“It doesn’t have the pick up and play simplicity of other Wii titles, but frankly, I don’t want that. I’m sick of that.”

Yug: First to kick it off if you could just tell us who you are and what you do here.

Mike Fegan: Well, I'm Mike Fegan. I'm the CEO of the company. I've been here for just over five years and prior to that I worked for Acclaim Entertainment for nearly ten years. I spent five years here in Australia and five years in the New York Head Office. And then prior to that I worked in publishing and distribution here in Australia, so I sort of got involved in the games industry in the late 80s.

Yug: Publishing and Distribution Australia... Would that have been for Melbourne House?

Mike: Actually with Play Corp...

Yug: Ah ok.

Mike: I started the Metro division of Play Corp back in 91' I think it was.

Yug: Wow.

Mike kicking back in his office

Mike: And prior to that I worked with LJN. We did eight big games. For NES. Melbourne House did a few of them for ... stuff like Bart vs. the Space Mutants.

Yug: You guys did that? Or did you publish it?

Mike: We published that, and we also did Total Recall.

Yug: I remember those!!!

Mike: Some really cool stuff and some crap as well.

Yug: Of course, of course...

Mike: What happened was that about five years ago Craig Laughton, who is one of the original founders of the company, rang me (I was taking a six month break from the business) and said “I've got this small company, would you want to come give me a hand?” Back then I think there were about eight full time employees. I actually gave them a job to do for me which was Kevin Sheedy's Coach - he signed it, and we did that product. It was crap but it sold.

Yug: That was back in 2002, wasn't it?

Mike: 2001... or 2000... I forget. 2001 I think it was. And then we did a whole series of AFL games, the first one was AFL 2003 and that one was with IR Gurus. They had a small team down in the Tea House on the floor where Acclaim Entertainment was.

Yug: At Vic house? Where Tantalus is?

Mike: Yup.

Yug: Ok.

Mike: I used to have a shareholding in Tantalus, and I was actually a founding shareholder of Blue Tongue as well so I got those guys started straight from Melbourne university. I gave IR Gurus the AFL product. The first one they let me down on because it was two months late, but the good news was that they went on to do seven or eight titles. In the last couple of years they've done six of those titles for Sony, so three AFL titles and then three Sony Europe titles which were primarily Gaelic Football 1 and 2 and Gaelic Hurling. Gaelic Football actually was the biggest selling game in Ireland – it sold 170 000 units - whereas the second biggest seller was Gran Turismo and that sold 120 000 units. I had this early relationship with IR Gurus when Craig said come in and give us a hand. I came in and two months later he went back to the legal fraternity because he’s a lawyer by profession and over the last five years we’ve built the company.

We’ve done things differently, I think. We actually spent about two years working on a film finance model, which is essentially getting funding from a merchant bank or investors and then off the back of a tax incentive. Essentially we had this model and it was guaranteed off the back of a distribution guarantee from the publisher, then we had completion bonding (production insurance) to ensure the project got finished. We tried really interesting things and we spent lots of time, lots of money on that because of the legal hoops that we had to jump through

Yug: You’d want to cover absolutely everything.

Mike: Yeah. It worked but in hindsight the downside was that it’s a very expensive way and it was hard work, and there was a lot of issues that had to be resolved along the way. There were too many lawyers, accountants and all that sort of stuff. On the other side though, the up side, we actually retained 100% of our IP. We own the Heroes franchise.

Yug: It’s quite rare – you don’t hear about that from most developers though…

Mike: In our view there’s no value in being a contract for hire company because all you do is front end the deal, create your margin and contingency and then you deliver the product, hopefully on time and on budget, and the publisher does the rest. If you get a royalty it’s upside and that’s why all developers try to front end the deal to get as much money through the production process and don’t really count on a royalty unless it goes gangbusters and sells really well; like Pony Friends or Puzzle Quest.

Yug: I’m starting to get the impression that Australia’s becoming less and less of a valid option for other international companies to actually contract out to develop. We’re not quite as cheap as we used to be.

Mike: I think that’s the thing. The emphasis has shifted to quality now. It’s all about quality because we’re not competitive. Looking at costing from a production point of view, we are probably on par now with North America. More expensive than Canada because of the subsidies there.

Yug: Jeez!

Mike: We’re below UK, but that’s the UK and they’ve had such a huge brain drain to Canada. They’re still a player but they’re not, you know, they’re not the dominant force they used to be.

Yug: I heard about that with your sports game. I particularly like that you're contracting out the designs for the faces of Indian and Pakistan players to India!

Mike: Oh yeah, they get it straight away. The problem in the industry worldwide is the skill shortage. If you find someone who’s really good, you’ve got to keep them. So what you’ve got to do is manage your production process so that those quality core people are well looked after and in the driving seat. But everything else around it and the low hanging fruit like, for example, can be outsourced.

