Earlier this week, one indie studio had to make a snap decision (based on a lot of factors) and decided to stop selling its game on Impulse, Stardock’s digital distribution service, after GameStop officially takes over.
When the Impulse/GameStop deal was initially announced, many people wondered why Stardock sold Impulse to the retail behemoth. Were they running out of money? Did Elemental: War of Magic nearly bankrupt Stardock? And if Impulse really was profitable, as Stardock’s CEO Brad Wardell recently told Joystiq, then why did they sell it? Or why did they sell it to GameStop of all things?
Wardell was happy enough to answer these questions for us and to clarify what the sale of Impulse will mean for the service’s management, for developers, and for consumers.
For starters, Stardock will be actively involved with the transition of Impulse to GameStop and run much of it from a day to day basis, with the whole Impulse team transferring to GameStop in its entirety. Wardell himself, a key driving force behind the service, will stay involved with Impulse for the next year to advise and consult on the platform’s future. So worries about the lack of his leadership being a detrimental factor in the digital distribution service’s future would appear to be mostly unfounded. For the time being, at least.
When asked about how he thinks Impulse will affect PC sales in the future — and indie game exposure in particular — after GameStop takes over, Wardell was keen to point out the shelf-space issue that brick and mortar retailers traditionally have. Having worked in a retail bookstore as a youngster, and later at Software Etc. and Babbage’s (which later merged into GameStop), he experienced first-hand how only the highest selling products get shelf-space in these mall stores.
Wardell elaborated that “there’s never really been a time, even going back to the CompUSA days, where indies were getting their titles in a store. That time never happened. It’s not like I went in there and I was getting Space Empires III at Best Buy, even though it’s one of the best games ever.”
But the emergence of digital distribution is where indies have gotten their chance to shine. One could argue that looking back on the past five years or so, the acceptance of digital distribution by consumers has gone hand in hand with the rise in indie games development. Of course, the emergence of easy and cheap (or free) tools has had a hand in that as well. But without a way to sell your game without being drowned out, those tools by themselves aren’t all that useful for keeping you off a ramen-only diet.
Naturally, Wardell was happy to explain that Stardock’s Impulse infrastructure makes it really easy for developers to release multiple titles per day. The tech behind Impulse, in particular Impulse::Reactor (basically a Steamworks platform variant) and its GOO DRM solution (which combines an executable with Impulse::Reactor into a single encrypted file) are meant to facilitate indie game publishing rather than obstruct it.
“When we say that Impulse is very technologically advanced, this is one of the areas I’m talking about. […] I think most developers and publishers — especially smaller ones — who’ve had to update their game can attest that getting something updated on Impulse is very quick versus other platforms. And that’s because our system has been designed over the years and years, when we were doing just our own stuff with Object Desktop where we might do multiple updates per day, to make it very inexpensive and easy to update things.
“And that’s really important to indies, because if you’re making a small game and you want to get it up, let’s face it, all these digital distributors are businesses, they’re in it to generate profit. So by having a system where it’s very inexpensive to release updates and get new titles up is one of the reasons why I have no fear of indies going by the wayside with Impulse.”
Of course while Impulse itself might be a fine digital distribution service for developers, the concern of indies in particular, and the vocal online community in general, is not with the service itself, but with GameStop. Wardell doesn’t blame users for being anxious about the impending takeover:
“[With] Any sort of change you don’t know what’s going to happen. I worry about stuff all the time [and] I spent a lot of time when I was younger worrying about OS/2 vs. Windows so I can relate. I guess the best thing I can say is just wait and see. Give them a chance to prove themselves, or to fail to prove themselves.
“But either way, no matter how you slice it, having more than one option for PC gamers is just so critical. It doesn’t require any leap of faith to look at the pricing of PC games and compare it to console games over the past 10 years. And there’s a reason why PC games have come down in price and the reason is competition. There’s so much there to keep prices from going out of control. And that’s why you want to have as many places as you can to buy these things and as many developers as possible to get their stuff out there.”
Since I’m a cheap Dutch bastard I pointed out to Brad Wardell that some games, like Crysis 2, were recently launched as $60 PC games, the same price of the console versions. Being the eternal debater he is, Wardell countered this by reminding me that PC games were even more expensive in the past.
“I remember paying $59,95 for some of the later Ultima games, and add in inflation and you get about a $90 game by today’s standards. […] I believe that if you have enough consumers out there making decisions, that they’ll vote with their buying dollars and that’s what is making the prices go down. It’s not because of any benevolence by any company, it’s because the consumers are making conscious choices.
“That’s one of the reasons I’m happy to see Android games and iPhone games, because the more channels that we game developers have to get our stuff out there, and the more places that gamers have to be able to buy our stuff, the better off we both are to keep anyone from becoming too entrenched.”
But how does Impulse factor into that, and how will it factor into increased opportunities for consumers? In other words, will the GameStop takeover of Impulse turn it into a stronger competitor to Steam? Wardell thinks it does stand a good chance, and that while Stardock has been working on a lot of technology like Impulse::Reactor over the years, the company just doesn’t have the resources to continue down that road by itself.
“I mean let’s face it, you’re running major publisher XYZ and in front of you, you have three platforms. You have Steamworks, Games for Windows Live, and you have Impulse::Reactor. One’s made by Microsoft, one’s made by Valve, and one’s made by… what are they, Stardock? Starrocks or something? Which are you going to pick?
