Video Games. The Present & Future. A Chat with Lev Chapelsky.

We spoke with Blindlight’s Lev Chapelsky on the video game industry, its future, the impact of casual gamers, mobile devices and tablets, and Hollywood’s interest in this space.

Lev Chapelsky is a founding partner and general manager for Blindlight, a Hollywood-based production company that has been operating at the nexus of the videogame and Hollywood industries for the past 12 years.  Leading game producers from 19 of the global top 20 game companies have turned to Blindlight when they want creative contributions from Hollywood, or when they need help navigating the murky waters between these two industries.

 

What’s the current state of the video game industry?

There are a lot of complexities going on right now. First, there is the issue of traditional console-based games being cannibalized by mobile and online games. This is a big disruptive change. Second, there’s the question of whether the predominant players are going to survive the transition and whether the new players will take over. Third, there’s the question over what’s going on with consoles. Consoles are transitioning to the next generation and that’s very mysterious right now. Fourth, there are economic challenges. The industry is starting to mature and there is a lot of pressure around profitability, consolidation, etc.. Fifth, there’s change in distribution as new digital models erupt. This last thing alone is what knocked the music industry on its butt, but games have the added complexities of all the previous factors mixed in. People often look at the industry and think it’s flush with money, “it’s bigger than Hollywood”, and everything is coming up roses. But it really is a turbulent time that is tough for our traditional clients, the big video game makers, to navigate.

Where does Hollywood fit into all this?

From the Hollywood talent perspective, it’s a mixed bag. It started out back in 2000 when the Xbox was first released and the PlayStation 2 came out. Hollywood realized this was a rich media form that could use the contributions of specialist entertainment talent at different levels. Their initial goal was to make games a second Hollywood and make as much money at this as they do from old Hollywood. It took them years to realize that this wasn’t going to happen. So now the post-land grab reality has set in, and it’s made up of a couple of different factions. In one we have some major agencies in Hollywood that hold onto the old thinking of having to pay talent their quote, which may be $1 million a project. And in the other, there is talent that recognizes that this is an important new space that is not only fun and creatively interesting, but very beneficial to talent careers. The biggest payoff that some of the talent sees is remaining relevant to a younger demographic that is spending less and less time in traditional media. This is important if their careers are on the rise, or if they’re not on the rise anymore, it’s important to their legacy. We see a lot of talent (most commonly, actors, writers and musicians) that now perceive involvement in interactive projects as an essential new part of being a professional entertainment contributor. This is largely due to there having been a big substitution in consumer consumption from linear to interactive. This is a change driven by the younger demographic who are spending money in this area because they favor interactive engagement. So the Hollywood talent sees this space as a field they need to play in to ensure their relevance to the world over the next 20 years.

What do the talent deals look in video games?

For the writers, actors and musicians, we still see some talent reps requesting backend participation. Most of them have heard enough times that it doesn’t work that way in this field and they’ve gotten the message. Sometimes they’ll still ask, to make sure that it’s not an option, or to test whether the person on the other side is naive and will fold to their demands. But it’s now become well established and the more savvy agents don’t even go there anymore.

However, there are exceptions to that rule where the talent brings something really substantive to the property. For example, a Sean White snowboarding game or The Beatles Rockband game would invariably involve equity participation. But it’s generally pretty clear which type of talent involvement includes backend participation. Overall, I’d say that in about 99% of the cases, talent involvement in video games are structured around an upfront buyout flat-fee deal. For most actors (and writers and musicians), the practical range for the fee spans from a few hundred dollars to the low 5-figures, depending on a lot of variable factors. That’s not to say that there aren’t outlier deals being cut in the low, mid, and even high 6-figure range. But remember what we said about the ambitious pursuits of Hollywood agents, and the occasional naiveté they’ll encounter on the other side of the bargaining table.

So if it’s not the equity, what’s motivating the celebrities?

Well, the money is an interesting question. We work hard at convincing these people that if they’re going to do a one hour voice-over session and get a $10,000 check, even if they’re one of the highest paid people on the planet, that’s still not a bad deal. So we’ll argue that money per se is not dismissible. But it’s certainly not the only driver.

Another factor is that they’d be reaching an audience that they’re loosing. It’s not about publicity or exposure, but about maintaining relevance.

It’s also very easy work and a lot less commitment than TV or film work. It’s often one or two sessions of voice-over where they can come in their pajamas, do something brilliant with a script and they’re done. That’s easy work, not bad pay, and it serves the important goal of audience retention.

