TCW 221 - North to Hellgate London

Jeffrey: This is They Create Worlds, Episode 221, North to Hellgate, London.

[Intro music -- Aprplane Mode - Josh Woodward]

Welcome to They Create Worlds. I'm Jeffrey and I'm joined by my co-host Alex.

Alex: Hello.

Jeffrey: Alex and I are very tired after fighting our way through hell and hellfire and some sort of lord of destruction or something. But that's all behind us because we have to still talk about these guys because they left Blizzard and did something about London and destroyed it in hellfire too.

Alex: [Chuckles] Indeed. So we have kind of an unofficial trilogy here. I mean, we haven't called them a part one and part two and part three, but we've basically been following the story of the individuals who founded Condor, which became Blizzard North. Starting with some of their activities even before the company was founded, then taking them through their two most significant games, Diablo and Diablo 2. Now we want to kind of take them to the end of their journey, kind of the denouement in the Blizzard North years, and then following up a little bit on their next attempt at the company Flagship Studios with Hellgate London. It's a lot more depth than we often go into on an individual studio, but that's in part because we're able to, because of the great work of David Craddock in his two books, Stay Awhile and Listen, Volume 1 and Volume 2. Now we're not just solely repeating stuff from those books. While a lot of the nuts and bolts comes from those tomes, we've also been adding in other insights and all the kind of similar analysis that we always do here, but it does mean that we are able to give a greater focus on an individual studio than we normally do.

You know, we could have easily done this as a two-parter where we just talked about Diablo and just talked about Diablo 2, but the reason I kind of wanted to do this episode is not so much to cover Hellgate London, though we are going to cover Hellgate London, but it's because with the insights that we have from Craddock's books, we have an unusual amount of insight into why this studio in particular failed, and a lot of that can be extrapolated into more broad kind of truths about why studios failed in this time period. Because there was a rash of company acquisitions in the 90s. Storied companies like Origin and Maxis and Blizzard itself, not just Blizzard North, but the parent company Blizzard and Interplay and all of these companies that had been cornerstones of the computer game industry in the United States in the 1980s and early 1990s, a large percentage of them failed for one reason or another after they were acquired. Gamers love to blame that on the suits, right? You know, big publisher comes in, snaps up scrappy developer or small-time publisher, imposes their corporate will on the company, and the company falls apart because of the meddling of all the suits, and this beloved treasure from my childhood is no more.

Jeffrey: We're looking at you, Microsoft, and your acquisition of Activision.

Alex: Ha ha ha. But while there's always some truth to the idea that there are corporate issues that lead to some of this failure, I mean, certainly corporate overlords are part of the picture, that's not a really fair overall picture. It's not a complete story. Oftentimes it is part of the story, for sure, but it's not the complete story. I think in the Condor story, the Blizzard North story, where we have a fair number of interviews, thanks to Craddock, of people, at all levels of the company, I think it provides us some insight into the other issue that often gets overlooked, which is that you had a small industry that grew up very fast. You had people that started in that small industry that weren't quite sure how to grow up with it. I think that's where a lot of the problems come from as well, that it's not just a corporate meddling thing, because as we'll see in kind of this final look at the Blizzard North story in the end of days at Blizzard North, there's certainly some corporate shenanigans that are playing very much not in Blizzard North's favor. But there's also a lot of problems and fault lines within the company itself that had to do with just the ways that the founder of the company were able or not able to run a studio in a period when team sizes were getting larger and projects were getting larger and more expensive. That is just as much of a problem and would have been a problem whether there had been a corporate overlord in this equation or not. That's why, even though this is a deeper dive than we often take, I still think that there's some value in doing this more nitty-gritty look at Condor slash Blizzard North, because there's definitely some universal themes we can pull out of this.

Jeffrey: That's certainly something that we have done on this podcast a lot, where we have looked at those big themes. We looked at the balance between creative and business. You need to have that balance.

Alex: Mhmm.

