Nice Guys Finish First!

Anyone with an MBA will tell you that there's only enough room at the top for one. Competition is meant to separate the winners from the losers, and if you want to be a winner, you need to grab as much of the market as you can, at the exclusion of any other competitors.

Well what do they know?

Since separating from Universal Interactive Studios to form their own companies, Naughty Dog, Inc. and Insomniac Games have had a relationship that goes beyond friendly competition and straight into friendship. Though the two companies have been competing directly against each other since the days of the PS1, first with Crash Bandicoot and Spyro the Dragon, all the way to the PS2 with Jak & Daxter and Ratchet & Clank, Naughty Dog and Insomniac have remained the best of friends. Sharing technology, knowledge, and an occasional beer, these two companies at the top of their games prove that it's not so lonely at the top when you bring a friend.

First, a little pre-history. How many Naughty Dogs/Insomniacs were originally at Universal Interactive Studios, and what motivated the exodus that created your respective companies?

(Ted Price, CEO, Insomniac Games) Al Hastings and I developed the demo for Insomniac's first game Disruptor in the spring of 1994. We had been shopping the game around to various publishers for a while. We ended up signing a multi-title deal with Universal on the strength of that demo (which is kind of laughable - or lucky - looking back on it). We were on the Universal lot until Spyro 2. The reason we moved out was that a more "important" group at Universal wanted to take over the windowless space we had occupied. In retrospect it was typical of the way we had been treated but a very good move for us. The move off the lot strengthened us further as an independent developer.

After we finished Spyro 3 we had approximately 23 people. We left Universal for a number of reasons - the most important was that a three party deal (Insomniac/Universal/Sony) made no financial sense to us. It's important to note that our departure did not "create" the company. Both Insomniac and Naughty Dog were independent companies before hooking up with Universal.

(Jason Rubin, President, Naughty Dog, inc.) Both Naughty Dog and Insomniac were independent companies working on Universal Studios' back lot under contract. In Naughty Dog's case, we had already been around for nine years when we first signed with Universal and moved onto the Universal lot. In effect, Naughty Dog helped start the Universal Interactive Studios by making both its first and most successful products. We created Crash Bandicoot with eight people and the sequel with thirteen. We left the lot during Crash Bandicoot: WARPED. There were a lot of motivating factors, not the least of which was that Universal stopped providing adequate office space for the teams as they were required to do by contract. During WARPED, we were creating a game that would eventually gross Universal tens of millions of dollars and they had moved us into a cramped, barely air-conditioned hallway in a corporate office building.

When you guys were next-door neighbors in Burbank, was your relationship more on a personal level, or had it become more or less company policy by then?

(Ted) I think our relationship has always existed on a personal level and will remain there. When our companies were both much smaller and working in adjacent spaces we hung out and discussed the same things and shared the same frustrations. And since a lot of the same people are still working at both companies those bonds have continued. There is no company policy that says "we must maintain a good relationship with Naughty Dog". It's just something that is because it makes sense for both of us.

(Jason) The Naughty Dog/Insomniac Games relationship started as soon as the two companies moved into offices next-door to each other. We were fighting the same challenges, including development, and there was a natural bonding between the two companies. The relationship has never been turned into company policy. It is mutually beneficial, so it continues without formalization.

What kinds of business synergies were realized through this relationship? Ever have any of those "moments", in terms of the kinds of things you can do working together?

(Ted) I think we still have one of Naughty Dog's CD burners (or perhaps it's the other way around).

A little history: We had certainly shared a few ideas here and there in addition to sharing hardware but I have to give the credit to Jason for the original foray into technology sharing. He called me during pre-production on Ratchet & Clank and asked if we'd be interested in taking a look at their code for their background renderer. It was hugely beneficial for us to actually use that code. We gave it back to them with some modifications and then gave them the code for our occlusion system, which I believe they used on Jak II.

But this is a good example of how technology flows back and forth between the two companies and how our teams work together to do things we couldn't easily do alone.

(Jason) At first, the sharing was mainly in the area of hardware. Naughty Dog would borrow a CD-ROM burner, Insomniac would borrow a printer cartridge. Eventually we realized that we could compete more effectively with the rest of the industry by sharing design, art, programming, and business knowledge. Understanding this is simple. There are a limited number of incredibly talented programmers in the industry, for example. Some of them work at Naughty Dog, some work at Insomniac. If we share technology, then we double the size of our Research & Development teams without adding the additional budgetary expense. Other developers that don't have this "doubling" relationship inevitably end up with inferior technology. And since ideas spring more ideas, by having a larger idea pool, in effect we end up with a multiplying effect over time. 2+2 does indeed equal 5. The longer we continue, the farther ahead of the competition we move.

When Sony made the decision to acquire Naughty Dog, was there any concern that you wouldn't be able to do certain things between the two companies? Were there ever any conflicts to that effect?

(Ted) When Naughty Dog was purchased by Sony it didn't make any difference in our relationship. We were already working very closely with Sony so conflicts were non-existent.

(Jason) The acquisition of Naughty Dog did not change the way we run the company. So I do not believe that it had an effect on the arrangement.

