Q&A: Gene Mauro's second act

Agent-turned-funding entrepreneur returns to the game biz with Myelin Media.

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Gene Mauro is back. With the ashes of his Capital Entertainment Group (CEG) now cold and scattered, the entrepreneur is about to announce a new business model that he hopes will succeed where CEG did not.

Startup Myelin Media is being run by Mauro but includes Grant Winton, Brett Icahn, and Kenneth Woo in the team of decision-makers and strategists.

According to Mauro, the company is positioned to provide "project financing to independent developers for the completion of unique beta stage projects that are at a first playable stage."

Unlike CEG, Myelin is backed by "a prominent member of the Forbes 400," according to Mauro. But that's all he'll say about the funding. "All of our capital comes from this single source. We don't work with banks or bond companies, so our game financing is pretty straightforward."

Winton and Mauro worked together at CEG, where Winton was the CFO and Mauro was the CEO. They take on the same roles at Myelin. Says Mauro, "Kenneth Woo and Brett Icahn have been working together for several years in both creative (film and games) and financial capacities, and they now work with Grant and me in managing the daily operations of the company. We all came together in one of those remarkably fortuitous 'Where have you been all my life?' moments."

We spoke with Mauro on the cusp of his announcement of the new venture.

GameSpot: How does the new business enterprise differ from CEG?

Gene Mauro: Well, for starters, Myelin has the capital to invest in full production. Unfortunately, CEG never reached this critical stage. However, our experience with CEG showed us that the industry is ready for indie production. CEG shut down because of our difficulties in closing the necessary capital to make the model work, not for lack of industry demand.

Another important difference is that Myelin is not looking to be closely involved in the creative management of its titles. Where CEG was focused on “engineering hits,” Myelin looks to leave the creative aspects of game development with the developer to place our capital and focus toward completion, marketing, and distribution support.

GS: Addressing the point when Myelin comes in with financial backing, does that differ from what was the case at CEG?

GM: Yes, it does. Myelin places the investment target later in the production cycle--at a first-playable level--where the gameplay is demonstrable. At this stage, we can more clearly appreciate the uniqueness of a property and more accurately measure the trajectory to completion.

GS: In terms of content, what are you looking for? Original or licensed content?

GM: We’re looking to fund unique properties that have solid execution behind them. We don't limit the scope of our interest to derivative works or products with licenses. The timing of Myelin is pretty interesting, as the gap between developers and publishers is wider than ever before, and we're positioned to satisfy the demand from independent developers looking for an alternative to the traditional model.

GS: And beyond production, where does the Myelin expertise come into play?

GM: We intend to take a more active role in the marketing, manufacturing, and distribution of our titles than we did at CEG. For example, we bring on marketing contractors with specific expertise for each of our products. We also use contractors to assist in project management, when appropriate. Sometimes we may even go direct to retail, particularly with our PC games, through relationships we are currently establishing.

GS: Any partners to announce currently?

GM: Our first product is being developed by Tilted Mill Entertainment, a Boston-based developer with AAA development history. Chris Beatrice is the president of Tilted Mill, and he and his team spun out from Sierra/Vivendi a couple of years ago to pursue their independent development dreams. Chris and his team have played key roles in many highly successful and award-winning titles, such as Pharaoh, the Caesar Series, and the Lords of the Realm series. We'll be talking a lot more about this game over the coming weeks, so keep an eye out. We are thrilled to be working with Tilted Mill and are extremely excited by the potential of this AAA product.

GS: When does project number one get its full retail release?

GM: We're planning at least one holiday release for this year.

GS: Three characteristics of the game industry you hope to change with the new venture?

GM: It's important to point out we’re not setting out to change the industry. We do see a certain market disruptor opportunity, but our focus remains on unique properties and the independent developers behind them. That said…

We are hopeful that we can make an impact on the struggling independent developer community. As you and I discussed not long ago, there is a growing global trend where many indies are going out of business, so we hope to make some difference here. More than the capital for development, marketing, etc., we offer compelling royalties, we don’t necessarily seek IP ownership, and we don't look to interfere with the creative vision of products. So you can see, our efforts to make an impact go beyond the usual rhetoric. We aim to put the indie in a "copilot" seat to empower their creativity and work closely together in getting a title to market.

We are also hopeful that through Myelin's success (in releasing unique games), the trend for licensed properties and formulaic gameplay will begin to recede some. I don't mean to beat up too hard on licenses, but it's getting kind of ridiculous out there. If we're going to continue to advance the game industry to its true legitimate art/medium potential, we need to stop renting our properties from other media.

