Star Fox developer Velan: How to survive as a North American game studio

0:00Karthik Bala: The Nintendo partnership is a very special and unique one and the bar is really high. North America is the most expensive place to do game development in the world. And so there's a lot of talk about, okay, what's the burn rate? What's the cost per man month for the teams and where we can go cheaper?

0:17Guha Bala: The number of doomsayers, like every two years, it seems like everything is done. The dominant players are set. There's no new opportunities out there. It's a harsh environment. and then somebody goes and surprises everybody.

0:30Karthik Bala: Today, the IP holders like it, recognize that it's matching it with the right teams that have the passion and capability.

0:41Karthik Bala: Hello, and welcome to the Game Business Show. This week's edition is sponsored by Xola. Now, the PC studios that will be here in 10 years will be the ones building direct relationships with their players today. Selling direct means running your own PC game store alongside the storefronts you already sell on such as Steam. You set the price, players buy from you, and you keep up to 95 % of every sale. The launch of your branding handles delivery and updates, and payments work in every market that you sell in. This is not meant to be a replacement for traditional storefronts. It is a new revenue stream alongside them, and more than 1 ,000 PC games already run one for the Xola Publishing Suite.

1:18Karthik Bala: You can see how it works for your PC game by visiting the Xola website, or in the links found in the newsletter associated with this very show. speaking of this show let's get on with it this week we are speaking to two video game legends Juhar and Karthik Bala the brothers were the founders of Vicarious Visions where they worked on some of the biggest games and franchises in the world including Tony Hawk Skylanders Spider-Man Guitar Hero Star Wars James Bond Crash Bandicoot the list really does go on now they sold the studio to Activision in 2005 and then in 2016 they started again at Velen Studios now velen has had quite the journey it secured a partnership with nintendo and has worked on two massive nintendo franchises the first was mario kart live home circuit in 2020 that was for nintendo switch it was a mixed reality mario kart game and this summer it handled the excellent remake of starfox for nintendo switch 2.

2:09Karthik Bala: but it's not been easy over the last 10 years it's big 2021 live service dodgeball game knockout city which was published by ea attracting millions of players but struggled to maintain an audience. Its public service was shut down in 2023. And in 2024, following a project cancellation from an external developer, Judy had to reorganize and make some cuts. But it's now growing again. It's just opened a new studio in Toronto, Canada. And over 10 years, it's put out six games. That's impressive. Now, I've spoken to the violas many times in my career, including on stage at events. And they're some of the most astute, considered and intelligent people I've ever had the pleasure to interview.

2:45Karthik Bala: And now, fresh from their Star Fox triumph, I've finally managed to get them to join me on the game business, where we will be discussing how they've managed to survive and even grow in an increasingly hostile North American game development scene. So, without further ado, here is my conversation with Guha and Karthik Bala. Heya, Guha. Heya, Karthik. Welcome to the show. It's really nice to be here. It's good to see you again, Chris. It's been, I find, it's 10 years, which really, I'm having like an existential crisis at that. Like, it feels like, you know, it was only six months ago, we were like an investment summit in Boston talking about all your plans and dreams and aspirations.

3:24Karthik Bala: And here we are, what, 10 years in and six games, is it? It's incredible. Time seems to be going faster and faster, doesn't it?

3:31Guha Bala: Yeah.

3:31Karthik Bala: I think the older you get, the time goes faster. I don't know what it does, but it does seem like yesterday. Well, I guess congratulations on your latest game, Star Fox. I thought it was an excellent, I'm a fan, as you can see from the poster. I thought it was an excellent remake, visually very striking. I played for it a bunch, so congrats. I know you can't talk too much about it, but congratulations on it. It was a lot of fun to work on. You know, we're really proud of what we made in collaboration with Nintendo. So yeah, we're just really happy about it. I'm really interested. It's still relatively rare to see an independent Western studio take on a Nintendo IP.

4:07Karthik Bala: I know there's a few out there. Mercury Steam does Metroid and stuff, but 10 years, six projects, and two of them with Nintendo, Mario Kart and Star Fox. What do you think it is about you or about Vellan that makes someone like Nintendo sort of trust you to handle such treasured IP? Well, I think that, you know, we've had a longstanding collaboration with Nintendo.

4:30Guha Bala: You know, I think our very first game with Nintendo was Spider-Man for GBA in 1998. And, you know, from there, we've been on the launch of every system. Game Boy Color. When I said GBA, you had Game Boy Color in 1998. No, that was before the GBA launch. We were at the launch of GBA with Tony Hawk's Pro Skater 2. I've got that game. Yeah. And Mysterious Menace as well. And we've been really admirers, as many people have, of the hardware as well as the software that they create, but also try to do something extra in each one of those releases, something that's really special for gamers. And so over time, you know, sometimes people ask me, sort of, how do you build relationships throughout the industry over time?

