One thing is certain; running a game development company in New York is difficult. While not everyone is willing to stick it out for the long haul, there are a growing number of devoted industry types who see very real potential in further developing the New York scene. This month's feature ventures back to familiar territory and further explores the challenges and rewards of growing the local game industry.
NYC Needs More XP To Advance Its Games Industry
The video game industry is one of the most celebrated and successful in the world, but for a New York City entrepreneur like John Mikros, that still wasn’t enough.
For four years, Mikros had his own game development company in Woodside, Queens, with his brother and another developer. But when the opportunity arose in 2001 to become an employee at Blizzard Entertainment, he was willing to give up his entrepreneurial ambitions, abandon his hometown and move to Irvine, Ca. In his current position as a senior software engineer, Mikros now works on some of the most anticipated titles for the PC, including World of Warcraft.
“This opportunity came up and I just kind of decided on the fly,” said Mikros. “There really weren’t that many opportunities in New York.” Seven years later, the New York City video game scene still does not compare with West Coast cities or even some emerging gaming pockets that have developed around the country.
Although the video game industry has been booming for the past decade, with fat profits and a growing army of employees, New York City has not been able to get in on the action. Building a strong games industry could help the city diversify now that a lot less money will be coming in from Wall Street. However, local makers of digital entertainment have not been able to keep up with the global industry’s pace, they say, in part because of the barriers the city presents to their businesses.
Many New York City game developers believe the city ignores them, while cities like Austin and Boston have actively helped local game companies navigate red tape and create a national presence. Although many developers are reluctant to leave the Big Apple, many fear the city cannot compete in this emerging worldwide market.
“There are other cities and countries that recognize games as a force to be reckoned with,” said Jessica Rovello, president and co-founder of Arkadium, a New York game company. “They’re doing their best to get those jobs and companies. It’s not like we make jump ropes or something. It is a giant industry; you would think people would pay attention to it.”
The video game industry is large and growing every year, with global sales of $54.8 billion in 2007, more than double 2003’s revenues of $27.1 billion, according to research firm DFC Intelligence.
The number of people who work in the games industry is growing along with its popularity. According to the second census from Game Developer, 44,400 people work in the video game industry in the U.S., up 12 percent from 39,700 in 2007. Around 21,200 people are employed by the industry in California alone, representing nearly half of the domestic industry’s workforce.
Cities like Los Angeles and San Francisco, along with their northern neighbor Seattle, have consistently led the domestic industry in the number of companies and employees. But cities like Austin and Boston have been actively nurturing their nascent industries and are starting to become more competitive, along with those in North Carolina and Georgia. (Outside the U.S., Montreal and France also attract droves of developers with incentives and tax breaks geared exclusively toward them.)
New York City has been known for many things: serving as the financial capital of the world (although that vision is fading), a media mecca and a center of culture and the arts. Even in the current downturn, however, the city’s economy hinges on the financial sector. “The fact is almost all cities have a signature industry,” said Frank Braconi, chief economist of the New York City Comptroller. “If you’re going to have a signature industry, I don’t think finance is a bad one to have. The question is what else would you like to have?”
Anthony Shorris, the former executive director of the Port Authority of New York and New Jersey, said every city wants to expand its high-tech presence because it is pollution-free, doesn’t require a lot of space, and allows people to work flexibly from their homes, reducing transportation needs.
In his public remarks, Mayor Michael Bloomberg frequently echoes Shorris’ concern about the need for further diversification in order to reduce the city’s reliance on the financial sector. Video game development, a field that has not suffered as greatly as other industries in the recession, could be an affordable and relatively easy field for the city to expand upon. The Center for an Urban Future (CUF), a New York think-tank, argues that the game industry, a niche of the high-tech sector, should be given special attention, given its success and growing roots in the city.
To be sure, the video-game industry in New York has been growing – but very slowly. Over the past five years, a handful of companies has sprouted to about 30, which employ at least 1,200 people, including musicians, artists and business types, according to a May report by CUF. By comparison, there are 150 companies in Washington State, with about 15,000 employees overall.
New York game developers range in size, staff and business models. There are studios like Tiny Mantis Entertainment, which employs four and shares a Chinatown loft with another studio, and Arkadium, which employs 32 in its Chelsea office and outsources 55 jobs to Ukraine. Most New York studios develop either casual games and/or online titles. New York City has only one studio that develops console games: Kaos Studios, a subsidiary of the large gaming company THQ, has a staff of 90, and made the action game Frontlines: Fuel of War for the Xbox 360 and PC.
