Q&A: Mark Rein steals thunder at Develop

BRIGHTON, UK--This year's Develop Conference in Brighton, on the south coast of the UK, brought together an interesting selection of gaming-industry professionals from all around the world. With a varied programme spread across several days that looks at many different aspects of the gaming world, ranging from business to design, as well as an awards ceremony, there was plenty on display.

The main talking points arose as early as the opening keynote speech, however. Mark Rein, vice president of Epic Games--creator of the popular Unreal engine and developer of the much-anticipated Gears of War--certainly didn't hold back.

After touching on the economic difficulties of developing games on next-generation platforms, he went on to claim that the notion of episodic content is doomed to failure because the economic model isn't sustainable. "There's a lot of talk, but very little actual success," he said of the idea. "[The customer is] paying $20 for a third of a game and waiting at least six months between episodes."

He compared it to watching a TV series, where people find it acceptable to wait a week between installments. However, Rein pointed out that this model is funded by advertisers, and viewers accept the delay as inevitable. For games, he said, it's different, "Franchise fatigue will set in if you don't shorten the time between episodes. But if you try and shorten the time, you're going to get a lot of recycled content."

The main thrust of his argument was aimed not at companies such as Valve Software, whose episodic Half-Life 2 expansion can command attention by itself. Instead, he addressed his argument at developers who might be thinking of digitally distributing episodic content as a means to sidestep the traditional publisher relationship to take a game to market.

But Rein saved the most controversial comments for the end, with his warning that the PC-games market could be about to implode. He laid the blame firmly at the door of Intel and its integrated graphics processors, which often come built into motherboards. A longtime critic of integrated graphics, Rein said Intel's inflated claims that IGPs can run games would lead PC purchasers not tech-savvy enough to install graphics cards to turn to consoles for guaranteed, high-level game performance.

[UPDATE] After Rein's keynote address, he sat down with GameSpot to explain the reasons behind his fiery rhetoric.

GameSpot: Let's begin with episodic content. There were a couple of titles you alluded to, with Half-Life 2 being the most high-profile one. Aren't you convinced the episodes like Half-Life 2: Episode One will work?

Mark Rein: Half-Life 2 I'm sure will work for them. It's Half-Life 2. I think any great property can break rules, right? They've always been a rule-breaker. I just think it's a kind of a flawed business model for everybody else because everybody knows Half-Life. You sneeze Half-Life and everybody runs to you with a tissue. Whereas an unknown IP, or a lesser-known IP--who's going to pay for the marketing? How do you justify a marketing spend to sell little pieces at a time? There will be episodic content that will do business, but I think it's few and far between. [But] I just think that developers are jumping into this business model thinking, "This is my savior because I couldn't find a publisher." You need a publisher, you need marketing, you need to have a partnership there.

GS: So what you're saying is that there are dangers for people thinking that episodic content could be right for them?

MR: Yeah, absolutely. This is a developer conference, so I'm talking solely from a developer standpoint. I think that developers who head into this thinking I can go do this by myself are going to find that this is no less treacherous than the normal ways of doing business, and the risks are higher and the rewards are lower. That's all. I don't want to completely pooh-pooh it. I just want to make sure developers realize that it is fraught with risk--more risk than finding a good publishing partner and working through the normal ways the industry works.

People have proven that they will buy full-price games. And I think there's an opportunity now, now that we have three solid platforms you could do the 400,000-unit [business] model. I think any well-crafted, well-executed game can sell 200,000 units in North America and 200,000 in Europe. That seems well within the grasp of what people can do. There's $8 million worth of income for a developer there, assuming they don't even have participation in the back end. So, I think there's a good solid business model that if you can make a $5 million game, you can make a $3 million dollar profit, and potentially more. To me that's a good reason to stay out of [the episodic model] for now.

GS: You mentioned the PC market is in trouble.

MR: Yeah.

GS: I think it's probably fair to say that you were kind of laying the blame fairly squarely in one particular direction.

MR: Intel! Intel Integrated Graphics.

GS: You kind of have a gleam in your eye when you say that.

MR: Intel Integrated! Yes! Yes!

GS: It's a crusade then for you?

MR: It's true. Nobody's talking about it, but it's clear what's going on. One of the guys came up to me after the event and he goes, "You know, you're totally right about this." He says, "There are lots of people that played Half-Life [One], because integrated graphics would run it fine." Same with the original Unreal. Even Unreal Tournament--you didn't even need 3D graphics then. But when games graduated to 3D graphics to keep up with the constant requirements of consoles, all of a sudden now we have a whole class of PCs that can't play games anymore--the PCs that the majority of the people happen to be in the market for.