5:14Guha Bala: You know, especially young people coming out of college and so forth. I said, well, you make promises and you keep them. And you try to exceed expectations. And this is, if you do this consistently over time, you build trust, you build relationships, and you build really interesting opportunities to collaborate. And so, you know, throughout our history, and of course, the 35 plus years in this industry, that's what we've tried to do. And I think the latest Star Fox is just the latest output of that.

5:42Karthik Bala: Wow. I went to the Nintendo Museum, Carpenter's already commented on this last week, and I loved seeing Mario Kart Live Home Circuit sort of featured so prominently throughout the museums. I don't know if you get a kick out of that, but I was pleased to see it. It's an amazing place. It is an amazing place. And too bad you can't take photos inside. No, not that bit, no. No, not that part. Bay Inter Sanctum. But they've done such an incredible job of celebrating the history and seeing all those games there. And then seeing some of your own work in that museum is quite a unique experience. It was pretty emotional.

6:26Karthik Bala: Yeah.

6:26Guha Bala: The thing that stood out to me about that place is the number of really out there creative risks the company has taken over time. And you remember the successes, like the dominant systems and things like that, but you don't necessarily remember the quirky things that they did. And the reality is that every one of those things, when they were taking the at-bat, when they were going there and trying to take this point, they were like, this could work. This could be something really special and surprising for consumers. and everything does, but really it's a consistent habit producing quality and taking creative risks that's reduced their success as well.

7:03Karthik Bala: But we've tried to pattern that for ourselves. I do think they're quite masters of turning, you can already be a failure, but even the Switch is like taking the Wii U and going, well, how can we turn that into, well, they turn, I don't think the Switch will exist without the Wii U. I think that would be something that's played it. And one of the things that was on display there, which was, I didn't even know this story, was the RadarScope, which was an arcade machine that failed, but it led to the creation of Donkey Kong.

7:28Guha Bala: You have this weird rooms where there are ping pong balls coming at you and you're swinging at the ping pong balls trying to take out different articles in your house as if that's a good idea to do in your actual house. But it's one of their games.

7:44Karthik Bala: Yeah, it's that whole level. It's like an interactive Wario. Look, we're five minutes in and we're just talking about nothing but Nintendo. So it's been 10 years of LLN and obviously Mario Kart was the first project. The first big original project you had was with Knockout City. And I remember really enjoying that game. I thought it was a really promising project, but it obviously didn't work out in the end. And we just had a bit of a chat there about learning lessons from things that didn't necessarily work out and that. But looking back on that part of your story now, was there anything particularly you learned from that?

8:15Karthik Bala: Not that Cere was such a great game and so fun. It was so difficult to make as well. There's a lot of technical challenges. We had a clear vision of what we wanted to go after, but we had to invent so many new things to make that possible. So it was quite a challenge. We had to build our own game engine. We had to build our own programming language that the game was built on. and it had a lot of strict requirements in terms of like dedicated servers and how it operated and how it worked, you know, we would cross play. So there's a lot of challenges and we had to learn how to do live service and as we were growing the studio, I wouldn't trade that.

9:00Karthik Bala: I wouldn't trade that for anything, you know, and just all the stuff that we learned and we had 12 million players coming through that game and there's a lot of people who really enjoyed it. But, you know, ultimately, you know, we got to face some of the harsh sort of business realities. And, you know, and if you're, you know, you keep trying, you're trying to make it work at scale. And the market shifted a lot, right? When we came up with the concept 2017, going with 2018, we showed it behind closed doors that at E3 in 2018, we thought it was cool. We didn't know if anybody else thought it was cool.

9:38Karthik Bala: and that's when we got a lot of publisher interest and then ultimately signed with EA and we thought we had something. But it was early days for like live service games back then, right? Even Fortnite had just come out and the landscape shifted a lot over those years. So, there's a lot of learnings, you know, from it. Still a great game. We want to bring it back, you know, but we have to do it differently. I think there are enough things that have changed in the landscape and also technology that may make it more feasible and sustainable. So part of what we have to look at is even though we discovered sort of a new gameplay mechanic, new sound of play with that, we've got to figure out how to do that in a sort of sustainable way, you know, for the community and fans and have it work at any scale.

10:33Karthik Bala: That's the challenge. So, but it's an IP that we own and great gameplay and technology and remarkably, it still hasn't been copied yet.

10:47Guha Bala: It's hard to do. It's a hard one to copy. It's a hard one. I would say a couple of things that I think were really interesting learnings for us. You know, we started Knockout City at a time where many games do take a while to develop. But then in particular, as kind of a season-based, you know, PvP, you know, kind of game, a game as a service game, when, you know, that was the thing to do, they structurally tend to have a lot of costs. There's a server component to it, but there's also just the amount of content you need to keep pumping out. And so it's not a great venue to experiment with things that are truly out there.