New York City presents many barriers for entrepreneurs. “It’s tough to run a small business in New York,” said Wade Tinney, co-founder of Large Animal Games. “Rent is expensive, salaries are higher [than other cities], you’re competing for technical and design talent with some pretty lucrative industries and the cost of living is higher” than other cities, he said. “The fact that real estate is so expensive really obligates smaller teams to do casual online games.”
Game companies face similar challenges in San Francisco, but the games industry there is more established, with bigger studios that can afford to make console games and pay employees higher salaries.
The Center for an Urban Future believes the lack of communication between colleges and local game companies exacerbates the problem. In other cities companies look to students and graduates for a steady supply of employees. While game design courses are offered at Parsons and the School of Visual Arts, these programs haven’t done much to promote job placement in the local industry, the report concluded. New York University recently announced that it will offer a degree program in the research, design and development of digital games next fall, the first of its kind in the city.
Executives of game development firms argue that one of the main reasons the industry remains small is a lack of recognition from the local government, which could do more to promote the industry in an effort to bolster recruiting and clientele. Recognition from the government could establish the city’s reputation as a haven for developers, encouraging talent to stay or new talent to move to the city. Investors would also take the city more seriously as a gaming hub. Ideally, they say, game makers could be provided with tax breaks, much like the film industry, which gets a combined 35 percent tax break from both the city and state governments.
Of course, there is a strong argument for not throwing incentives at every industry that comes along. The video game industry is small, which is why the city’s Economic Development Corporation has not included it in any of its financial plans, according to the CUF report. The EDC did not reply to repeated requests for comment.
The film industry is old and established, which makes it a solid investment for the city. “What’s more sexy? Law and Order being here, or some game studio that no one ever heard of?” asked Nik Mikros, John’s brother, who remained in New York and started Tiny Mantis Entertainment. “Press-wise, I think they get more bang for their buck.”
Tinney likens it to a chicken and egg problem. “It’s like, you need critical mass to justify putting more focus on it, but until you put focus on it, it’s hard to build a critical mass.” But there is one benefit that arises from New York’s tiny presence. “I feel because the industry is small, the community is tight,” Tinney said. “I’m friendly with folks at nearly every other game company in NYC. We talk and exchange war stories. This kind of information sharing is invaluable in business.” Companies also outsource work to each other, he said.
Despite the catch-22, inroads are starting to be made. Last November, to promote and foster the growth of New York City’s game community, Brandon Van Slyke, a game designer at Vicarious Visions (New York State's largest game development studio), spearheaded the launch of nycgameindustry.com. The site, which has been officially recognized as the central repository and informational hub for New York game development, features job boards, company and school listings, user forums, and an event calendar. In addition to this, the site currently has over 150 registered members and a growing number of impressive features on the local industry.
Along with community involvement and a passionate workforce, there are definitely other benefits that come from New York’s status as a cultural mecca. Mikros says he can easily see Broadway plays and catch the latest independent flicks, which helps get his creative juices flowing. The creativity of New Yorkers also can be a big help with employee selection. It’s “the best in the world,” said Rovello. “It’s such a hub for all things creative, which is great for us. There’s an energy here that can’t be replicated anywhere else. It’s a tough city, but it’s the best city in the world.”
Bright red couches, small tables that house computers and board games like Risk decorate Tiny Mantis’ modest loft. But the most important thing is the people filling the chairs. “Where am I going to recruit all these crazy people that I hire?” asked Mikros. “I’m not going to do that in Flint, Michigan.” He added, “Not to mention, I like living here.”
It’s this attachment to New York’s unique atmosphere that keeps local game makers here. “The only reason to make games in New York City is because you want to be here,” said Nick Fortugno, co-founder of game studio Rebel Monkey. “If I were indifferent about New York, it would be hard justifying living here.”
Many developers say they would not be willing to leave New York City, although some admitted considering it, saying it would make running their businesses a lot easier. Other cities recognize the gaming industry as growing, and have devoted resources to promoting it. "New York has so much going for it and so much amazing potential." said Van Slyke "As a community we really need to sit down and figure out what each of us can do to help cultivate the industry here."
The cities of Austin and Boston have models that New York could easily replicate. Austin’s Economic Development Corporation has an initiative called the “Emerging Technologies Group,” which focuses on industries that promote green initiatives and technology, including video games. Austin’s program requires a company to make the investment, hire the workforce and pay taxes, then the city provides a grant equal to 60 percent of new taxes paid over 10 years, according to Brian Hamilton, Austin’s economic development manager.
