Her greatest challenge, however, lies ahead–not in a ruined temple, but in the fast-changing global marketplace. Can Lara Croft lead Britain into prominence in the 21st-century information economy? Last fall Britain’s minister of Science, Lord Sainsbury of Turville, issued the call. In a speech called “Science and the Knowledge Economy,” he tapped the daughter of Lord Henshingly Croft as Britain’s “ambassador for British scientific excellence,” who would help spread the message “that we are still a force to be reckoned with.” And while that may seem a lot to ask of someone who’s merely a collection of 586 polygons, the minister isn’t entirely off his rocker. Tomb Raider, along with other hit titles such as Goldeneye and Grand Theft Auto, is proof positive of Britain’s flair for creating these high-tech amusements, the fastest-growing segment of the entertainment industry. Analysts reckoned 1998 would be a banner year if the British video-and-computer-game industry’s sales hit £1 billion. Lara (who returned in Tomb Raider III in November) and her pals brought home £1.2 billion. The industry showed a positive trade balance in 1998 of £250 million, far outshining the British film and television business, which in 1996 had a deficit of more than £190 million. “Last year was a tremendous milestone in the history of our industry,” says Roger Bennett, director-general of the European Leisure Software Publishers Association (ELSPA).
With that kind of momentum behind her–not to mention her expertise in archeology and her sweet touch with an M-16–you might think Lara would be reporting back to Lord Sainsbury in a few weeks with the treasure in the bag. Alas, the truth is she’s probably overmatched this time. The reasons are rooted partly in the game industry itself but, more profoundly, in British business culture. How can it be that Cambridge alone boasts more than 1,100 high-tech firms, yet Britain has no company comparable to SAP, the German software giant? It’s a question Lara can help to answer.
The worldwide game market–which includes both computer and videogames– has doubled in the last three years. It has morphed from a niche business for teenage boys and hard-core gamers into an industry that moved $15 billion worth of software in 1998, according to the Interactive Digital Software Association. Key to this growth were the introductions of two consoles: Sony’s PlayStation in 1994 and Nintendo’s N64 two years later. And key to the more than 50 million PlayStations sold, say folks at Sony UK, is Lara Croft, who comes in a PC version but looks downright dazzling on the dedicated console.
Besides having been developed by a British shop (Core), Tomb Raider is also distributed by one. But in this it’s an exception. Most of Britain’s games talent is clustered not in hardware, not in publishing and distribution, but in the creative–which is to say, cottage-industry–end of the business. So while England’s hundreds of small development companies are great at thinking up games, they almost always need American or Japanese capital to develop them and sell them to the rest of the world. The biggest names in game publishing, such as Electronic Arts,GT Interactive, Sony and Nintendo, are American or Japanese. Of the 18 leading global publishers, only three are European, and only one–Eidos, which publishes Tomb Raider–is British. It was the British developer-publisher Rare that built Goldeneye, the Bond multiplayer hit, but the Japanese company Nintendo that sold it. The global hit Theme Park was dreamed up in Britain but made a household word by the American giant Electronic Arts. “British people tend to be good at creative things,” observes Demis Hassabis, managing director of the game developer Elixir Studios. “But they don’t think globally, and they’re not that ambitious.”
That will mean less and less clout for the Brits in the years to come. With the advances in software and customer sophistication, game development is getting to be a harder market to get started in: four or five years ago, developing a game cost about £40,000. Now that customers want 3-D graphics, sophisticated story lines and haunting scores with CD-quality sound, developing a game runs about £1 million. “The weak link in the British games industry is being able to find investment for producing the software,” says Bennett. “While there are some smaller publishers who are willing to pay, it’s more often the major multinationals who are eager to make that investment.”
Like many moody teenagers, the British game industry claims it’s deeply misunderstood. In the City of London, that’s partly true. Only six game publishers have managed to go public, and they, say industry-watchers, are routinely undervalued. According to Nick Gibson, a game analyst at Durlacher Research, those four trade at humble multiples of around 15 times earnings–whereas European and American game companies are valued more highly. British game executives say that would-be backers simply don’t have enough information about what they’re missing, because very few City firms even have game analysts. Throw in Britain’s notoriously conservative investment culture, where the moxie and the style of venture capital that helped build Silicon Valley is largely absent, and the gamers have a real problem. Even the British government acknowledges as much, in a 1998 official paper on competitiveness from the Department of Trade and Industry. “In the U.S., entrepreneurship is widespread because entrepreneurs are highly regarded and well rewarded,” the summary baldly states. “In the U.K., entrepreneurs are still too often viewed as mavericks.”