11:29Guha Bala: And maybe it's okay for tried and true mechanics, but even that's very high risk. Or tried and true game formulas or established brands. Even that's high risk. So do it with something that's completely different. The structural costs make innovation difficult. There's that. There's also, and this is a bit of like time moves faster as you get older type of thing. the dynamics of the market change are changing very rapidly enabling technologies consumer attention where entertainment is coming from the nature of discovery you know even the things that are classified as like the black hole games the games that people are spending all their time in i believe that's going to change fundamentally over the next 18 months we really transform so when we look at that developing a game that's structurally high cost over multiple years when the world around you and consumers around you are changing, that is not the right way to approach innovation.

12:25Guha Bala: So I think that in a lot of ways, I feel like we've made a great game. You know, it was recognized that way and people love it and the staff fans asking for it. I would like to bring it back, but I'd like to bring it back in a much more agile way, in a leaner way, where we could figure out what happens or what's going to happen if we try something in a very short window. In a lot of ways, we talked to a lot of experts in the process of trying to figure it out after we launched. And it turns out the experts are better historians than they are forecasters. You never know what's actually going to happen, what people are really going to think.

13:01Guha Bala: And so I think actually just modifying our approach entirely, seeing how quickly we do things, how quickly we can change things, and how the cost of that is low enough that you can take some real risks. I think that's really the big lessons from Knockouts today. And it shows up in the types of games that we make now. I've done Murder Club and other smaller, you know, wilder creative experiences.

13:23Karthik Bala: I always say it to the analysts who I have on the show all the time, and they don't admit it themselves, they're good at looking back and all their predictions are based on what's happened rather than what's going to happen. And when you're in a creative, artistic, innovative industry, you can never predict what's going to... In one minute, something that you thought was dead could suddenly be the biggest thing in the world and just the things that, you know, the industry moves so fast. But it's not one of the greatest things about our business. Sometimes. You got to take good with the bad, right?

13:52Guha Bala: I do think it's one of the greatest things out of Crytek because I think it's like we've heard the other thing that you learn over time and I'm sure you recognize this too, Chris, is that the number of doomsayers, like every two years it seems like everything is done. The dominant players are set. There's no new opportunities out there. It's a harsh environment. And then somebody goes and surprises everybody.

14:15Karthik Bala: So this is what keeps us hopeful. I guess it can feel that way at the moment in the industry. It can feel like it's taking a tumble. But as you talked about it, you know, you've gone through quite a rapid change. So you talked about things moving smaller and needing to move faster and be more agile. Is it just being quicker to react to things? Is that how you deal with that? I think it's multiple things. It's rapid prototyping and trying new ideas quicker, the whole fail faster kind of mentality. Being able to try things and get it into consumer hands, whether it's public or private tests, and getting feedback and having tighter feedback.

14:56Karthik Bala: I think that's actually really important. And especially if you're doing something sort of really new, this is the kind of like mindset and approach is pretty crucial. So building tools and pipelines or keeping a small and agile team when it comes to discovery, I think that's absolutely crucial. But then even when a product is out there and then you're evolving it, that's where the rapid response and being able to take consumer feedback is also really important. And I don't know if we're that good at it. I mean, we're pretty good. But there's room for improvement there. And I think that's what's going to be necessary kind of going forward.

15:48Guha Bala: And most of the work that we've done is in the PC and console area. And so for that, I think a lot of times the craftsmanship involved in the product matters a lot. So there's a real balance there. It's not like we can crank out a prototype and then just put it out there in a test market, look for KPIs and respond to KPIs and suddenly optimize the perfect game. That's just not how this part of the industry works. and so these are real artistic expressions that you need to say, okay, this is an expression of what I want creatively. That could take a while. But then balancing that with the ability to respond to what's actually happening or shut it down and making it into something new,

16:29Karthik Bala: you know, that's the problem that we've been working on. I'm sort of interested, Nogi, I wasn't planning to ask this, but you mentioned that, you know, even you think Black Hole games and what's happening there will change substantially in 18 months. I've got to poke at that. What do you, how do you think that's going to, what's going on there?

16:46Guha Bala: Well, I just think that so much is going on right now with people go to user-generated content platforms, people go to destinations for games to form social communities. And there's a bit of a stickiness factor because there's structural advantages to creating those communities and the obvious ones are going to be like Roblox and Fortnite and, you know, places like that. There are others, right? to big franchises out there to do that. It's not at all clear to me that those barriers are going to be durable. Those walls are going to come down, and maybe they're going to be more micro communities made.

17:25Some of that could be because of AI-generated environments.

17:31Guha Bala: It might be. It might be that the barriers to creating those, the structural barriers to creating those environments may come down. It may come down because web becomes a more prominent means of consumption for more geographies. Because I do think that having high GPU systems as barriers to adoption, or proprietary console systems as barriers to adoption, they're very geographically bound type of constraint. I just see developers, consumers poking at all of these boundaries at a rapid rate. We're going to see a lot. I don't know what is going to happen exactly. Speaking of being an expert or an analyst, we're going to go on.