Boston has a similar initiative, Create Boston, which began focusing on games a few years ago. “We saw the potential,” of video games, said Carole Walton, Create Boston’s manager. The program seeks out the needs of game makers by bringing together academic institutions, government and companies. The organization also offers real estate and financial assistance, with loans up to $50,000.
The program “showed that the mayor and the people of Boston were committed to creative industries,” said Darius Kazemi, president of Orbus Gameworks, a Boston company that tracks players of games, and a coordinator of the city’s chapter of the IGDA. Kazemi said the city has been helpful and friendly with the gaming industry, but would not go so far to say that it led to Boston’s jump into the gaming spotlight. “The biggest boon was having companies releasing huge products,” he said, like last year’s hit Bioshock and the Rock Band series. “The timing has been fortuitous. But there’s no one in the industry who isn’t happy about this.”
The New York City government does not appear to have made the games industry a priority. The Center for an Urban Future said that the mayor’s office of Small Business Services has not dedicated staff to, or created initiatives for, the games industry. Larry Scott Blackmon, the former chief of staff and deputy commissioner for intergovernmental affairs at SBS, said he was not sure if any games company had contacted his office, but he said the office is willing to sit down with any business owner.
“We’re encouraged by the signs that the video game industry is growing, and we look forward to working with owners or representatives of businesses of the industry to find ways to make New York City more hospitable for them,” he said. He would not commit to SBS going out and actively helping video game companies.
New York could also consider following the lead of Georgia, which recently passed a bill that includes video games in a film and television incentives package. The package provides a 20 to 30 percent tax credit for qualified film, TV and video game production. A 2005 incentives package “led to a record-setting economic impact in 2006 when film, television and video game companies contributed $475 million to Georgia’s economy, up from $124 million in 2004,” according to a press release. In 2007, the state pulled in $413 million from the three industries.
The NYC film office has been in looking at the possibility of incorporating games into its agenda. “Under Mayor Bloomberg’s administration, the Mayor’s Office of Film, Theatre and Broadcasting has been exploring new media and reaching out to various digital companies as well as studying the video game industry and examining its growth potential,” Julianne Cho, associate commissioner of the film office, wrote in an email. “As video games are a key part of the digital media universe, we are looking at ways to support this part of the production industry.”
She added that the office is looking to incorporate media production, including games, into some public schools’ curricula. A school for grades six through twelve that will use game design in its curricula is slated to open later this year. The school was developed in part by Gamelab’s not-for-profit organization, Institute of Play, and received a $1.1 million Macarthur Foundation grant.
Whether these small steps will lead to a boom in the industry equivalent to those in cities like Austin and Boston remains to be seen. In other states, schools have formal relationships with game companies, which may offer lectures and internships. For example, Blizzard Entertainment has a university relations team, which provides internship and full-time employment opportunities for students, according to the company’s website.
No such program exists in New York, “because I don’t think we have a company of that size,” Tinney said. “It may take some collaborative effort. The interim step is to get communication between schools and the industry.”
Meanwhile, many graduates serious about working in the industry are leaving New York City. “A lot of the students who are interested in being in the game industry, most of them move to California if they’re serious about doing it,” said Mikros, who teaches graduate game design and programming courses at the School of Visual Arts. “If I were coming up now, I would move to California.”
He added, “I can’t look a student in the eye and say ‘you’re going to have the same opportunities in New York than you would in California.’ There’s a ton more studios there, people are competing for talent. A lot of them stay in New York for the same reason I stay: they don’t want to live in California.”
Local developers, most of whom are in their 30s and 40s, suggested the city’s politicians just don’t understand the industry. “Perhaps it's a generational thing, but New York City feels very far behind,” said Eric Zimmerman, co-founder of Gamelab, an eight-year-old game development company. “I'd encourage the government to look at policies and have events and advocacy that can help change the status of games in our city.”
Most of the older, larger companies have seen their businesses grow, but smaller companies and upstarts may stagnate without change. “No matter what, New York City is going to produce games that are different from everywhere else, and I think that’s something the city can capitalize on,” Mikros said. “Just like New York City has a long history of producing art, plays and films that nobody else produces; there’s a certain cultural richness here that games could be part of, instead of being excluded.”
Stephen Bronner is a recent graduate of the City University of New York Graduate School of Journalism, where he obtained a master's degree. He is currently looking for work, hopefully writing about video games.