Jeffrey: If one or the other has too much power, then the company will fall apart. We see that if a company grows too quickly, business cannot properly put the safeguards and structure in place in order to allow for that growth to really be sustainable. That leads to things like Atari failing, because we have all this money coming in. Obviously, it's going to be coming in forever.

Alex: [Amused] Right.

Jeffrey: We're not going to put some structures in place in order to really make sure that this is sustainable, and that we are accounting for everything. We see that with creatives, where people just go, I have this wonderful pie-in-the-sky thing, but I want to keep adding everything and the kitchen sink in there. But it's not something that is really obtainable, and eventually you just run into a problem with return on investment, ROI.

Alex: Yeah.

Jeffrey: I spend three months making the perfect working sink in my game that a player is going to interact with, maybe, for one second.

Alex: [Chuckles] Indeed. Yeah, these are, as you said, these are problems we've talked about before, and there's kind of another wrinkle in this, which I'm sure we've hinted at from time to time, but I'm not sure that we've really explicitly said in so many words, which is that you have a lot of these small developers and small studios started when groups of friends got together who were really passionate about games, who had discovered the joys of coding and making their own games. Maybe they also have a friend who's a business person, maybe they don't, but the core of the group is just this group that really loved games, really discovered that they liked programming, designing games, and went to town just for the sheer love of doing it, and their early product they could do themselves with maybe just one or two or three trusted hires. You know, a couple of additional artists, maybe an additional programmer, a sound guy that they pull in from someplace if they didn't have one of those, and you could make a viable company out of that. That's certainly what Condor was doing here. I think it's certainly what Blizzard Entertainment itself was doing, its new parent. id Software, of course, is the classic example of this. These are people that are doing all games all the time, all game development all the time, because they enjoy it. We would recognize that today as crunch, but at the time it wasn't even thought of necessarily in that way, because these are groups of people that bonded together over a shared love of games, a shared love of game creation. They enjoyed each other, they enjoyed making games together, they enjoyed playing games together. What else would they do but stay at the office all day long and make games? Especially since many of these were young people, they did not necessarily have families yet. Some of them did, but some of them didn't. So they didn't have that outside distraction. That's kind of the environment that a lot of this started in, in the 1980s or even into the early 1990s.

But as you go along, you're talking about bigger games, you're talking about better graphics, higher resolutions, which by necessity require more and better art, more and better animations. You're talking about much better sound cards, so you're talking about more sophisticated sounds, you're talking about more sophisticated music. Of course, as these games get bigger and bigger and there's more and more stuff being added onto them, there's just more and more code that has to be punched out as well, so there's more and more programmers. Then suddenly you're in a situation anymore where it's not just you and a couple of friends just having a blast together, it's now you've hired a team of a dozen people, two dozen people, obviously it's going to increase even more than that in the future into the hundreds. We're not quite there yet in this time period, but that's what we're looking at. It's not all just friends working together, it's a business where people are there because it's their livelihood, and of course most of them, I mean, they're there because they enjoy it, but they're not necessarily getting to just work on a game holistically and have that pure thrill, they're having to specialize, they're having to subdivide, and that means that you need structure, you need coordination amongst people doing different things, you need real leadership. This is where game development at a lot of these early studios just starts to break down.

Jeffrey: And I've mentioned the guy again, because I mentioned him in the last episode, Thor, who used to work for Blizzard--

Alex: Yeah.

Jeffrey: --goes into this a lot in his live streams and some other stuff where he says one of the biggest problems he observed with companies was that they would keep trying to chase the bigger and bigger thing, and they keep staffing up and staffing up and staffing up, and eventually that just becomes unsustainable. What works way better is that you do a bunch of small game, you get your teams to work well together, you've got something that's actually actionable and done that you can sell, and yeah, maybe it's not your dream thing, but it's a smaller game that works well. Then you do a big game, you do that, you get that big publicity and everything else, then you don't go for another big game, you go back to making a bunch of small games again to get people to relax, try out different ideas, and then once you've got a whole bunch of different ideas and other small games, then do the next big game. It's a much more sustainable model because you have more money coming in, plus it allows for the company to actually breathe, and you're not just staffing up and going, oh dear god, I have so many people, I don't know what to do anymore, we can't sustain this anymore, because we're always having to staff up more and more and more to get this bigger and bigger and bigger thing. Eventually it just implodes on itself because it's like an inverse pyramid, it's just top-heavy.