18:17Guha Bala: But the ways to poke at the boundaries are growing, you know, a tremendous amount. So I think we're going to see a lot of change and include those durable advantages. Well, to the owners of all those advantages, they can be quite comforting. I think they're going to be more fleeting than no. Of course, in the middle of all this, where do we see ourselves? I do think that great creative teams, creative insights. I always think about creating something special for consumers, meaningful ways of spending time together. These are the heart of what drives us. I think that'll continue to be valuable.

18:49Guha Bala: The structural boundaries, all these advantages, I see so many ways that that could come down. Interesting.

18:56Karthik Bala: Now, let's go back to talking about Vela. You've had mixed reality racing games, and Mario Kart and Hot Wheels, a sports action game in Knockout City, the Night Murder Club, which is like a horror party game thing, VR pinball game. Do you think there's like a... What would you say is a Verlan game? I think the core to our values is sort of staying curious. And we're always trying to go after sort of new sorts of play mechanics at the heart of it, something we haven't experienced before. When we do look at it, we're like, wow, it's like cutting across lots of different genres. And we experiment, we see where we find unique, fun, and we build from it.

19:42Karthik Bala: But I do think that what we're finding is that over the course of the last 10 years, we've built teams that have a lot of expertise in certain genres and trying to innovate and come up with new gameplay mechanics or new ideas within those genres. But I think the core of it really kind of comes down to play feel and find something unique and new, a new kind of feeling or connection that you can have with the game. I think that's what makes it a valid game. We always talk about create breakthrough games that have magic. And that's something that's magical is inherently bring something new to the table, right?

20:26Karthik Bala: A new trick. and so we've got to keep we've got to keep doing that You talked before back in my games and shop these days, you talked before about the importance of finding that magic, particularly in the initial sort of concept phase, I remember you saying you give yourself time to really know what makes the game special before sort of going full steam ahead with development, but you know we've just talked about the industry's shifted things are tougher out there, people are moving fast you need to react quicker, so how do you get the balance between giving yourself the time to find that magic, but then also not taking too long because the industry moves so quickly.

21:00Karthik Bala: That is one of the core challenges. We are prototyping all the time and trying new ideas, sort of percolating in the background. And we do internal game jams and things like that, from time to time, and folks have ideas. And when we do latch onto projects that we feel, okay, there's a real sort of market opportunity as well as just the passion for the team. We have a pretty structured approach with internal green lights. The balance that we're finding now is really when we think about the size of games that we can make as an independent studio with multiple teams, I think we're finding a natural cadence where we can kind of go into a double A scope game that has like an established IP, licensed IP.

21:54Karthik Bala: That might be a partner project or a licensed IP that we are directly licensed in. And we can make a double A investment around that because there's an audience and so on. And then with more original IP or like something that's really out there in terms of gameplay, we can sort of make more of a triple I level investment with like an even smaller team. And so we're trying to sort of find that middle path which there are some studios going down that. And, you know, for a veteran team that's not a, you know, sort of garage band indie and we're not AAA, you know, multi-studio, multi-hundred person, you know, sort of efforts, this feels like sort of a natural sweet spot for us and something that honestly, like, the industry has lost a little bit, you know, and maybe you're coming back, you know, but it seems like a more sustainable path for teams like ours.

22:51Guha Bala: We don't see a lot of independent studios with more of a staggered slate, some bigger projects that have a bit more genre stability in a built-in, and then smaller ones that are sort of creatively experimental with a path to market as well. I think more independent studios should try to do that. They tend to be single product companies, and if the slate plans that the publisher changes, that becomes a real challenge. Or if they're solely investment-driven and the metrics don't show up in their product, then the funding gets cut off. And I think that's a lot of where we see the carnage as well.

23:32Guha Bala: Especially in an environment where the publishing world is really contracted to a small number of operating businesses within each entity. And that's across the board, whether it's Take Two or most recently, obviously, Microsoft, Embracer, Actocean, even Actocean really started that process 15 plus years ago, EA. It leaves a lot of audiences, a lot of IPs that don't have great creative behind them that can effectively serve that fandom, you know, as well. So we see an opportunity there. But I do think as an event developer, trying to design a slate that allows within the capabilities of that developer to be able to have smaller, more agile teams, take market risks with stability, with larger projects, which have more defined genre requirements would be a good formula for that.

24:29Guha Bala: I mean, that's the approach that we have available and it's been serving us pretty well.

24:32Karthik Bala: We'll talk about the sort of return of the middle and I guess Claire Obscure has been used as a bit of an example of that, but, you know, Sabre sort of operates like that and they're a very big company. And I find I quite like what you're suggesting there as well about, you know, there were lots of big companies that have IPs that, you know, they might want to develop, but they need someone to find them. And you kind of just answered my question there, but you think that this isn't just a couple of examples of companies that are making this work. This is something they can work on.

