Game Over?

By Michael Fitzgerald | Boston Magazine |

Last year MTV unloaded Harmonix for $50—and $100 million in liabilities. Will founder Alex Rigopulos pull his team together and release another hit? Photograph by Scott M. Lacey

Rigopulos remains upbeat, shrugging off the write-down and fire sale of his company. “That was a strategic decision senior management made about where they wanted to place their bets,” he says. In fact, he seems almost thankful, saying, “It created an opportunity for Harmonix to have a new beginning as an independent studio.” It’s also his shot, after years of focusing on what’s essentially been a single type of game, to prove his company is more than a one-hit wonder.

video games. According to market research firm International Data Corporation, U.S. video-game sales are expected to hit $29.5 billion this year. That’s almost three times the size of the all-powerful movie industry, and the video-game business is expected to do nothing but grow. Last month, for example, the game Call of Duty: Modern Warfare 3 did $738 million in sales — in its first week. It’s estimated that global sales for the overall industry, including hardware, will reach $115 billion by 2015. And unlike the early years, when consoles and games were seen as expensive toys for kids, today, nearly everyone plays some kind of video game. More than 230 million people kill time with nominally free games like FarmVille and Mafia Wars on Facebook.

Massachusetts has become a launching pad for many successful gaming companies. The state now ranks as the fifth-largest employer of video-game developers in the country, with most of the local jobs concentrated in the Boston area. Needham-based Turbine, for example, is part of the Time Warner family, and employs 400 people who create online games like The Lord of the Rings and Dungeons & Dragons. In Quincy, Irrational Games makes the wildly successful BioShock franchise, which has sold more than 8 million copies. And last year, Zynga (the creators of FarmVille) set up a shop in Harvard Square by merging two Massachusetts firms, Conduit Labs and Floodgate Entertainment, into Zynga Boston. In 2009, the 75 or so Massachusetts video-game companies raked in around $2 billion.

There’s quite a long history of exceptional video-game talent around here. Starting in the late 1950s, MIT helped create some of the very first computer games, including electronic Tic-Tac-Toe and Mouse in the Maze, in which players collected prizes like cheese and martinis by, yes, guiding a mouse through a maze. In 1961, an MIT team led by Steve Russell launched the action-game genre — if not the entire gaming industry — when they started building Spacewar!, which involved two players trying to shoot each other’s spaceship out of the heavens.

Russell eventually left Cambridge for Stanford, but Massachusetts continues to draw strong talent. In fact, the Princeton Review says that three of the top-rated gaming-development programs in the country are here: MIT, Worcester Polytechnic Institute, and Becker College.

“Eds and meds and games, that’s Massachusetts!” says Timothy Loew, executive director of Becker’s Massachusetts Digital Games Institute. But Loew believes that the state doesn’t quite understand the gold mine it has. Compared with mainstays like education and healthcare, he says, games are an afterthought.

Another challenge for the industry here is the emergence of smartphone games, which is putting pressure on traditional gaming centers such as Los Angeles, Silicon Valley, and Boston. Then there are the business incentives offered to Boston video-game companies in the hopes of luring them elsewhere. At a Beacon Hill hearing in early October, for instance, Jeffrey Goodsill, the vice president and general manager of Tencent Boston, held up a recruitment package sent to him by the province of Quebec. Tencent is one of the largest gaming companies in the world, worth around $40 billion. At the hearing, Goodsill said moving his branch to Montreal would save him up to 37.5 percent, something he said Tencent’s Chinese management is interested in. Montreal has given out nearly half a billion in tax credits over the past 15 years, and there are now something like 8,000 people working in the industry there. And they’re far from alone. “More than 20 other states are giving incentives,” Goodsill says. “We just need an even playing field.”