Alex: Mhmm. Absolutely. To an extent, Condor, did start out doing things that way. I mean, their earlier games were definitely simpler than their later games, and Diablo was smaller than Diablo 2, and etc., etc., but of course, at this point, they're right in the maelstrom because they've gone through a series of ownership changes, and they've gone from being an independent developer doing contracts to being purchased by Blizzard's parent, which is a big parent that then gets swallowed by another parent, which then gets swallowed by another parent, until they're suddenly part of Vivendi Games. Which has a whole lot riding on it, and so they don't have the luxury to necessarily just stick to smaller things. The industry is big and getting bigger, their publishers are big and getting bigger, and they have to get big and get bigger, and of course, all of that culminates in what we talked about in our previous episode, which was the massive crunch on Diablo 2, the 18 month crunch on Diablo 2.

Jeffrey: That's a year and a half, kids.

Alex: Yeah. It was in this crunch that the seeds of destruction for the company were completely sown. Obviously, we talked about the crunch itself last episode, so we don't have to get into that again, but that was really the beginning of the end, because once that game finally released in the June of 2000, the core leadership of the company was completely and utterly burnt out. I mean, they weren't the only ones. There were people at all levels of the company that were burnt out on that crunch, but the problem for us here and the problem for Blizzard North going forward is that the top leadership of the company, David Brevik, Eric Schaefer, Max Schaefer, were completely and utterly burned out, especially David and Eric, Max a little less so. This was a real obstacle to the company moving forward because they had never put structures in place because they came up as a small company and these were the people in charge and they were still the ultimate people in charge. Yes, they weren't doing every task themselves anymore, obviously, and they even had a little more administrative help. They had some office managers and whatnot to help out with things, but they were still primarily the primary arbiters. David Brevik was the big champion of everything. Diablo had been his vision. The entire Diablo franchise had been his vision. Even though there were plenty of other people that were responsible for the ultimate success, other programmers, many talented artists, for the second game, Stieg Hedlund, the designer, of course, always Matt Ullman with his fantastic music. David was always the cheerleader that was rallying the team, keeping the team going, pushing them forward, and having a strong, unwavering vision of what they were working towards at the end of the day. There had not really been another level of leadership that had built up underneath the founders. As many people in the book talk about in interviews, there were technically, on the Diablo II project, there were leads, like a lead programmer or whatever, but even though they had the title, they didn't really have the authority. Becaus they could try to issue an edict of some kind, but at the end of the day, you could always go to the top, you could always go to David or to Eric or to Max, and all you really had to do was convince them, because they had an unwavering hold on the project, and they didn't really have a hierarchy. Even though they created some lead roles, they didn't create that structure, which is really important when you start getting on a bigger-sized project. You need lines of reporting and chains of command when you get to a, a certain level, because there's too much for any one person to keep track of. You need to delegate, but then those people you delegate to need to have the authority to make binding decisions. Otherwise, you just get into an endless cycle of different armed camps trying to convince the very top people that their way is best, and circumventing all of that, that's what leads to an insane amount of politics.

Jeffrey: You really need to set it up so that you trust your, subordinates, you have delegation of responsibilities, and make it so that you trust them. You may not overly agree with them on something, but you trust them. We've seen this with some of the Japanese companies that we have covered before. Yeah, this person has failed me or has something else, but I trust them with what they have done for me in the past. I'm willing to give them the benefit of the doubt. Sometimes that's good. Sometimes that's bad. But you still need to have that in order to essentially avoid chaos.