24:57Guha Bala: Actually, I think that... Well, I actually went to Business School, you know, and then, you know, like we graduated in 2013, so a number of years ago. And if you look at a business school strategy course, they will say, do not be in the middle of anything. The middle is always a giant hole. Be at one extreme or another, because that's where you get differentiation. There's a classic collapse of the middle. So what we mean in terms of the middle here is that there are lots of opportunities with audiences that are not massive. So you still need to make an amazing experience because making mediocre experiences is not worth anybody's time.

25:33Guha Bala: So the puzzle to solve or the game to make is how can you make a remarkable experience for a fan base that's big, but may not be such a mega size to support hundreds of millions of dollars in production? And what we're finding is there's surprisingly large number of opportunities in this space, but it takes a different mindset towards development. Some companies solve it by having low cost development locations. Other companies solve it with technology and tools and high productivity. Some companies solve it with genre specialization. So particular teams are highly productive in certain types of games.

26:14Guha Bala: So the different solutions that are available for that, but it's still amazing products, but which can be developed in a manner that can serve kind of audiences that don't have to be tens of millions of people.

26:29Karthik Bala: I use the word, we live in an age of the niche, and a niche doesn't necessarily mean small, but there's lots and lots of audiences looking for very specific things, and I think you can build a business on, interestingly, there was an interview with Hughes Games and making the Star Wars racing game, and I said, you know, why haven't we had that many Star Wars racing games? And he thinks we live in a time where a Star Wars racing game could do really well today, whereas maybe it wouldn't, in the case, 10, 15 years ago. I think our stakeholders have actually gotten smarter with this whole thing. We talked a little bit about our early days on handheld on Game Boy Advance and whatnot.

27:08Karthik Bala: And there was a lot of these licensed games back then. Equality was across the board. And we really try to just really focus on quality and serve the fans. But the licenses were granted to the big publishers. All those deals, the IP holders just went to the big publishers. Today, the IP holders recognize that it's matching it with the right teams that have the passion and capability for it. So the deals are out there, the partnerships are out there, where it's in a way much more reasonable. They want the quality. It's an expression of the IP that actually gives longevity to the IP and actually bring in new audiences into the IP as well, you know, through games.

27:57Karthik Bala: So there's actually more opportunity that we're seeing now than there were before. And maybe it's also a function of the big AAA publishers have doubled down on their own, you know, ITM projects and there's less licensing going on other than like integrations into like live service games and that sort of thing. But when you've got that audience and it's sort of underserved in these niches and there's that fandom and you can really deliver, you know, for those fans what they're looking for. It's also a great force and function of scope. So you can be really disciplined about that. So I think those confluence of those factors are actually opening up an interesting space for proven teams.

28:47Karthik Bala: I think it's probably worth noting that you, obviously with your previous company as well, Viking vs. Visions, is that you are very well known for taking a brand that might have existed somewhere or someone else's game and then making a sequel or taking it elsewhere and doing an incredibly good job of that. So I imagine when people are looking out, they're going, well, I've got something. You might be on there. It might be someone they called before. Maybe they called other people. So you've got that. You've got both that insight, but that advantage, I suppose.

29:17Guha Bala: One of the things that we try to inform our prior games with is the brand itself is going to be able to help identify an audience or help an audience identify a type of game that they may enjoy. But on its own, it doesn't make sense to do. Like we've rarely experienced commercial success based on brand strength alone. Except for certain, you know, very specific types of products. You have to have an amazing creative experience for that audience. And so when we look at things, we still start with a valid approach of saying, what is an amazing creative experience? In some cases, we could say, well, that would be amazing for this audience, especially with this brand as well.

29:57Guha Bala: and then that's where that marriage occurs. And I think that's a worthwhile approach for others to take as well.

30:03Karthik Bala: You talked about some of the ways that people can structure themselves to sort of move quicker or react faster or make games a bit more... I don't use the word intelligently, but whether it's low-cost locations or being really quickly good or using tools and technology. Of course, a lot of studios, and I don't think this necessarily makes you move faster, but it's a way of sort of managing size, is they're using a lot of outsourced teams and contractors. People have been talking about this Hollywood model for 15 years. I mean, it seems conversations certainly come back round again. Is that something that you do?

30:31Karthik Bala: What's your take on that? We do. And, you know, I think what we're finding is we're finding this balance where we have these core teams that have sort of been together a long time. They've operated really well together. And with that core team, as well as a level of internal production, you know, we can figure out all the whiskey bits, figure out what's core to the game and the glue and then we can partner with co-developers or outsourcing team or individual freelancers for that scaling up in terms of production. And for a long time we were like observing this sort of trend of working on projects where as you get into the back half of production that the costs really go up and the risk also goes up and it's a nail biter to the finish line and you're hoping you can get down in time and hit the quality bar or you're at alpha is it fun yeah oh no it's not quite funny we still got to iterate soon and the risk is going up while the costs are going up and uh and this is actually one of the observations where we're starting valon it's like shouldn't that be inverted shouldn't the risks be really high when the costs are really low and then the risk goes down and then the costs can go higher and it can be sort of more well managed.

