Recession-Proof?: Rebuilding Chicago’s Video Game Industry (Part 1)
Jaime Calder
When Electronic Arts (the video game juggernaut behind such longstanding successes as Fight Night, Madden NFL, and The Sims) set up shop in a custom-designed, six-story studio in Chicago’s West Loop, things could not have looked brighter. Lauded as one of the company’s fastest growing branches, Mayor Daley heralded the studio as a contributor to “Chicago’s reputation as a global center of innovation” and a generator of jobs for local developers. Midway Games, the industry icon known for such games as Mortal Kombat and Spy Hunter, was just a few neighborhoods to the north, and Alex Seropian, otherwise known as The Man Who Invented Halo, had recently returned to the city to develop his latest company, Wideload Games. Additionally, Columbia College had just commenced the inaugural year of its new Game Design curriculum, an interactive media program following in the footsteps of DePaul University’s two-year-old Game Dev Program, and entrepreneur Howard Tullman was accepting applications for the first class of Flashpoint Academy (now Tribeca Flashpoint Media Arts), which was set to matriculate in 2007.
Screenshot from Day 1 Studios' "Fracture"
Chicago’s video game industry was awash with talented companies and busily in the process of training the next generation of game designers, developers, and artists. Nintendo’s newly developed Wii console had just sold over 1 million units in its first month on the market and Microsoft’s Xbox 360 had sold over 5 million units since its release in late 2005. Whispers of a recession were growing louder amongst business analysts, but what did the video game industry have to fear? After all, these were the same analysts who had been calling it a “recession-proof industry” since 2002 – a concept supported by such news outlets as MSNBC, CNET, and Barron’s Magazine. The future was brighter than the glare off a new PS3.
Then, after only a year in operation, EA Chicago abruptly closed shop in November 2007, laying off all 146 employees (including some who had been hired mere days before the announcement). The financially-insolvent Midway Games declared bankruptcy in 2009, while smaller companies hemorrhaged talent at an alarming clip, leaving only a handful of studios in the city that had birthed Space Invaders.
Robomodo
As industry losses mounted, game sales, to the surprise of many, remained steady – even rising. According to the ESA, the entertainment software industry’s annual growth rate has come to more than 7 times that of the national economy over the last four years. Employment rates have been increasing at a rate of roughly 8.65% per year, with roughly 32,000 individuals directly employed in 2009, with 4,000 of those individuals working in Illinois. Surely things in Chicago must be on the rise?
Yes, no, and sort of. In September of 2009, Warner Bros. snatched up Midway, rebranding the company as “WB Games Chicago” and hiring back some of those cut from the original team. A mere two months later Disney acquired Wideload Games, naming Seropian VP of creative and immediately setting to work on the recently-released Guilty Party, a party/puzzle game for Wii. In 2008, five former employees of EA and Midway banded together to form Robomodo, a company which quickly rose to prominence after assuming control of the famous Tony Hawk series, while Day 1 Studios released Fracture, the product of their recently formed partnership with LucasArts.
The weight of so many recognizable names certainly can’t hurt the rebuilding of Chicago’s gaming industry, but names are not always enough, and numbers can be misleading. Yes, video game hiring is up – but the forecast for job retention is not quite as bright. Game companies persistently hire a slew of developers, artists, and other talent for singular games only to drop them with the conclusion of the project.
Mike McShaffry, a 20-year veteran of the industry and author of Game Coding Complete, theorizes that this phenomenon causes companies to cluster in active locations, like California, where it can be easier for a laid-off developer to find a new job. A greater number of studios in Chicago could encourage more designers to stay within the city limits, fostering a mutually beneficial environment of experienced creative talents and a range of companies in various sizes needing their expertise. It would also create a better job climate for the many students just graduating from Chicago’s new video game education programs. These students will be educated and weaned on the local industry, but come graduation, may depart in search of a more appealing work environment.
Wideload
To function on California’s level, Chicago will have to up its game in a serious way: though Illinois may be the sixth largest employer within the video game industry, it accounts for only 3.63% of the workforce – a far cry from California’s 41.27%. (California, of course, being the number one employer and producer within the video game industry.)
One option to woo potential operations is to create a fiscally appealing environment for companies to work in. Tax incentives have long been used to pull in Hollywood ventures, and in recent years similar efforts have catered to companies such as Texas’ Blizzard Entertainment, who receives a return of at least 5% for spending of over $100,000, and Michigan’s Reactor Studio, who enjoys a whopping 42% tax credit on all in-state expenditures. Wideload’s Tom Kang and Robomodo’s Josh Tsui have both spoken out in favor of the idea, and according to gaming journalist Nathaniel Edwards, Disney has been actively lobbying the local government to get on board.
Considering the city’s (and the state’s) current financial situation, a short-term tax incentive (the industry average is presently 5 years) might not be such a bad notion – even in the face of the recent economic crisis, the video game industry surpassed its own expectations, adding $4.9 billion to the GDP and $606,000 to the Illinois GDP. The 2009 film industry credit took mere months to produce positive results (presuming, of course, you’re the sort who considers Terminator 3 a result of anything “positive”) – perhaps the gaming industry could replicate such sudden movement, creating the level of creative cache Chicago needs to compete with Silicon Valley and keep its talent – new and old – here.