“The technology isn’t what determines the winner. Building the best mousetrap on its own isn’t enough. You have to [be] on the cloud and [have] the sales force and the support infrastructure to really go out and make it successful. And that’s something that GameStop really takes to the table on that.”
The new Impulse might be more competitive through the support GameStop can provide, which is what is required to drive it forward in the future. But it also raises the question of whether that future will have fewer, more dominant digital distribution channels for developers and consumers, which would actually lead to less competition. Being able to support a digital distribution platform is what appears to be most important in securing its future, as Wardell explains when I asked him where he sees the current five largest digital distribution services in two years time.
“Oh I think they’ll all still be there. One of the things is that [concerning digital distribution services] I think there could even be more than that. I think it could even be more fractured, if anything. So it’ll be interesting to see how that goes, because it’s so lucrative. I can’t speak for GamersGate or Direct2Drive, but I imagine that all of them are running very high margins. Because running a digital distribution service is a lot like a casino, except that you don’t have to hand out free margaritas.
“I mean, you’re dealing with virtual goods. There’s no shipping, there’s no manufacturing involved, there’s no sales people, it’s all handled by machines. And the cost […] is really on the back end of having account managers and having developers to keep extending the platform.
“But if you’d ask me where I see things going in 5 years, the next big battle is going to be the Platform War. And that is, on the one side you have essentially the web stores, which I don’t know what’s going to happen to them. I don’t think they’re going to go away, because the margins are so high.
“But if you’re just a web store, that’s going to put you at a disadvantage to someone who has a platform like a Steamworks or an Impulse::Reactor or Games for Windows Live. Because when you have those things, then there’s a mechanism for developers to integrate features into their games that can build communities and that sort of thing. Whereas if you’re just a web store you’re gonna ultimately have to bundle a third-party platform […] onto your store.”
The concept of an impending Platform War is interesting enough and given the current integration of services into digital platforms, like we see on things like Steam, Xbox Live or even Facebook, it doesn’t seem all that far-fetched. Which is probably one of the reasons GameStop is jumping on Facebook as well.
But that’s the future, and this is the present. Or this is. Or this is. What’s more important right now is how the sale of Impulse to GameStop will affect Stardock as a company, and how GameStop is approaching the platform’s future.
“We’re a relatively small company. And I really like digital distribution, but that’s not what I want to wake up to in the morning and do as my job all day. I like making tech, and I mean if you look at Stardock’s homepage, people are always shocked at how many products we have. We’re around 50 people and we have dozens of products. It was never my intent for one particular product or service to dominate the company.
“And in the past year, our company’s had more and more resources put into Impulse because, frankly, it was generating so much money that it was really hard not to put in that kind of focus. But that meant our Object Desktop programs (the kind of software that gets packed-in with HP and Dell pre-built computers – Ed.) were not getting any attention they would get, our gaming products were starting to not get the attention they should get, and there’s been some effect on that that’s been reported in the past year on our other non Impulse-related endeavors.
“And you know, I like making tech. Stardock is a technology company, and we have a lot of really cool things that are in the pipeline that we want to be able to focus on. And in order for Impulse to remain competitive, for 2011, 2012, Impulse is in good shape. But to take it to the next step, you really need to have account managers, sales people, lots of sales staff, account engineers, and on and on and on. Those are things that we were just not prepared to do.
“But on the other hand, GameStop already has these kinds of people. And they’ve assembled an amazing team of people from our industry. A lot of people don’t realize this, but besides the fact that the Impulse team is going over as an intact team, GameStop has assembled some amazing people with it, I mean they have Steve Nix from id over there, he’s my successor!
“I’d like to think that people would feel that it’s in pretty good hands. Just because a company is a public company doesn’t mean, I mean, one should always remain skeptical but at the same time there’s a line between being skeptical and cynical.”
And does that mean that now that Stardock has sold Impulse, it can focus on more fun things like developing games? Wardell says:
“Yeah exactly! I’ve been having a lot of fun doing heap fragmentation coding! Here’s something people talked about, [and] I wouldn’t be surprised if you’ll feel similar to how I do, people always say that money isn’t the only goal in life. But it’s amazing how skeptical they are when they see someone actually choose. I mean obviously we were well compensated too, but my goal in life is to do cool interesting things. I’m not looking to run a multi-billion dollar company. So if I can go and spend time doing cool stuff, that’s what makes me happy and that’s what makes our team happy.”
So, Stardock has sold the profitable Impulse digital distribution service — for quite a large amount of cash one would imagine — to a company that was better suited and more willing to grow it and remain competitive, with all the sales and support infrastructure that requires, in order to focus on the core products like it did before Impulse started to eat into their time.
Rather than choosing to try and become another Valve, Stardock chose to sell Impulse and focus on what they used to work on instead. Which probably also means that something like a future ‘third episode’ of a game franchise shouldn’t take a huge amount of time to release. Hell, it it means I’m getting Galactic Civilizations III faster, I’m all for it.
Brad Wardell also had some interesting things to say about Stardock’s future in gaming in particular, and his vision on the future of gaming technology, but you’ll have to check back tomorrow for that.