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The independent imagination

Insomniac guards its freedom, refusing offers despite rising costs. Ties with Sony help.

November 26, 2007|Alex Pham | Times Staff Writer

It takes a certain mind-set to invent a gadget that causes a video game's villains to start disco dancing.

For Insomniac Games, an independent studio in Burbank, the Groovitron is a signature touch -- zany, unexpected and over the top. Other wacky weapons in Insomniac's latest game, "Ratchet & Clank Future: Tools of Destruction," include the Transformer, which morphs enemies into cute penguins, and the Gelanator, which traps foes in cubes of lime gelatin.

Insomniac's whimsical take has helped catapult nearly all of its titles to the top of the game industry's bestseller charts, alongside titles produced by much larger and better-financed companies.

"There are very few places that have that sort of maniacal focus and unwillingness to compromise on quality," said Mood Rowghani, a vice president at Summit Partners, a Boston-based private equity and venture capital firm. "These guys have it."

With the average development budget for a commercially viable video game now more than $25 million, many studios have sought financial refuge by selling themselves to private equity firms or big publishers such as Electronic Arts Inc. or Activision Inc.

But Insomniac has remained one of a handful of developers that insist on dancing to their own funky tunes.

"Being independent is insurance that we can continue to make our own decisions," said Ted Price, Insomniac's 39-year-old founder and chief executive. "It lets us focus on making good games."

It's a familiar refrain with Price, who sang the virtues of independence in a 2002 article in The Times. Back then, Insomniac had 50 employees, and it cost less than $10 million to make a video game.

Now the company employs 150. Its game budgets have more than doubled, which means projects are riskier than ever. Developing games on next-generation consoles such as the PlayStation 3 and Xbox 360 can take as much money and manpower as a Hollywood movie.

That's largely because much of the technology used in creating special effects in movies are the same ones used to create ultrarealistic graphics and lifelike animation in games.

Insomniac's ability to survive as a stand-alone studio despite the surging costs stems partly from its relationship with Sony Corp., which bankrolls much of the firm's projects and spends millions of dollars marketing its games. In return, Sony owns the intellectual property rights to the games, which can be played only on Sony's PlayStation console.

The arrangement was lucrative for Insomniac when the console was dominant. But sales of the PlayStation 3 lag behind Nintendo Co.'s Wii and Microsoft Corp.'s Xbox 360, which means Insomniac now has fewer customers to buy its games.

"In some ways, Ted's leaving money on the table by not publishing on any other platforms," said Geoff Keighley, editor of the website Gameslice. "On the other hand, there's something very noble in the fact that Ted has remained loyal to Sony through thick and thin. As the PS3 has struggled, Insomniac has kept pumping out the hits for Sony."

Price sees it differently.

Although he wouldn't rule out publishing a new game for other consoles one day, he said the PS3's powerful graphics capability lined up well with Insomniac's interest in making big, complex and visually lush games.

"It's very symbiotic," Price said. "We are great at making games. Sony's great at publishing them. And everybody wins. This has gone back over 10 years. Since we're independent, we don't have to work with Sony, but we do because it's gone extremely well."

Sony's financial backing also has meant that Insomniac never needed to go elsewhere for capital. Price continues to politely turn down every offer that comes his way.

Independent developers Pandemic Studios and BioWare Corp. recently sold out to Electronic Arts Inc. for a combined $775 million, but Price maintained he wasn't interested in money.

"If we were to sell, things would change," he said. "We like our size. It's fool's gold to assume that having more people adds to your success. Adding more people just adds to the chaos."

Price found that out over the last five years, as his company tripled its head count.

He and his partners, worried they wouldn't be able to keep control over a much larger company, took a private management course.

They incorporated some suggestions from the program, such as planning more for the long term and taking notes during meetings to keep track of the decisions made.

They chucked much of what they learned, however, preferring to return to their roots as a goofy, informal company that focuses on creativity and fun.

Insomniac has a Frag Fest Fridays tradition -- employees are expected to spend hours rocking out in "Guitar Hero," exercising their vocal cords in "Sing Star" and playing other games. Price has taken his workers go-kart racing. Once, after meeting a particularly grueling deadline, he treated his employees and their families to a cruise to Mexico.

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