Also, creatively it’s interesting for them. A lot of celebrity actors that have done deals with us are acting legends that have heard a lot about these “video games”, perhaps from the press, or maybe through their grandkids. For them, bringing life to a video game character is creatively interesting. It stretches their creative muscles. Good performers really like to do things beyond what they’re often typecast to do. For example, a film actor may like to do live theater or narration for documentaries. These are all things that expand their repertoire and so video games appeal to them in that regard. Games offer interesting characters that are very different from linear characters, and the scripts are very different from linear scripts. The type of performance that they do for a game is different. They like to have that experience under their belt for creative breadth.

How can startups and casual game developers work with talent in their projects?

The shift to casual games caused us a little concern because our business was built on getting high-end talent into high-end productions. With casual games, such as Angry Birds, typically you don’t need high-level performers. But we’ve recently seen an increase in demand from casual game clients for our services, for contributions from specialist creative talent, and even in acquiring celebrities. Everybody is starting to realize that you need a competitive advantage when extending your brand into this already crowded marketplace. This often comes in the form of attaching talent to the game.

Another interesting development is that we have some projects we’re working on for handheld platforms that require full Avatar-style motion capture for the actor’s performance. That’s how sophisticated the casual games are getting nowadays. Added to this is the higher resolution and graphics processing power of the new portable platforms. Just look at the new iPad’s higher resolution screen. This could be Apple’s really clever gaming play. If you can get that much resolution onto the screen, that could conceivably be the next Xbox or PlayStation and the games could have that level of richness. If that is the case, you need actor performances and Hollywood-level polish.

So for tech startups developing their own interactive products, working with talent may help them gain that competitive advantage in the marketplace right from the get-go. They should look at integrating somebody else’s property into the game or have that game based on an extension of that property – for example, a celebrity’s personality, the name of a known writer or director, or the Lord of the Rings game for the iPad.

How can casual game developers take on the big publishers in securing licenses to name brand franchises?

Well, we’re actually working with a number of major TV franchises where the projects center around Facebook games. Those networks licensed out those properties to developers to make those games. I obviously can’t say who those developers are, but in the past, if you wanted to make the Xbox game for Iron Man and you were a small developer, you wouldn’t have a shot. That license was going to get snagged up by a big publisher. However, to make something like the Mad Men Facebook game, that license doesn’t have to go to Electronic Arts. Smaller developers may now have a shot at those things.

Also, it used to be that to secure a Film / TV / Book license, the company would need a multi-million dollar budget to develop it simultaneously for the PlayStation, Xbox, Wii and PC. There are only a handful of companies with the wherewithal to pull that off. So now you can carve off a Facebook or iPhone game of, let’s say, Mad Men, and produce the game for perhaps $20,000. That can be a startup project. It’s the economic shift due to the rise of the casual platforms that’s making this accessible to the small, indie and startup developers.

Looking forward, where is the industry heading over the next 2-5 years?

The most promising thing that’s evolved over the last couple of years is the democratization of the industry. It parallels what happened in the film industry in the 50′s where the studio system was broken up and the independent players were able to make an impact. That’s now happened to the big video game publishers and there’s a lot more opportunity for smaller, independent players. And they don’t have to be based in  some gaming center like California. Who would have thought that mobile gaming would be led by a small company out of Espoo, Finland? So democratization is very interesting. There also isn’t really a threat that mobile and social games will consolidate under oligopoly powers. Production, and the channels to market, are open field. It’s a beautiful thing that anybody can make an iPhone app in their basement in a matter of a few days, throw it out there, and see if it works.

In terms of the big console players and publishers, they’re starting to evolveand open up to this field. The online marketplaces of Xbox Live and the PlayStation Network offer very interesting opportunities for great things to happen. It allows beautiful low cost games to be created with a relatively direct channel to market. This is disintermediating retailers. Like right now in Europe, jaws are dropping over the shut-down of their leading game retailer, ‘Game’. This is huge. Physical media is on its way out. What happened to Hollywood Video and Blockbuster is the future that the GameStops of the world need to watch out for, unless they can do something smart and fresh. And that is possible. McDonalds was threatened by a number of things, and they innovated out of it.

So the future model, and we’re almost there, is one where people with an interactive product concept will be able to create it and get it immediately to the global audience. With this comes distributed co-development on a global basis, and greater reliance on user-generated content. These are a few things the industry is grappling with. Some are scared of it, especially Microsoft and Sony, who are heavily invested in the consoles, as well as the publishers who placed their bets on the games that take $50 million to make. Meanwhile, Rovio, Zynga, Facebook, and Google are having parties about it.

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