While looking for other examples of such corporate goodwill, the only analogy I could find outside the gaming industry was aerospace, where only by making sure every plane was as good as it could be would anyone fly. Do you think that as budgets and development times continue to spiral ever higher, the only way to make a truly great game is to share resources?

(Ted) Sharing technology (and perhaps other resources) will certainly be important when it comes to making all games, not just great games in the future. I think that the PC game developers caught on to this long ago and have been able to keep their budgets lower and have a greater percentage of personnel focused on actually making game content. In the console world we've been slower to adopt this approach because there just hasn't been enough middleware commercially available until recently.

At some point soon though due to the increasing complexity of consoles, I think it will be impossible for teams to develop games using all original technology and stay in business.

(Jason) I believe that middleware and sharing technology will become more and more important as budgets increase and the effective difference to the end user between decent and cutting edge technology diminishes with the increase in hardware power. At that point, it is my belief that the "island" developer will be made obsolete as profit margins are squeezed. In the end, we will win or lose based on our content, not our technology.

With as much as you guys share with each other, what's keeping your companies from just making the big leap and merging outright? If not, what are the advantages to staying separate?

(Ted) Even though we share a lot, our corporate cultures are extremely different. Our production processes are completely different. We live in completely different areas. Trying to merge the companies would create more problems than we could handle.

But more importantly, I think both teams thrive on being responsible for their own, uniquely designed products. At Insomniac we're very selfish about the creative process - we would go nuts if we began trying to reach agreements with another strong-willed design team. And even though we do like to work together on technology, we certainly enjoy the friendly competition that producing side-by-side products creates.

(Jason) Naughty Dog and Insomniac still make separate products. There is, therefore, an obvious delineation between the teams. I do not see how merging the companies would bring economies of scale. We would still need as many artists and programmer, as much paper and as many PCs. Keeping the companies separate allows each one to focus on its own product, and there is still a positive competitive spirit, despite the sharing arrangement.

While Naughty Dog and Insomniac are probably the most well-known of these corporate friendships, what other companies are in this network? I know I saw Sucker Punch's Sly Cooper in the Ratchet & Clank 2 menu screen...

(Ted) Insomniac has worked closely with both Suckerpunch and SCEA in the same areas as Naughty Dog has. The Sony first party group is a great collection of developers who have a lot to offer each other.

(Jason) Naughty Dog has shared its technology with other groups within the Sony Computer Entertainment family. We have also received technology back. An example of this includes SCEA's excellent audio routines and Sucker Punch's Korean font methodology.

Does the fact that you guys share technology, not to mention genres, ever confuse people into thinking each made the other's game or even got the games themselves confused? (Granted, this might seem like a long shot, but when you're dealing with the mass market anything's possible...)

(Ted) The only confusion we've encountered is that some people think Naughty Dog wrote the engine for Ratchet & Clank. And I remember one article which claimed that CTR used the Spyro engine! These days, games use lots of engines or renderers. We have about 12 in Ratchet & Clank, all but a couple are original Insomniac code. Fortunately, both companies have a strong enough presence that people don't get confused about which developer created which franchise. Whether or not they really care is another question…

(Jason) There have certainly been instances of this. I have been asked questions about Spyro in interviews before. Then again, I was once asked how I came up with Parrapa the Rappa! Most end users don't pay attention to who developed the games they love, so in the end, I don't think the confusion we create, if any, is terribly important.

In an era where a company's most valuable asset is arguably its intellectual property, are there ever times where there's some inter-office grumbling about "Should we really show them that...?"

(Ted) Showing another team a prototype or semi-finished level is usually a good way to guarantee that that the other team will NOT copy your ideas. The last thing we want to do is be called an imitator and I think the same can be said for most other teams that develop original properties. For instance, Insomniac and Naughty Dog make an effort to compare ideas early on to ensure that the final products are not too similar.

And we aren't terribly worried that showing off our animation techniques or renderers or whatever is going to lessen any competitive advantage we might have. Players are more interested in the whole gameplay experience than whether or not Team A's lighting looks similar to Team B's.

A company's most valuable asset is good participation in a killer title. It doesn't matter if the company created the engine and the character, or used middleware and a license. What matters is selling a lot of copies of the game and getting paid well for that success. That means 1) making a good game and 2) not being stupid when deals are signed. I am sure that the GTA team doesn't lose sleep because it used middleware to create Vice City and didn't create its "own technology". There are plenty of bankrupt and deceased companies that went down because they didn't understand that fact.

Like all good friendships, it is not the smooth sailing but the conflicts that define and eventually strengthen a relationship. Care to recall any ideological conflicts and how you managed to get through them?

(Ted) Conflicts? None. The only disagreement we've ever had was when Jason compared controlling Spyro to steering the Exxon Valdez. And I retorted by calling Jak a mutant elf. And then he punched me. And I kicked him. We went out for beers after that and promptly forgot about the whole thing.

(Jason) I don't remember any. Soldiers fighting side by side in a trench don't argue over who is getting the better mud.

Thanks to both of you for your time today. With the example you've already set, and the inclusion of new companies into this corporate circle of friends, one can only hope other companies will be inspired to follow your leads. After all, in the pantheon of great game developers, there's plenty of room for everybody.

Jan 21, 2005 - 12:00 am | 0 comments
Ryan Sharpe