I think the business is changing and if you don’t change you’re not going to be competitive. Above all publishers want quality and there are less and less independent developers around now. The good guys get snapped up so as soon as they’ve got compelling tools, technology or IP.

There’s been a lot of that lately and it will continue so I think for independent developers. The challenge is creating quality and we’re spending a lot of our money on R&D; building game engines for example. Our focus is PS3 and Xbox 360, but there are other opportunities for developers. Obviously mobile and casual games are where the entry levels are much lower, and DS and Wii.

Original I.P. - Heroes over the Pacific on the Xbox

Yug: But then the risks are much higher, for that sort of thing. I know we’ve got a bunch of questions on games, but I just wanted to ask about your thoughts on the skills shortage. In Australia, I suppose that relatively the industry is growing, it’s younger than a lot of the industries internationally. With the skills there tends to be a lot of people coming straight out of university and things like that – not a lot of people with a lot of experience. Do you see that as a problem? I mean, I notice that a lot of people get poached over at GDC and they’re enticed to come to Australia – what kinds of options do people who want to get into the games industry here have?

Mike: I think it’s a big issue. We need experienced people on big projects because first and foremost publishers are about risk mitigation. If they’re putting fifteen, twenty million dollars into a project they want to make sure that they get a good quality outcome and you can’t produce quality with a bunch of rookies. It’s a really that simple.

A majority of the team has to be experienced and with the skill shortage right now finding a graphics programmer, for example, that’s got at least two or three years experience on PS3 and 360 is difficult. The time taken to train a junior puts you behind the 8 ball in a production point of view. So that’s one issue. I think that other main issue in Australia is that there is a fundamental disconnect between industry and the educational institutions. For example, most courses, like those offered by AIE and QANTM don’t teach C++, which is the fundamental programming language for games. They teach .Net. When these graduates come in we spend six months training them on C++.

Yug: I often hear that…

Mike: Why aren’t we teaching them C++ in specialised courses? There are a number of institutions that have woken up to it. I think Ballarat University is particularly strong and Latrobe is getting there. We still have problems with other universities recognising the fact that there are jobs available. Another problem is actually selling the video game career path to young people.

Yug: Which is surprising really!

Mike: ICT courses are actually going backwards whereas courses like CPAs are going up, so that says a lot in itself in my view. And then the other thing is that we need to get more females into the industry. Here in the studio we’ve got eight females that are all incredibly good, but there’s no one really focussed on promoting the fact that there’s a good career in games. I think there’s a whole lot of issues that need to be resolved before we’ll get quality graduates coming out ready to hit the ground running.

Yug: Yeah, fair enough. I actually think that’s a tough one to address, because in ICT especially, it has a bit of a stigma from years ago when it was just the nerdy people working it. The numbers are dwindling and I was involved in a Queensland government campaign, trying to help them put together a campaign pushing the fact that it’s cool for everyone! It’s fun! Look at these studios, they’re not dungeons or anything like that, they’re actually decent places to work! We get approached a lot of the time by parents who believe there’s no sort of career in video games. On the flipside we hear a lot of the time that if you want to be a games programmer, come and do a normal programming course, learn C++, get a good foundation.

Mike: Yeah. That’s why I think it’s a bit of a bun fight to get the best graduates from any course because you know they’ve put their own money into doing the course and they’re serious about the games business.

Yug: They’re not just flippantly “I like playing games – I should make them”

Mike: Exactly. And you know, we’re preaching to the converted in that sense, but the thing is that halfway through the year we’re all sort of queuing up to see who the best guys are and sign them up before they finish. That’s how desperate we are for them. If we could get that sort of situation with numerous universities, like Bond University or Melbourne University here - that would be great for everybody because there is this real skills shortage and that’s what holds us back as well.

Yug: It’s good news for people who really want to get into the industry though.

Mike: It is. Right now we work with recruitment companies to find experienced people. Over the last two years we’ve brought in over sixty people from overseas, primarily from Europe. Here in the studio we’ve got talented people from England, Germany, Austria, Holland and Egypt.

Yug: Australia’s a pretty easy sell.

Mike: It is! People assimilate really well in Australia. It’s not a hard sell, but the problem is that Europe’s drying up because a lot of people are going to Canada. The Canadian government has created over 10,000 jobs for video game development in the last five years on the back of very heavy financial incentives to publishers and developers. If you look at Vancouver, for example, you’ve got EA there with two and half thousand people. From that there’s the green fields effect that’s been going on for a few years and now there’s actually over sixty development teams in Vancouver alone.

Yug: There’s not even that many in Australia.