31:58Karthik Bala: And so that goes back to the structure of the teams, you know, and how can we have a small core agile team figuring out all of these unknowns? That's obviously the ideal case, right? And it's like, I don't think two game projects have ever on the same. And if they do, it's actually you're not taking enough risk. But going after that general sort of principle, I think allows you to, again, structure those teams. And now that we're finding sort of specialist co-developers and specialist outsourcers who are built for that, to be able to go and support teams for that phase of the project, it can work out quite well.

32:41Karthik Bala: It's quite symbiotic.

32:43Guha Bala: Let me kind of build on that, Karthik. I mean, so it's important to be able to be deeply curious of all the different ways to make things. There's no one way to do it, like Karthik says, but there are some common elements. So, for example, having a strong core team with very clear creative direction and trying to find the fun and the architecture of a game early on so you understand where the value to the consumer is going to come from. That's very important. And having a team that it's not just about the individuals that are experienced, but a team that has veterans here around doing that, and has done that before, tends to be much more dynamic and adaptable.

33:23Guha Bala: And, you know, not only quick, but also quick to find the solutions and then to find the problems as well. So that's a commonality across the board. At the same time, you know, for us, we have to be mindful that we're a North American studio. it is our philosophy to pay as much as we can for the best talent that we can possibly have employed at Valen. And with that mindset, we have to say, well, we've also got a strong dollar. So what are the tools available to us? What are the production methodologies available to us? Sometimes outsourcing can play a role. It has played a role and will continue to play a role.

34:01Guha Bala: But each type of outsourcing is also a little bit different. Sometimes wholesale for certain types of work can be efficient. Sometimes it's highly inefficient as well. And so it's very important for us to be able to have many options and find the right fit for each project. And that's what we wind up doing. Some of the smaller projects that are indie have a very small role for our outsourcing. And it's just more about moving as quickly as possible with very focused systems and that kind of thing. Other ones, large productions tend to try and say, okay, well, how can we figure out the pipelines and the methodologies and who are the right set of partners to work with as well?

34:40Guha Bala: And we have developed trusted relationships over time that are very valuable to us in that also.

34:45Karthik Bala: I ask a lot about this subject on the show and we had Maverick making that new racing game. And one of the people who run Maverick used to run Sumo and her thing was that outsourcing is really powerful but it can slow you down. and it's their first game they want to get it out you know at a certain point in time and make a statement and then we had Bulkhead who made War Dogs they came on and they're a little bit less trusting about because sometimes you don't get to get the best people and I think what you answer you just get there that you do have to it's not a one size fits all thing that can just work for everybody

35:17Guha Bala: I mean sometimes it's written into a business plan that sounds really good the readers tend to be it's like buyer or buyer on those types of business plans let's say

35:27Karthik Bala: It's tricky because, you know, I mean, again, North America is the most expensive place to do game development in the world. And so there's a lot of talk about, okay, what's the burn rate? What's the cost for man month for the teams and where we can go cheaper? And that doesn't necessarily mean you get the same productivity. So it's a balance. and you know if a team is half as expensive as your internal core team but it takes twice as long or it takes more than twice as long because you're not set up effectively for it or the type of work or the relationship isn't going as well as it could it may end up costing you more it may end up taking longer and it is trying to figure that out and there's no single answer I think, you know, one size fits all, I guess, for the teams.

36:23Karthik Bala: But like over time, you build these trusted partnerships, trusted relationships, know which teams are really good at doing certain kinds of things. And then you can find some productivity games. Because ultimately, it's like we're all after factor productivity, not the burn rate, not the cost per person month.

36:43Guha Bala: When you start with a creative insight, then you're like, well, how am I going to make this? and then you're after, how much output can I make for the input? And that really comes down to saying, okay, well, let me put a great quality team together and all the components that that involves. If you don't know what you're trying to build or you don't have those pipelines down and you're trying to still figure that out, it'll cost you three times as much to do it outside than inside because there's wait time, there's iteration speed, there's just communication gaps and interaction costs and that kind of thing.

37:17The same kind of truism is with upstream QA

37:22Guha Bala: versus downstream QA. If you try to have a very large QA team pick up all the errors later on, it's usually three to five times more expensive than doing a more costly tester that's located on-site, but one with your development team and in line with development. Those are properties that have actually existed for the last 15 to 20 years.