Lastly, we hope to stabilize the third-party publishing model a bit and prove that you don't need to be a big publisher to build a profitable business with reasonable predictability. A well-capitalized, private publisher is something that we really haven't seen lately, and we think these two elements alone give Myelin considerable advantage. Small publishers, for example, are bootstrapping and often have to compromise on product quality and quantity by hoping for a "hit" to fill in the financial gaps. Public companies are under constant pressure to show steadily increasing earnings, quarter by quarter, so they always seem to be focusing on the near-term, which can be problematic given "the hits nature" of the business. It's very difficult to take product risk in either scenario, which gives Myelin certain leverage in pursuing properties that others might like to but simply can't because the property is "different" or "unknown."

GS: Three characteristics of the game industry you're trying to change but know will be a challenge.

GM: We wish we could get more game development happening "in the garage" again, but that's a tough battle at this point. The consumer standard is way too high for five or six guys to make it happen alone (without the proper infrastructure to compete), but I do suspect the germs of great ideas will continue to happen at some basic, "noncorporate" level. We’d like to help some of these concepts reach the market. We’ve already seen some interesting opportunities along these lines.

Retail is always an interesting challenge. It's nice to have the clout of the "Big 4" on the shelf, which is something we'll have to work very hard at. Reconditioning buyers to focus back on the product and not necessarily the license will be a challenge. Sell-through wins at the end of the day, so getting those first few products to move is our immediate priority. Once we accomplish that, I think we’ll be fine. We also have a high level of confidence in the future of online distribution, so we're looking for relationships with consumers in several places.

Lastly, we recognize that our impact will be limited to a few developers at a time, so we can't solve the broader indie crisis, but Myelin can be a beacon of hope and a source of capital and support for those willing to stay true to their independence.

GS: Who's got the power in today's industry? The developers, publishers, or brick-and-mortar retailers? Will that change in the next year? The next three years?

GM: Consumers, of course, have the ultimate power. Second, though obviously tied to that, is content. Content is king, and if you have it, you have the power--sort of. But without money to get it made or the network to get it on the shelves, this power is limited. So, to be realistic, publishers currently have the greatest power in the industry, since they get to decide what gets made and what gets promoted and distributed. With the advance of online distribution, this power should shift to developers, to some extent, because this is where most original ideas come from and where all the value ultimately resides. At Myelin, we're using our capital base to level the playing field in a way that brings power back to developers.

We believe developers ultimately have the power, they just don't always know it and certainly aren't always in a position to exercise it. This is why we have designed our model around the developer. Marketing and distribution can be solved for you if you're willing and able to pay. Retailers, of course, have critical leverage since it's their shelf we need to be on. However, retailers are hungry for something unique--as long as it has a big awareness among consumers--so marketing will always be important, but publishers certainly don't have a propriety advantage there.

GS: What's the story behind the name?

GM: We named our company pretty carefully, so you might imagine the word myelin gives real meaning to how we currently see the game industry. Suffice it to say, we believe strongly that each element within the system is important, but without the developer, the system breaks down. Content is king.

GS: In what ways do you see the industry changing over the next 12 to 24 months? Either from a finance perspective or from a more general point of view?

GM: I won't bore you with the obvious stuff, like the increasing costs involved with next-gen development, Hollywood "convergence," etc. I personally think that the industry will begin to shy away from the massive licensing we've seen over the past few years. Putting aside the creative malaise, the costs for these properties are enormous, and frankly, not all the publishers are seeing the desired returns to justify the added financial risk. I know it's not very vogue for me to say this (everyone seems to love talking about Hollywood convergence), but I believe it to be true, and it's one of the reasons I'm so excited to be part of Myelin. Hollywood had nothing to do with the industry's early success, and now that the game industry is eclipsing the film industry, do we really need them for our continued success? I think the game industry will be putting some serious thought into that question over the next few years. I also see mobile/wireless beginning to get some real legs and suspect this category will deliver, while MMOGs are beginning to show signs of their limited growth.

GS: Who do you see as the dominant player in the game space in three years?

GM: The think EA keeps its market lead but, without certain adjustments, loses some share.

GS: Gene, we're in a high-speed elevator, and you've got 20 seconds to wrap up the Myelin message. Talk to me.

GM: Myelin is an independent video game production company focused on the completion of beta stage products for the PC and console. The company has built its product strategy around the independent developer and provides capital and product support management for the development, marketing, and distribution of unique game properties. Our model addresses the needs and talents of our development partners in a way that gives Myelin a competitive edge over the traditional publishing model.

GS: This has been a long road for you, Gene. What’s kept you going, and what is it you really want to do with Myelin?

GM: In my agent days, I used to marvel at all these brilliantly talented artists struggling to get unique properties through the system. I quickly recognized the creative dilemma they were in but also saw this as an opportunity to build something of substantial value. Independent developers need a new source of funding. I don’t think anyone would argue that. More than capital for new ideas, though, developers should be more involved in marketing, promotion, etc., to help their products reach their full potential. This is the stuff that gets me really excited, because I believe independent developers are just now gearing up for what’s coming next.

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