Alex: Yeah, exactly.

Jeffrey: The only time that upper management should really override is when you have an issue that's preventing work from getting done and things are stalled and at a hard impasse. Usually this might be an HR issue, like someone just being a jerk. There needs to be a way to have upper management learn about that and then override in those specific cases. In upper management, in David, Max. and Eric's position, they should yield that override power very, very sparingly.

Alex: Mhmm.

Jeffrey: It is a husbanded resource that must be carefully cultivated and only used with the greatest return on investment.

Alex: Exactly. And I'm sure this all sounds very, you know, very boringly corporate--

Jeffrey: [Chuckles]

Alex: --and all of this to a certain degree, and yeah, I mean, that's fair, but it's so necessary because it's the only way you can keep control of a project this size. But it's also the only way you can empower employees and make them feel like they have space for themselves to advance. Which is incredibly important to keeping a team of talented people, which there's no doubt Blizzard North has a team of talented people, motivated. If at any time what little authority you have by virtue of having this lead name in front of your title can be very easily undermined by just endrunning you and going to the top boss, then you're not going to necessarily feel that you're very fulfilled or have had a chance to grow yourself in your time at a company, and that is going to lead to a lot of disgruntlement as well.

Jeffrey: So that just leads to a really bad situation, especially if you have that upper management being burned out after doing a year and a half of overtime just going crazy. They don't have their heads on straight.

Alex: Exactly.

Jeffrey: Obviously, Diablo 2 came out. It was a fantastic hit and everything. Obviously, I imagine Vivendi came to them and said, I want that expansion, boys.

Alex: Well, yeah, of course, there's always something else to be done, and that was a real part of the problem with this burnout is that David and Eric, in particular, were in no position to help position the company for what was next. David, he was having a really rough time because he was going through a divorce at the same time, which was also largely caused by the crunch, not surprisingly. He was going through a divorce, he was burned out on Diablo, and he basically just escaped into EverQuest. He just dove into EverQuest and was playing that all the time rather than making decisions. Eric, he took a couple of really long sabbaticals from the company. He took like a six-month sabbatical, which also rubbed some people the wrong way, because everybody was burned out after the Diablo II development, and there were some people, and again, this is all according to Craddock's interviews, there were some people who were kind of grumbling. It's like, we're all burned out. Why does he get to take six months off just because he's one of the founders? He gets to go recharge his batteries like that? What about the rest of us? Who does he think he is? Of course David and Eric both worked hard on Diablo 2. No one would doubt that they put effort into Diablo 2. However, they were not the ones working the hardest, because they were not in the trenches. They were not the ones doing the grind day in and day out to get it finished. So, you know, a lot of these people were also like, they're burned out and they're withdrawing, and it's like, they didn't even, you know, from their perspective, David and Eric might have a different perspective, but from the perspective of these employees, it's like they weren't even doing as much work as we were. Why do they get to say they're burned out and they get to step back and still get paid and we just have to keep pushing forwards? David was still a generally widely popular leader. I mean, it's not like people started hating the upper management of the company, but there were some seeds of dissension being sown there just because of that dynamic.

Of course, there was an expansion that they were going to do, and we will talk about that expansion briefly here. It was Max, who was less burnt out than the others, that kind of took the lead in overseeing that project, with two people underneath him primarily. Programmer Tyler Thompson, who was leading the technical design, and an artist by the name of Phil Schenck, who was leading the creative and narrative design of the expansion. It was a pretty straightforward process, actually, of doing the expansion. First of all they did learn from the unrealistic expectations and ridiculous crunch on Diablo II. Initially, they were handed a plan saying that we want the expansion in six months, and Tyler Thompson, who was really in many ways the project lead, and this was another point of contention, because Max was the overall lead and had final approval. Tyler was actually doing most of the nuts and bolts running of the project. So again, there was a little bit of that tension there with this inability to delegate and just designate people as real leads, even if they had lead in their title. Giving them real empowerment to be leads was a bit of a problem here as well. But Tyler Thompson was like, oh no, no, no, no, no. Did you see what just happened on Diablo 2? We are not getting this done in six months. You can have your expansion in one year. You know by having the foresight to do that, they did not have to crunch on the expansion. Because they had realistic expectations based on past experience. Something that video game industry is notoriously bad at. But I think the success and longevity of Diablo 2 as a product that could continue to sustain itself over that time through Battle.net Play meant that the powers that be were willing to be a little more generous with the time, and so they got there one year, came out a year later. It was not a crunch experience.

