How Airtight Games started a console game studio with just $24,000

In 2004, Microsoft canceled a sequel to its Crimson Skies game, prompting the game’s executive producer, Jim Deal, to leave the company to create a startup. He and his team of four other ex-Microsoft game people had $24,000 of their own money and an idea to create an action-adventure game where you could fly. But that wasn’t nearly enough to launch a new console game, which is a near impossible thing for a startup to do these days.

Console games cost too much, studios are closing down or getting bought, and investors are leery of the risks of funding developers. But five years later, Deal’s game, Dark Void, is being published by Japanese video game publisher Capcom’s U.S. division.

[aditude-amp id="flyingcarpet" targeting='{"env":"staging","page_type":"article","post_id":122011,"post_type":"story","post_chan":"none","tags":null,"ai":false,"category":"none","all_categories":"business,games,social,","session":"C"}']

Today, Seattle-based Airtight Games the small studio of about 60 employees is in the final stages of development with Dark Void. The Indiana Jones-esque action-adventure game, which takes place in the late 1930s and stars an ordinary guy named Will (who is equipped with a jetpack), is due in January 2010 on PC, PlayStation 3, and Xbox 360.

Airtight is now constructing additional studio space. While visiting Airtight’s studio this summer, Deal gave me a tour of the studio, concluding the walk at a taped-off wall and a closed door. “Nobody from Capcom goes past here,” Deal said. The studio’s additional seats will harbor an expanded team set to work on an unannounced project–with a new publisher. This story is about how the startup managed to swim against the tide and establish itself among rivals who have huge financial resources and many times more employees.

Getting Sage Advice

Getting a new studio off the ground is a difficult task because it takes anywhere from $10 to $20 million to produce a major console game. Airtight managed to do it, but it wasn’t easy.

After Microsoft shipped “Crimson Skies: High Road to Revenge” exclusively for the original Xbox in fall 2003, it received solid reviews and respectable financial success. Deal and his team at Microsoft started work on a sequel.

“We weren’t calling it Crimson Skies 2 at the time, but that’s essentially what it was,” said Deal (above) in an interview. “It was action-adventure with in-air combat.” But Microsoft never green-lit the sequel.

That was a trigger for Deal, who had worked at Microsoft for seven years, starting as a texture artist on a six-month contract and winding up as executive producer on the Crimson Skies team. Deal knew Ed Fries, the former vice president of Microsoft Game Studios (which published Crimson Skies), a well-connected executive who provided advice. With Fries’ counsel, Deal formed his team.

In fall 2004, Deal left Microsoft Game Studios (MGS) to start Airtight Games. Three core game members left MGS with him: Matt Brunner (art director), Jared Noftle (technical director), and Jose Perez (game design). They had a track record consisting of a single game, Crimson Skies. And they had Fries, who became co-founder of the studio.

To fund their venture, Deal and his three partners (excluding Fries) each anted up $6,000. The $24,000 start-up fund, he hoped, would carry them until they got a contract. Until they found a publisher, each member (and their families) had to live off savings. The team met anywhere they could, from coffee houses to the nearby public library. “We started small and built slowly,” said Deal.

[aditude-amp id="medium1" targeting='{"env":"staging","page_type":"article","post_id":122011,"post_type":"story","post_chan":"none","tags":null,"ai":false,"category":"none","all_categories":"business,games,social,","session":"C"}']

The pitch was a little more difficult, but Fries’ credibility helped. During his stint at Microsoft, Fries grew MGS from 200 to 1,200 people and was part of the acquisitions of Rare, Bungie, and Ensemble. Under Fries, Microsoft had 18 games that sold more than a million copies. Fries’ time as Microsoft’s executive vice president of game publishing positioned him perfectly to speak with game publishers.

“It was tough, but having Ed as part of the group really helped,” Deal remembers. “He knew the team and he could vouch for us; his credibility helped. But also having the core guys, the guys who actually worked on Crimson Skies, ultimately made it what it was.”