But even outside Britain, the computer-and-videogame industry has been hard-wired with challenges. The short shelf life for software and limited lifespan for hardware make it a volatile business. Add in the fact that it’s a creative industry, with millions riding on long-haired developers meeting production schedules and ship dates, and you’ve got investors spooked. “People don’t understand this industry,” says Douglas Lowenstein, president of the U.S.-based Interactive Digital Software Association. “It’s sometimes seen as entertainment, sometimes seen as a toy business and sometimes seen as a kids’ industry.”
In Britain, the pinstripers may be nervous partly because they remember the industry’s grungy roots. The nation’s game industry was born in thousands of teenage bedrooms in the early ’80s, on first-generation home computers. Kids–mostly boys–would write their own games and hawk them in the schoolyard. One industry legend, Jeff Minter, would sometimes give away his games, which invariably featured llamas, camels or sheep. Get a few old-timers together and they’ll wax on about Minter classics like Mega-galactic Llamas at the Edge of Time. Indeed, up to about 1994, the “industry” seemed little more than a group of guys who sat around computers by day and the local pub by night. “One night I joked that somebody was going to come along–I just said ‘Sony’–and say ‘Here’s £5 million. Now piss off’,” recalls Paul Franklin, who worked at Psygnosis, a small company based in an old warehouse on the Liverpool docks in the early ’90s. The whole table laughed. Six months later Sony bought Psygnosis. The day a Sony executive was due to fly to Liver-pool to check out the company, cleaners came in to make the place presentable. Lifting one trash can, they found maggots.
The structure of the development side of the game business can be just as messy. Teams of designers come together, design a game, then split up and move on to form other teams. “Nonconformity is the name of the game,” says Roger Bennett. And a touch of non-conformity, realize the big industry publishers, is what makes for hot games. Though Sony has its own in-house development teams, it buys most of its games from independent developers. Says Chris Deerling, president of Sony Computer Entertainment Europe: “If we compete too aggressively with the independents, it can hurt creativity.”
But these days, lack of funding can hurt just as much. One of Britain’s hot young development companies is Elixir Studios, the eight-month-old outfit run by Demis Hassabis. You’d think that Hassabis–a child chess prodigy, a co-creator of the hit game Theme Park when he was only 16 and a top honors graduate of Cambridge–would be an investment somebody would want to make. When he decided to start a company he hoped would become one of the world’s top game developers in four years, he wrote to 31 British venture capitalists. He got meetings with only four. “As soon as they heard computer games, they switched off,” says Hassabis. Luckily, Eidos came up with the money, giving Elixir a three-game contract.
Eidos, of course, is the great British success story–most of which, at the moment, it owes to Lara Croft. With all three Tomb Raider games still among the top six sellers in Europe last year, Lara Croft was responsible for a hefty chunk of Eidos’s £137 million turnover in 1998. Greater industry consolidation, analysts say, means that the British industry needs more such hits, which will enable companies to grow large enough to make their own way in the world. “British games developers are still very vulnerable to takeovers from the big boys in America,” observes ScreenDigest’s Ben Keen, who last year produced the industry’s first report for ELSPA. Gremlin, one of Britain’s oldest game companies, for example, has put itself on the market, and is being looked at closely by multinationals. Eidos’s own strategy seems to focus on development rather than distribution, which sets it apart from many of its French and American counterparts, which tend to focus on marketing. According to Eidos chief operating officer Michael McGarvey, the company hopes that in the next 12 months new games will enable it to reduce its reliance on Tomb Raider to the point where the game provides about a third of revenues.
A little less prominence for Lara may actually suit her creators. The folks at Core Design are already ambivalent about her becoming an icon for the grown-up-games industry. Particularly in Europe, where the target audience remains hard-core gamers, the company wants her to retain her cult status. They’ve turned down offers to stick Lara’s famous form on snack food and the sides of buildings, and they’ve got veto power on the scripts for the Paramount movie. “We want to keep her a bit of a dark horse,” says Core Design’s Susie Hamilton. A bit like the British game industry itself.
