Playing alone

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Author: M. Sharon Baker
Date: Nov. 6, 1998
Publisher: American City Business Journals, Inc.
Document Type: Article
Length: 979 words

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Monolith Productions has made its boldest move yet in the CD-ROM game business.

In a cutthroat industry where retail shelf placement and distribution can make or break a company, Monolith took a risky step last month by self-publishing its latest two CD-ROM games, Shogo: Mobile Armor Division and Rages of Mages.

Monolith isn't spurning its relationship with GT Interactive, the large software publisher and distributor that will launch Monolith's Blood 2: The Chosen later this year, said Jason Hall, Monolith's chief executive,

But the small Kirkland company is taking the risky step in hopes of larger rewards. By self-publishing, Monolith stands to reap all the profits from its labors, a move executives believe may help them at least double revenues to between $5 million and $10 million.

When a game company or other software company works with a publisher that distributes its product, the developer typically receives a royalty on sales.

"We're taking a two-pronged approach," said Gary Kussman, president of Monolith and executive with Takarajimasha, a Tokyo-based publisher that's pumped several million dollars into the game maker. "We'll continue to work with other publishers but we want to be capable of publishing ourselves. It's not our strategy to compete with major publishers, but we don't always want to be at their mercy. We know going it alone is a risky proposition."

But if Shogo or Rages of Mages turns out to be a hit game, the company stands to enjoy much bigger profits. With both titles having been released at the end of October, the jury is still out on whether the games will become mega-hits.

"We've been very encouraged by retailers so far," Kussman said. "I've gone to CompUSA and Babbages and they were out of it. But that's just a small anecdote."

Seema Williams, games analyst for Forrester Research in Cambridge, Mass., said any success by Monolith's self-publishing effort would be a major coup.

"Self-publishing really isn't a viable option anymore," she said. "And if they do make it onto the retail shelf, their games will all be (displayed) down by people's shins or knees."

To succeed in self-publishing, a company has to "get a hit or they're never going to make it out there," she said.

Three-year-old Monolith has had modest success with its first two rifles, which were released last year. Its first title, a 3-D action game based upon a horror movie theme and called Blood, was developed under contract for distributor GT Interactive. It was modestly successful, selling about 120,000 copies worldwide, Kussman said.

"Blood helped establish Monolith as a premiere action game company," Hall added. "It had a big cult following. It burned a hot coal in the gaming market but it didn't set the forest on fire."

The company's second title, Claw, a swashbuckling action adventure game, did poorly at retail but was profitable due to a bundling deal with Creative Labs, Kussman said.

Monolith's games compete with scores of titles vying for attention and shelf space. "Even when you're looking at the hardcore gaming market, every single category is crowded," Williams said. "You really need a strong title to succeed."

A hit game sells between 500,000 and 1 million copies in a year, and only a handful of games reach that pinnacle.

Getting and keeping shelf space will be the company's biggest challenge, said Frank Catalano, a marketing analyst based in Sumner.

"There is very little time given to new game titles to prove themselves," he said. "It can be as short as two weeks, and rarely these days seems to be more than six weeks. If a title doesn't move off the shelf to customers, it moves even more quickly - onto pallets - and back to the publisher."

Hall is well aware of his company's challenges. "We're doing basically what our competitors do," he said. "We'll do X number of ads in magazines. We are not overspending in that area. We're hoping the difference is our good reputation with consumer and our release timing is near perfect. Nothing else is on the shelf right now."

"It's getting tougher and tougher to make a successful title," Hall added. "This is a tricky business to be in. One of the key things is to master the production process and control costs, and that's helped us."

So has the Internet. Monolith has generated its own following. It's not uncommon for garners to call anyone in the company and get information. which executives say is fine.

"We're a game company filled with garners and that has had a profound impact on the game-buying public," Hail said.

Monolith executives are betting that Shogo will be a leading title this year. So far, the game has received good reviews from online game hot spots Online Gaming Review and Gamespot. The title is among to the top 10 downloads on each site's demo list.

Shogo is a showcase for the Lithtech Engine, which allows for a full range of powerful graphic effects, ranging from spectacular explosions to more subtle touches such as real-time cloud shadows.

Monolith has sold several of the $250,000 licenses for the Lithtech engine, Kussman said, declining to reveal which companies have licensed it. Unlike other game development licenses, Monolith does not charge royalties, making it less expensive, he said.

He expects licensing the Lithtech engine to bring in between 10 percent to 20 percent of company revenues this year.

That means much of the revenue generation is expected to come from Blood, Shogo and Rages.

Shogo was originally under contract to Microsoft Corp., under the name Riot.

Monolith was also co-developing the game-making engine now called Lithtech Engine with Microsoft. But differences of opinions led Monolith to buy back the game and technology earlier this year.

Microsoft game executives were unavailable for comment earlier this week. Whether they will regret their decision to let Shogo go remains to be seen.

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