The First Game Pitch

Building from Crimson Skies, an arcade-style flying adventure game that made flying easy and fun, Airtight’s focus was on accessible flight mechanics and Indiana Jones-style narratives. Deal pitched it as a “Triple A” console game, meaning it wasn’t designed as a small, casual PC browser game, a low-cost download game, or a licensed TV game, like American Idol or 24. Deal’s idea was to create a full-scale, original, action-adventure game designed for the console audience, and his aim was to secure an up-front production advance of $9 to $10 million, which would cover the cost of production until completion.

[aditude-amp id="medium2" targeting='{"env":"staging","page_type":"article","post_id":122011,"post_type":"story","post_chan":"none","tags":null,"ai":false,"category":"none","all_categories":"business,games,social,","session":"C"}']

“Even at that time, four and a half years ago, there definitely were big obstacles,” Deal said. “They are obvious: You are new, you don’t have a company, and you have a new IP. Having a new company and a new project combined are basically huge together. You walk up to a publisher, shake hands, give them your pitch, and then you ask for $10 million. They just look at you.”

At first, Airtight pitched its game idea to American publishers. They started with the biggest ones and made their way down the short list, including Electronic Arts, Activision, Take-Two, and THQ. Airtight had no props or special equipment to demo its game; all it had was an idea on paper. The team would gather round in the middle of a room with a few chairs and talk to publishers. Occasionally, Jose Perez, the lead designer, helped the demos with his own sound effects. “It wasn’t very impressive,” Deal admitted. “But they knew we were a start-up.”

The first round of pitches proved unsuccessful.

Enter AGEIA and THQ

Airtight scrambled for funding from any source. It found a partner in a tools vendor that needed to show off a new technology: making objects behave in a physically accurate way in games, such as balls bouncing off virtual walls in the same way they do in the real world. Airtight signed a contract in 2005 with AGEIA, a company that Fries co-founded (now owned by Nvidia), to create physics demos for the “PhysX physics accelerator.” Deal said he would cram people into their newly rented, 500-square-foot office and would pitch the physics accelerator to publishers, many of whom he had just made pitches to for their original IP.

[aditude-amp id="medium3" targeting='{"env":"staging","page_type":"article","post_id":122011,"post_type":"story","post_chan":"none","tags":null,"ai":false,"category":"none","all_categories":"business,games,social,","session":"C"}']

The AGEIA contract lasted through 2005. It paid for a demo that showed off AGEIA’s special physics effects. But it served a second purpose: It illustrated Airtight’s technical prowess, which applied directly to the game they wanted to make. By then THQ had seen two of Airtight’s pitches, and they were interested in exploring Airtight’s new game idea. In 2006, THQ signed an eight-month pre-production contract with Airtight to create a working demo, but it wasn’t a full-fledged green light. Instead, it allowed THQ to evaluate whether or not to move on the project when the demo was complete. Deal pushed the studio’s headcount to 12, moved into a slightly bigger office space, and worked on the core concept until it was done. Things were looking up.

Six months later, Airtight completed the demo, but THQ didn’t extend the contract.

“In the end we had this big, fancy demo, but they didn’t want it,” Deal explained. “It wasn’t the same game as the one we’re working on now. It had some similarities, but it also had an open-world aspect, which, in retrospect, was huge. THQ decided that, at the time, they had their open-world game [Saint’s Row] and they didn’t want to tackle another one.”

The Second Game Pitch

[aditude-amp id="medium4" targeting='{"env":"staging","page_type":"article","post_id":122011,"post_type":"story","post_chan":"none","tags":null,"ai":false,"category":"none","all_categories":"business,games,social,","session":"C"}']

Nearly two years after starting their company, THQ’s decision in the summer of 2006 sent Airtight reeling back to square one. The studio had no incoming cash, it had no contracts, and Deal had to cut employees from his tiny team of 12.

