A small game studio scores big with Torchlight (video)

Max Schaefer is the head of Runic Games, a tiny game startup with a big punch. He and his brother Erich have been making fantasy role-playing games for more than 15 years. They started Runic in Seattle a few years ago after stints at Flagships Studios and at Blizzard North, where they worked on the Diablo series. Now they’ve lived to tell the tale about making yet another hit game, Torchlight.

It isn’t easy to create a new video game development company that focuses on high-quality games. But Runic’s path to the market is one that others can take in the age of digital distribution. For the sake of creativity and innovation, its important that the industry figures out how to create financially viable independent game development companies. So Runic’s success so far is an inspiring example for would-be entrepreneurs who want to create a new company in the video game business.

“I think the era of the five-year, $90 million project may be coming an end and mercifully so,” Schafer said. “We measure our development cycles in months, not years.”

Against the odds, Runic was able to create and self-publish Torchlight, a high-quality online game that sold through digital distribution. It got funding from China’s Perfect World Entertainment to finish the game and begin work on other titles. The downloadable game is a lot like Diablo, but with lots of improvements and gorgeous graphics and a real story with 20 hours of game play. That’s quite a bargain for $20, and many gamers thought so too.

Since launching in October, Torchlight generated a considerable amount of sales on Valve’s Steam digital distribution service. The game was a big enough hit to keep Runic going on its own. Now Runic is about to publish Torchlight as a console game on Microsoft’s Xbox Live Arcade, the downloadable game market on the Xbox 360. To create that game, Runic had to reconfigure the game for console controls, something that the Schaefers always wanted to do. That title will launch shortly.

Schaefer said that the company is in full-scale development on Torchlight 2, which could come out as early as this summer. That game will add multiplayer play. And if the property continues to be successful, Runic could build a Torchlight massively multiplayer online world, which could be published by Perfect World, which is one of the biggest makers of MMOs. Someday, sometime, Schaefer’s old employer, Blizzard Entertainment, is going to produce some serious competition for Torchlight. Blizzard has been working for years on Diablo III and may be getting close to publishing it in 2012. By then, Runic will hopefully have done multiple titles in the same time that it took Blizzard to do one. Blizzard might crush Runic, but I would guess that won’t happen.

Check out our interview with Schaefer below.