Disney's new game chief faced high hurdles at Atari

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Disney's strategy to compete in the video game sector -- especially against media giant Warner Bros. Interactive Entertainment -- called for recruiting a new skipper last month, one with plenty of industry experience.

Jean-Marcel Nicolai, the new senior vp of global production at Disney Interactive Studios, comes from seven years at troubled Atari where, most recently, he was chief technology officer and senior vp of product development.

Sadly, things continue to look bleak at Atari whose losses for its most recent nine-month period rose to $20 million from $8 million last year. The company has also defaulted on loans and its management has "substantial doubts about [its] ability to continue as a going concern."

What sort of experience does an Atari alum acquire after having his company continue to hemorrhage money? And how did those hurdles prepare Nicolai for his new post?

Nicolai was reluctant to discuss Atari but hinted at the fact that frequent management changes lead to "inconsistencies" and not enough production planning meant games that were constantly "rushed out the door."

"That was one of the biggest issues," he recalls, "which is a problem not only for Atari but for everyone in the industry, specifically meeting deadlines without compromising quality. You can be developing a $20 million game and then flush it all away in the last three months just because you need to rush and keep your dates. It's a common mistake. What we've learned is we need to plan better and to find the talent in the industry who is good at managing that process."

At Disney, Nicolai will oversee worldwide video game production, including externally developed projects as well as the company's five internal development studios -- Vancouver-based Propaganda Games, which builds epic action games; U.K.-based Black Rock Studio, which specializes in racing games; Salt Lake City, Utah-based Avalanche Software, which develops family games; Salt Lake City, Utah-based Fall Line Studio, which specializes in games for the Nintendo Wii and DS handheld; and Austin, Texas-based Junction Point Studios, founded by industry icon Warren Spector.

Equally as important, says Nicolai, is that he is also in charge of future studio expansion. And that, according to Graham Hopper, executive vp and general manager, will likely require additional acquisitions of outside developers. Nicolai reports to Hopper at the Glendale, Calif.-based headquarters.

"What we purchase when we do that is not so much individual talent, but teams, which is what we really care about," explains Hopper. "Sometimes we buy a studio for its technology, so that when, in 2006, we acquired Climax Racing -- which we renamed Black Rock -- it was for their racing technology. We could have built it ourselves, but it would have taken some time, and we wanted experts on our team. That sort of logic is going to pervade future decisions as well."

Nicolai subscribes to the business model for which publishers like Activision are known; he believes acquired studios need to keep their own identities. "I don't believe in the studio factory model," he says. "I believe that when we bring developers into the Disney structure, they ought to benefit from that structure and be supported by it. But, at the same time, they need to have the freedom to realize what they are passionate about. Because we all know that if there is no passion behind the game, there is no entertainment for the consumer."

His intention is to build long-term partnerships with outside developers and then, perhaps, acquire them "if they seem to share the same kind of values about quality and innovation that we do," he explains. "I'm not saying that we are always going to have a partnership before buying a studio, but that scenario has worked well for us in the past. We've acquired five studios over the last 3-4 years and we will probably continue with that trend."

What is less important, adds Hopper, is seeking out developers because they happen to own popular franchises.

"I don't rule out an acquisition because the right franchise might fit well with us as a company," he explains, "but buying franchises is the last thing we need to do. When you consider our movie and TV brands, Disney has so much great content. What we really need are people who can take those brands and turn them into outstanding video game content."

For instance, Hopper notes, Disney's Pixar studio produces a movie every year, "and they tend to perform well in the marketplace as video games. Then we have franchises like 'The Pirates of the Caribbean' and 'Chronicles of Narnia.' No, there are no shortages of franchises here at Disney."

One strategy that will not change, says Nicolai, is Disney's "70-20-10" strategy for its game portfolio; in other words, 70% of its $350-million investment in game production in the next five years will be spent on existing Disney movie, TV, or other content; 20% will be spent on creating new IP with Disney brands; and 10% will be for content without the Disney moniker.

That last 10% is, perhaps, the slice that is most surprising since Disney games are usually thought of as being all based on Disney properties. But "Turok," released last month, was developed by Disney's Propaganda Games studio from the main character in a 1997 video game created by Acclaim Entertainment, "Turok: Dinosaur Hunter." And, this fall, Disney intends to release its first extreme off-road racing game, called "Pure," developed by Black Rock Studio. There will also be a "Guitar Hero"-like game called "Ultimate Band" that will utilize the Wii controller to play drums or guitars instead of more expensive instrument-like controllers.

"I think we're going to surprise a lot of people with the genres we intend to get into," says Nikolai. "The idea will be to broaden our audience to a much older, mass audience, and redefine how people perceive Disney games. Frankly, it's not that different a strategy from what Disney has been pursuing in its movie business.

"The only genre I can promise you that you won't see is anything with a lot of blood and gore in it," adds Nikolai. "Do we want to do 'Grand Theft Auto'? I can promise you; Disney does not want to do 'Grand Theft Auto.'"

Paul "The Game Master" Hyman is the former editor-in-chief of CMP Media's GamePower. He has covered the games industry for more than a dozen years. His columns for The Hollywood Reporter run exclusively on the Web site.
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