But Deal was convinced they could make it. Because the THQ deal hadn’t panned out, Airtight was free to show its newly created demo around. Deal and Fries lined up appointments with a litany of publishers, but this time they broadened the list.

“This time [the demo] was moving,” said Deal. “We had a motorcycle, an airplane, a grappling hook to grapple the airplane, and it was very early. But at least this time we weren’t just walking in with paper. It wasn’t a slam dunk, but the second time was easier.”

Capcom Entertainment’s U.S. branch showed interest in the second round of demos, and Airtight and Capcom met several times during 2006. The Japanese publisher, best known for its Street Fighter and Resident Evil franchises, moved cautiously. In the summer of 2006, Capcom executives performed lengthy background checks on Airtight Games. They flew small teams of five to 10 executives and designers from Japan to meet with Deal and his team at their Seattle studio, vigilantly examining the team’s strengths and weaknesses.

[aditude-amp id="medium5" targeting='{"env":"staging","page_type":"article","post_id":122011,"post_type":"story","post_chan":"none","tags":null,"ai":false,"category":"none","all_categories":"business,games,social,","session":"C"}']

“Japanese companies are careful by nature and quality is important to Capcom,” said Adam Boyes, director of production at Capcom US, in a phone interview. “It’s not like we’re signing a contract with whoever comes to the door and is the lowest bidder. That’s not our MO at all.”

Airtight’s background played a significant factor in Capcom’s vetting process. Airtight’s short pedigree–its work on Crimson Skies while at Microsoft–was a key factor; the developer’s ability to make flying accessible was another. “With the Microsoft Flight Sim games, [the gameplay] had become so hardcore,” said Boyes. “But these guys made it fun again to fly. Being able to take a genre and shift it into something new really spoke to us.”

Enter Capcom: The Collaboration of East and West

Airtight passed Capcom’s careful examination, and signed a contract at the end of 2006 to develop what is now known as Dark Void. Capcom debuted the first playable demo of Dark Void at the Electronic Entertainment Exposition 2008.

That Capcom signed with Airtight is no small matter. As games expand into a broader global market, Western and Eastern game companies have evolved their philosophies about each other’s markets. Capcom has worked with Western developers on other projects, such as Bionic Commando (Grin), Spyborgs (Bionic Games), and a number of Xbox Live Arcade Games (Backbone). None have been as high profile as Dark Void.

“It’s been a full partnership,” said Boyes. “They’ve been open to that from the start. They’re very collaborative.”

Deal agreed, adding that working in a smaller studio setting eliminates the distractions that came from working at a larger studio like Microsoft. “There is no career path other than making the game great,” Deal said. “It creates a great atmosphere.”

Expansion and Acquisition

When I visited Airtight’s studios this summer, a handful of posters stood out in the relatively unadorned office: all based on George Lucas’ Indiana Jones. Dark Void’s narrative–about a cargo pilot who disappears into the Bermuda Triangle and teams up with inventor Nikola Tesla in the “Dark Void” to fight off aliens and to escape–derives from the team’s obsession with Indiana Jones and movies like The Rocketeer.

The team’s strong tendency toward adventure games, along with its exploration into third-person combat and its unique vertical platforming mechanics, should prove interesting in its newly secured project. But Deal isn’t revealing much about that next project yet. “We might announce the relationship maybe mid- to end- of next year, but that is all I can say,” he said cautiously.

When asked what would green-light a Dark Void sequel, Deal said, “The success of Dark Void 1. I can’t say definitively, but if we score 80-plus in the game rankings and we sell 2 million units, or we’re in the 2 million unit neighborhood, as a new IP, that’s probably what they’re looking for.”

In an age of corporate buyouts and mega-mergers, the possibility of selling his independent studio also came up. “Everybody has their price,” said Deal. “But we’re not really looking at that. We like being independent. We like talking to different publishers and keeping our options open.”