37:41Karthik Bala: I think people are looking at them a bit more now. um um when you opened a studio in toronto right is the um so what was the so where's that fit into

37:51Guha Bala: all this is what's thinking there so there's there's been a you know post-covid you know during covid a lot of growth in general for studios has been with remote employees and remote workers and so forth we do find with especially with highrd exposure and rapid prototyping and things like that. A remote system is not as effective as having in-person iteration and development. It doesn't give us much opportunity for serendipity for larger teams. And so we've moved to really, on a go-forward basis, hiring in FROI, near our FROI headquarters. And then we knew that, okay, in the absence of more of a remote forward hiring, we need to have another location with a large potential talent base and the potential to draw talent as well.

38:41Guha Bala: And so Toronto is actually so geographically far from us. As a pro fly, that should only be an hour to fly, but we don't have a direct flight there. But it's not so far from us in Canada. It's same time zone, awfully very similar, you know, as well between the northeast of the United States and Canada, you know, as well. Great talent base. It allows us to essentially extend our team. And we've been really excited about the new folks that we brought on board in Toronto. We have active plans for that as well. So it's sort of like a hiring and growth motif that has access to talent in the United States through our headquarters in Troy, but also in Canada and international for our second location in Toronto.

39:30Karthik Bala: I have to be mindful when you say it's not so far from us. I think you were at an event we did in PAX, and you said, oh, it's not so far from where we're based. And it was still like a four-hour drive. Whereas in the UK, that would get you across most of the country.

39:46Guha Bala: Well, I think we're in Boston, and of course we're in the capital region of New York. And it's literally three hours down the road. So we can get on a road about two minutes away from our office and go three hours down the road and be where you are. All right.

39:59Karthik Bala: Yeah. How big are you then today? How big is Studio? We have about 120 full-time employees, so it's a decent site. Yeah. So interestingly, I was going to ask this question, but the more I've talked, I don't know if it's a redundant one, you've worked with some big publishers, right? And I wondered if there was a desire to get away from reliance on big partners or big publishers or big platforms or licensing partners. But actually, it seems like you might be, you see that as an opportunity rather than a risk. It is an opportunity and it's balancing it as a multi-project studio. We've always been that.

40:36Karthik Bala: We were a multi-project studio at Vicarious as well. And during the handheld heydays, there were a lot of games that were in development as a function of the smaller teams. And that actually has been an important part of that formula for sustainability. and so we can sort of have offset release schedules and stuff as part of it. So working with great partners, you know, having projects that are funded helps keeps the lights on but makes the partners and also like self-funded projects. So like one big step that we're taking is directly licensing like world-class IP that we're self-funding and publishing ourselves and mixing that with having projects that are partner funded.

41:34Karthik Bala: So that's a big step for us to be able to do that. But again, it's looking at where the teams have expertise and passion and where we see opportunities. That's really interesting. I think one of the things that we can do being independent outside of a large publishing structure is really look at the world in a broader scope than just the singular publishing strategy of any individual

42:07Guha Bala: content company. So Xbox has a tone strategy. EA has a tone around its core operating businesses and so forth. Here we can look at the opportunities for consumers, you know, at large, so to speak. In some cases, it makes sense to co-fund, co-finance, or work with larger entities. And other times, it makes sense to do things on our own. And that's the flexibility that we wanted because the number one thing for Vailin has been to be deeply curious and think about new types of surprising experiences. So if that's your fundamental underwriting thesis, then being independent becomes quite important.

42:46Guha Bala: part of that.

42:49Karthik Bala: How are you with funding projects like that? I imagine the landscape is quite different and everything's smaller deals and stuff compared to when three years ago when we used to... But are you finding it easier to find funding? I don't really know what my question is, but you seem to be doing quite a lot of projects.

43:07Guha Bala: There was a period of time where it seems like you can cast a stone and find somebody willing to fund game companies. And that existed between approximately like 2019 and 2023. But in the rest of the 35 years that we've been in our industry, that has not been the case. And so funding has always been one of those things where it's like, okay, well, do you have a great plan? And do you have evidence that your product will work as well? And so we try to look at that in our own products. We look at that in products that we may invest in as well. with third parties, you know, also, so we do a bit of that.

43:45I do think that for us, we've been able to create a balance

43:49Guha Bala: of having projects that are funded by larger entities, being efficient with our capital, maintaining a strong balance sheet in the process of doing that, so then we can make our own investments also. And so the way we've been able to manage Valen Studios, it gives us that flexibility. and we've had our mission at the root, but kind of a financing approach that's been able to help us underwrite that as a result.

44:18Karthik Bala: When you've got, and to go back to the start in a way, when you've got a partner like Nintendo that trusts you, does that make you do you get a lot of phone calls when something like that happens from people wanting to work with you? Go ahead, Karthik. I think there's a lot less publishing deals out there these days. You know, there's a lot less of that. And the Nintendo partnership is a very special and unique one. And the bar is really high, you know, in terms of what we need to make. And it's, but that's always been the case, right? Even when we were third party and with the relationship with Nintendo.