This would be different if we could say that, "Well, the majority of PCs are the high-end ones and these low-end ones are a problem because gamers gravitate to them." That's not the case. The vast majority of PCs sold are under 800 pounds (about $1,400). The numbers there are so much larger than everything above it that it's just insane.

Intel could have fixed this problem years ago. It could have made integrated graphics glued to a decent Nvidia chip. I'm not talking about the high end. I'm not saying you need a GeForce 7950 GX. But the point is Nvidia makes a perfectly good 7400 chip that's probably within a couple of bucks' price difference from the Intel one. Yet because Intel's not the one doing the testing and all the other things that Intel does to certify their platforms, the hardware manufacturers are staying away from it.

Another reason is because they don't see PC gaming as a big viable thing. The thinking is, "Well if somebody's interested in PC gaming we'll sell them this gaming system." But they don't realize that if you sell that low-end guy a gaming system that's at least capable of giving him a taste, you have a chance to up-sell. You have a reason why he would want two cores this year and four cores next year, and eight cores the year after. Otherwise--what's the reason now? Oh, Vista? An operating system that consumes more resources? Is that how we're going to sell computers from now on? Just keep piling more and more crap on top of Windows to be the justification for better PCs? I don't think so. I think we're beyond that point. I think Windows XP runs great on dual-core, and Vista will run just as well on a nice dual-core system. Windows is no longer the excuse for upgrading your machine. So they better find some excuses or they're going to find that they're going to have a tough time selling upgraded machines.

And that's why Intel has so much competition from AMD these days. And that's why they're rowing the boat so much harder right now. Here's a way to fix this. My position is that they're just blind to this problem. They don't realize that, "Oh, yeah, we're doing a great job selling hundreds of millions of CPUs, and people are buying integrated graphics." It's what is available in the price ranges they're willing to buy. Nobody's choosing Intel Integrated Graphics. It's the lowest end, right?

Nobody's choosing that. They're getting it because that's all that's being manufactured in their price range. I think that's a very dangerous situation. If I were Intel, I would probably be out subsidizing Nvidia chips and ATI chips so that they could be in these machines so the people could get a taste. And I'd be preloading a game. Maybe not a violent game like ours, but preloading at least some sort of cool 3D experience so people go, "Oooh, there's more to this. I can go further. I can buy a faster processor next time. I can buy a discreet graphics card. I can move up."

Laptops are a huge, huge problem. Laptops are a complete dead end. The problem really manifests itself when people switch from desktops as their primary computer to laptops. They have to exit gaming because the majority of laptops can't do it. [Intel's] answer is, "Oh, sure but there's lots of laptops with these good chips." Yeah, yeah, $2,000, $3,000 laptops--and they're huge.

GS: So what's happening is that people are buying consoles, playing games on them, and seeing that they perform better than their low-end PCs, and hence they exit the PC games market.

MR: If I'm playing all my games on consoles, and I'm just using my PC for business, I won't need that upgrade all that soon. I'll probably get an extra two years out of my next PC. Guess what? Intel just lost a CPU sale from me. If that becomes epidemic, you're going to see a big change in Intel's profit soon. If that snowballs that could really hurt them.

GS: Is this a trend we're looking at for the future?

MR: It doesn't seem like the path they're on now is a smart way to build volume for the future. If I were running Intel, I would certainly not be thinking that way. And I'm sure there are smart people running Intel, but maybe they're not aware of this problem.

Let ATI and Nvidia fight it out for doing benchmarks. I don't know the right solution, but Intel could fix the problem, that's the thing. They could fix the problem if they made integrated graphics more competitive with midrange Nvidia and ATI, then--and ATI and Nvidia would also push up their midrange chips in performance, and push the high end further. It would be a win-win situation for everybody.

GS: Bill Gates at E3 talked about the Xbox 360, Vista PC, and mobile phone coming together via Live Anywhere. Is that credible?

MR: That's going to be for consumers to decide. I think that's kind of cool that you could manage your content from your phone. You could choose to order something, check what's going on with your Xbox Live account, or your friends' games, or see somebody's achievements. I thought that was kind of cool.

But at the same time, I find it kind of scary because they're putting a lot of control in Microsoft's hands, a closed system that in the past we haven't had on the PC. The beauty of the PC has been the openness of it. And maybe for the PC to survive and improve as a gaming device, maybe we have to accept a little bit more of a closed platform. Maybe Xbox Live is the answer. Maybe that will actually help the platform. Maybe there will be Xbox-Live-certified PCs, and they'll treat it like a platform and have a package, and they'll talk about their packaging campaign for Windows.

I applaud those efforts to move it in that direction and kind of turn the PC into a future console. But the consumer has to cotton to it, and it remains to be seen if that's what's going to happen or not. I think [Microsoft is] making great strides in doing cool stuff. I'd love to see Sony mount a viable challenge to that.