Mike: Vancouver’s population is less than Melbourne so it’s created this vibrant industry on the east coast. It’s the same with Montreal. It just proves that with the right incentives and as our industry continues to grow, we could really have a vibrant industry down here as well.

Yug: I could talk to you about this all day but I think we’d better get on to some questions about Transmission.

Mike: Sure.

Oracle: Just a bunch of questions that the readers are interested in knowing – the first one is: Originally called IR Gurus, why the recent name change to Transmission Games?

Mike: We had a long hard think about it and we felt that at the start of this year we wanted to change our name to really announce that we’d made the transition to next-gen and original IP development. Heroes of the Pacific was a good starting point and now we’re building on that. Transmission Games was setup to say that here’s a new era. Now we’re going to go international. Up until 2006 we were basically known for doing…

Yug: AFL….

Mike: Yeah, very niche titles. Flight combat is still very much a niche genre, but it does have international appeal. Heroes of the Pacific sold over 700,000 copies so we know there’s a market for it. It was our first title that got us into the international market; up until then we were pretty much under the radar. We didn’t have any credibility or recognition outside of Australia.

Yug: Heroes of the Pacific is a great title, there’s a lot of times I’ll rattle off a “These games were made in Australia too!” to a lot of our readers because most of the time they’ll have no idea. “Heroes of the Pacific was made in Australia” – “yeah, I’ve played that game. That’s made here? Oh cool!

Mike: Looking back we used to think, “How are we going to compete on an international basis?” We’ve got very little money, very little resource, no credibility - how are we going to get a publisher interested? We looked for a genre that we could dominate, that no one’s taken really much notice of. And we came up with flight combat. At the time there was a clear market leader (Ace Combat) and we knew that the numbers were pretty good. So we thought, “that’s modern jet, why don’t we go World War II so that we’re in the genre but there’s no direct comparison?”

We didn’t have twenty, thirty million dollars to work with so the team spent five months building an incredible tech demo. Those guys worked bloody hard. They came up with a prototype that blew us away; it was essentially hundreds of planes in the sky at one time, fantastic clouds, etc.

Tony and I were able to take that demo, put some pretty documents around it with budgets and schedules and all that sort of stuff and take it to the publisher and get an immediate reaction. Publishers could see the genre opportunity plus we had mitigated a whole bunch of technical risk. Most had never heard of us and we walked in, gave them something they could pick up, play and was fun. We got a deal in place, threw the demo out and actually started from scratch. It was a really interesting process.

Heroes got us on the international stage. I think AFL and Gaelic has allowed us to sort of go up a notch in the sports genre and the new sports title appeals to a much wider audience. This category sells about 10 times what AFL games do so it’s a step up…

Oracle: And that’s the Premiership 2007- is that the one you’re talking about? Because we know that Premiership 2006 was on the top of the Australian charts for six weeks.

Mike: I haven’t actually added up the numbers, but over all the iterations of AFL on console, we’ve sold well over a million units.

Yug: I love those kinds of figures. You’d never imagine that sort of thing…

AFL Premiership 2007

Mike: And we love football. This is the heartland and we’d love to do another AFL game but economically it doesn’t add up yet. The install bases aren’t where we can justify it.

Yug: There aren’t many people outside of Australia playing and AFL game, I guess.

Mike: Yes. We averaged about five thousand a year internationally, but they all went to England for the expats.

Oracle: Fantastic. Well, we’ve been talking sport and action genres, are you interested in any other genres? Or will you be working on any other kinds of games?

Mike: Well, we’d love to do a character-based product and we’ve spent seven months working on the Unreal III technology. To be quite frank, the biggest thing holding us back is production capacity. The sports game is booked for another three years, Heroes – that team comes off early next year and we’re already in negotiations for another project. I don’t think we’ll be able to take on another major project purely because we don’t have the bandwidth to do it.

Yug: Stick with a good thing while you’ve got it.

Mike: Well yeah, I think if you look at flight combat there’s probably three or four teams that can produce quality - there’s Namco with Ace Combat, there’s Ubisoft with Blazing Angels and Tom Clancy’s Hawx, some guys in Russia and there’s us. We’re going to build a reputation in this genre.

Yug: Yeah.

Mike: With sports simulation I think in the short term. The new game is our focus, but when it ships we’ll revisit the option. To be a big player in sport is difficult because it’s controlled by a very small number of publishers.

Yug: But that’s why you’ve got AFL and the new one…

Mike: We’d love to do a FIFA. We’d love to have those sorts of budgets with two hundred people every year working on it, but we don’t have the deep pockets of EA or the licenses.

Oracle: Well, let’s talk about Heroes of the Pacific – that won Australian game of the Year which was pretty impressive. Did that spark any interest straight away in making a sequel?