45:03Karthik Bala: And it helped us back then, you know, because we, even as a third party, because we made really good games that Nintendo had liked. And that gave us the opening to have conversations. But the reality is that the funding environment is challenging. There is less publishing deals that are out there. and but we also need to be really strategic about, you know, what we take on and what we say no to. Hmm. Obviously, you worked on the... What was the game? What was the Skylanders game that had the Nintendo characters in it? That was Skylanders Superchargers. Superchargers. That was... I couldn't remember the name of the escape.

45:51Karthik Bala: Yes. Going back to that. Yes. I remember that one. that was a um that was a big moment for us because we finally were able to integrate uh nintendo characters into into one of our games and that was a big learning experience as well you know and it's quite uh successful we're all very happy with how that turned out we were um a third party developer for the longest time and uh but i think we had a close relationship even as a third party are working on Wii and Guitar Hero and then Skylanders and all the DS stuff in Game Boy. And so which I think over time, the relationship grew. And I guess that's the, that's what it's interesting because I've got, I don't know, I've got fused games on the brain, but they've got Star Wars Galactic Racing.

46:42Karthik Bala: I'm like, how did you do an independent studio get a Star Wars, get to work with that IP? And the answer is they used to work at EA, they worked at Criterion, they worked on Battlefront. And so you got the relationship, they built the trust, and that led to that. I'm sure a big part of it is they also deliver and they do what they say they're going to do. And I think that's really important. I think the trusted relationships and stuff all the time is really important.

47:12Guha Bala: There was a period of time that, I don't know, it may still be the case. you have an amazing showman and they give a great kind of razzle-dazzle presentation, you know, kind of really charm executives and charm IP holders and get financers and get their game funded. And, you know, kind of like the Conan O 'Brien monorail episode in The Simpsons. We see less of that now, and we should see less of that. It should be based more on what we relied on is competence, delivery, keeping your promises, and really making excellent products for gamers. So I think hopefully we've shipped it to that more than anything else.

47:56I'm sure, you know, from a galactic racer standpoint,

47:59Guha Bala: that's been the case.

48:01Karthik Bala: Yeah. Well, I'll ask one more question because I've taken up way too much time, more than I was expecting. But where would you, I normally ask five years, but seeing as this is the 10 years of LN, I'm going to ask 10 years, Where would you like to see yourselves in 10 years' time?

48:16Guha Bala: I think for me, I would be delighted if we can, one, bring back Knockout City. But two, really create some special experiences that we can bring. I mean, we have an active slate right now. Bring out some really special experiences that become durable franchises that we continue to be doing creative experiments that people are really like, wow, where did that come from? That's very interesting. I'm glad somebody took a risk on that. And be able to do that sustainably. It's also really important to me that the people that come here to work every day at Bellin, you know, have that spark and curiosity and the ability to say, yeah, here's a place I want to take creative risks.

49:01Guha Bala: so if they say that in 10 years and we have commercial success to keep supporting that I would be absolutely delighted I think

49:11Karthik Bala: looking back at 35 years it's been a journey and it's not about the destination you know we want to keep creating great experiences both original and world class IP and keep pushing ourselves in terms of what we can do and there's just going to be new challenges new constraints you know early on i think like it was actually after we made our first game called synergist and we were in college and the game was not successful uh you know go on i when we started in high school we thought we were going to be rich and famous after making this first game and neither one of those things happened and uh it was we were just left in a lot of debt and it was like it was a real town beat you know and after five years uh and and but we shipped shipped our first game and it was really a moment of introspection in terms of like what we enjoyed about it and it was the game but it was not the game it was at first it started out was just this vision for the for making this game but what we realized it was actually like the team and the people that we were working with day to day that's actually what made it special and really fun and it's like oh that's when we do what we do you know and we get to also bring joy to like especially millions of people around the world and and if we can keep doing that well that's just awesome so it continues to be that journey you And as the industry keeps changing and evolving and redefining itself in terms of what is a video game, I think that's what's so cool.

51:04Karthik Bala: Interesting, we had Harvey Smith on, and we talked about Redfall. And he said, look, we're disappointed how it ended up and what happened, how disappointing it was. But actually, the journey was great. And it was a very refreshing... uh view on it it's not really about the destination you know i do we regret it no we we learned a lot and developed a lot and we had fun exactly yeah um thank you so much for your time i've taken up way too much of it uh but good luck for the next uh project again congratulations on starfox i think it's brilliant and yeah your insight is as always impeccable so uh thank you so much thank you for it's really enjoying it lots of fun thank you thank you to guhart and carfit there for diving so deep on so many of those subjects.

51:52Karthik Bala: That's it for today's episode of The Game Business Show. If you enjoyed that and want to make sure you don't miss the next one, head to thegamebusiness.com, sign up to our newsletter. You'll not miss an episode. It'd be great. You can also become a paid subscriber if you want to support us in that way. But that's it from us today. Until next time, thank you for tuning in.