you want to do, and as long as you’re realistic about what you want to achieve, most of these problems can be resolved.

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How do you determine which console you release a product for?

When we first started the company, I was looking at going for the Xbox 360 or Playstation Network, because I thought they’d be huge. I’ve always been a Nintendo fan, and I knew they were going to do the virtual console downloads but wasn’t very sure about the WiiWare side of things, so I started discussions with all of them.

Microsoft run a very closed shop – it is very particular about the processes you go through to get a game approved and put onto Xbox Live or Arcade, and you’ve got to spend a lot of money getting the game to a certain point by yourself before Microsoft will even give you development kits, or approval. We started down that road, but for us it was a very risky proposition. If you’ve built a prototype game but someone comes along and cans it, you’ve probably already spent six to nine months of development time on that, and for our business it could have put us under.

On the other hand, everyone says Nintendo is a very conservative company but I found they were almost the opposite. Nintendo just wanted to hear ideas and what sort of experiences we could put on to the Wii, so we pitched about 10 concepts, detailed them up a bit more, and when the people there seemed happy with the ideas, we were approved. Since then, it’s been a really open system. As long as you fit within those boundaries, we’re allowed to make just about whatever software we like, which is brilliant.

What’s your opinion on the lack of the R18+ classification rating in Australia? Would Nnooo develop R-rated games in the future?

In terms of us developing R18+ products, probably not – there are a couple of ideas that I have that would be borderline, but they’re a very long way down the track.

Will it come to Australia? Yes, I think it will – I think it’s inevitable that Australia has to wake up to the fact that games are for more than just children. If you look at it as a medium, it has been a boy’s medium for so long, and it has explored all the things that boys predominantly find fascinating. But now the market it growing up.

If you look at TV, it has exploded into all kinds of different directions, such as Dexter, Californication and the Sopranos. They all explore different, but adult topics, and I think there’s going to come a point in games where you’re going to have a game that doesn’t necessarily involve violence but can still be a R18+ game. Those are the sorts of experiences that we want to start bringing to games – the idea that there’s deeper emotional content, than just running around shooting things or driving.

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Have you found it difficult as a small developer to get legitimacy in the market?

Yes, it’s hard, obviously the big gaming websites like Kotaku and IGN are interested in the big games and software, and are looking for big scoops – so for us as a small company, it’s very difficult to even get noticed by these big websites because the type of software we’re making is small, and the experience isn’t as in depth as World of Warcraft. Having said that, what I really like about working on Nintendo platforms is there is such a strong community, not only of users but also specialised websites that are telling users about the various new applications. There are a couple of really good ones that have sprung up just around WiiWare and DSiWare.

What’s the Australian climate like for developers?

Because we self fund, we don’t have the same business model that I think a lot of Australian developers face, where they’re constantly trying to find publishers that have a product, or sell a product to a publisher to keep working. I imagine that’s probably very hard, particually now with the PS3 and Xbox 360 and how amazing the graphics are that these machines can generate, and how expensive it is to make a game. If you’re a publisher, you want to make sure you go with developers that have a really strong track record, because you don’t want to spend $30 or $40 million and not make it back. I think particularly for Australian developers, that market it going to get harder and harder as HD becomes more prevalent. I’m quite glad we’re not in that market.