Mike: It was really interesting. Heroes has sold about 700,000 units. The deal we set up was that Ubisoft had it for North America and Codemasters had it primarily for the rest of the world. Codemasters did a fantastic job for us and marketed it aggressively. Ubisoft didn’t spend any money on marketing for it, but it still sold strongly on word of mouth and from that initial success, within three months of release, we had a deal for a sequel. We just rolled the Heroes of the Pacific team straight onto Heroes over Europe. People liked what they saw and if you look at the overall reviews of the game they were capping at 78% across the board. Now the challenge is that we’re aiming for 85% plus for Heroes over Europe.

Yug: Cool. I hear you have another couple of unannounced titles in the park, sort of thing. Won’t push you on those! Actually I did want to quickly ask, I don’t know if you want to talk about it or not but it was known that Transmission were going to be working on the Sin City game but they’re not now.

Mike: Yeah.

Yug: Is that pretty much all there is to say on that?

Mike: We were pretty keen to do Sin City and we thought it would be a breakout title for us, hence the involvement with Unreal III. The guys did a fantastic job with the initial tech demo for Sin City. However, Red Mile Entertainment, who control the license with Frank Miller, hit issues with raising money for the project. Sin City got cancelled from our end because there was a concern over whether Red Mile could keep funding the project.

The reality is that the project will probably now be made in North America. It is disappointing, but fortunately we were able to move the seventeen people in preproduction over to another project immediately.

Don't hold your breath ...

Yug: And the skills that they would’ve learned, they’re not going to be wasted all, you know?

Mike: Oh no, no. Absolutely not. And we would still love to do it and we believe that Sin City would be very cool. We’d love to show you some stuff, but we had to shift it all back to Red Mile. Other opportunities will come up. Our thing is to really focus on what we’re good at right now and that’s flight combat and sports simulation.

Yug: Especially since it’s your own IP –that’s fantastic.

Oracle: You already mentioned you’d be working on PS3 and Xbox 360 titles, focussing on that, is Heatseeker the last title for the Wii that you’ll be working on?

Mike: Yeah. Our view on Wii is that it’s not an internal skill set so we’ll outsource We’ve got a Wii project coming up; it will be executively produced by us, but done by another studio locally. We’ve had some good success in the past with people like Half-Brick who did a great job for us on Heatseeker for PSP and then Acheron Design did a good job for us on Ricky Ponting’s Cricket for PSP.

Oracle: Was Heatseeker a secret kind of successor to Heroes of the Pacific because I understand that you guys really like those jet fighting games and you want something modern to test it out on. Is that the case?

Mike: The guys had a lot of fun with it. We had the underlying technology built from Heroes and we just wanted to do a really fun jet game where you just jumped in and blew up whatever you wanted to. The team did an excellent job with the Wii controller, back then it was really early in the Wii development cycle and the system worked quite well under the circumstances. I think we were one of the first local studios to go through the Wii submission process as well. The Wii version came out really well. The reviews were good, but the sales were really lacklustre. I think the reason it didn’t sell that well was because that mature type product was too early in the Wii cycle.

Heatseeker - one of the first games to come out on the Wii

Oracle: It was. I mean, it came out just after the Wii was released.

Mike: Yeah, we had it out really early. You know, Codemasters loved it, the reviewers loved it on, but it was too early. I guess in hindsight – always easy – if we were to have released a few months later it probably would’ve done a lot better. You’ll see a lot more mature product coming out on the Wii, because…

Yug: The install base has certainly helped it grow a little.

Mike: Yeah, yeah. Justifies it a little bit. The audience is really broad now. Back in the day it was all about appeasing hard core early adopters. Now it’s about pleasing the audience on a broad basis, so you’ve got to come up with a product that isn’t focussed on that one guy. Those days are gone. We’re the biggest part of the entertainment business now; our revenues are exceeding film.

Yug: Exactly.

Mike: TV’s on the way out in my view. Broadcast TV’s on the way out because people are heavily engaged in the internet in so many different ways.

Yug: I never watch TV shows on TV anymore, I just buy the DVDs, get the box set.

Oracle: Well I’ve got one last question which Yug and I are very interested in - We understand that you guys did a video game based on the TV series Saddle Club, we’ve found out that it was the number one selling PC game in 2003, is that right?

Mike: I think that year we sold over 600,000 copies - 390,000 in Australia and the rest in North America.

Yug: That’s huge

Oracle: You really do love your horse games!

Mike: I guess that was an interesting one – the production was before my time, but essentially we contacted Corporate Productions who were the guys behind the TV series with ProCoin Entertainment out of Canada and they gave us access to everything we needed. The guys got the game out and it sold really well.

Yug: Well, we’ll wrap it up there. Mike, thank you very much for your time!