Phil Schenck is the one that really came up with the story of it. He really wanted to get at kind of the larger picture. Even though there's lore behind Diablo, they're making it up as they go along. It's not like they really have an overarching plan for where the Diablo universe is going. He thought it would be very interesting to delve into what was the end game of heaven and hell, the angels and the demons. We know they've been fighting the Sin War. They know they've been at each other's throats. But what's the ultimate goal here? What do they gain by all of this fighting on Sanctuary? And so he came up with this idea of the World Stone and the idea that the barbarians were defending it and that hell coveted this World Stone in order to do what it wanted to do with corrupting all life and all of that. The villain of the piece being the Lord of Destruction was also very obvious because the game itself had led it in that direction through the cutscenes, though we didn't mention this last time. But this was again another example of Blizzard South doing a lot of story making that was not directly necessarily coming from Blizzard North, just as the case with the cinematics in the original Diablo, where that shock ending of shoving the stone in the forehead was not anticipated by Blizzard North and came out of nowhere. Now, there was a little more coordination this time. It wasn't quite as uncoordinated as back then, but you see, they knew they were going to have cinematics again. Once again, it was going to be Blizzard South doing the cinematics. Blizzard North very briefly tried to take control of the cinematics in Diablo 2 and put together some mock-ups, and stuff was okay, but Blizzard down South was basically like, yeah, that's nice, but really, we got a team for this, so yeah, they're going to do it.

You know, Diablo 2 did something that the original Diablo didn't, which was that it had a full paper doll, avatar, where every time you equipped a new piece of equipment, it would change the way your character looked. The original Diablo had a couple of layers of that. There was like a light armor, medium armor, heavy armor variation. That was it, and it wasn't down to the individual pieces of gear you were finding. So the cinematics team, when they saw that system, they were like, well, we can't do cinematics that feature the character, because there are endless variations on what the character might look like at any given time. The amount of cinematic work we'd have to do to support that would be nuts, because they just didn't have the tools and the technology to do that easily back then. Nowadays, that's not such a concern, but back then when everything was more pre-rendered, less in-engine, that was a really big concern. So they said, so we can't tell a story of your character in cinematics, so what we need to do is tell a parallel story to the story of your character, so that there's this, like, narrative thread that's kind of moving along and is showing the thrust of the story, but it doesn't directly involve your character, and so that's how they came up with the idea of this traveling duo, this mysterious cloaked figure, and this sole survivor of this massacre caused by the stranger, and--

Jeffrey: Marius, I believe his name is called.

Alex: Yep, I believe so. Their continual trek to the east, always to the east. Which, of course, you know, also was the entree to having Bael be a figure in all of this, the Lord of Destruction, and end with that big reveal that that's who Marius has been following this entire time.

Jeffrey : Talking to.

Alex: Yeah, sorry, not following, but talking to, yes. He was following the stranger. He was talking to...

Jeffrey: Bael.

Alex : To Bael. Uh-huh. The general thrust of the story was established that way. Phil's big contribution other than that is he really wanted the quest to tie into the story for the first time, really. Neither of the first two games, they always kind of just came up with a bunch of quests randomly near the end, and most of them had nothing to do with the overall arc of the story, a lot of them were side quests. This time he wanted the quests to actually follow the progression of the game, so the quests are a little more tightly interwoven with the narrative as you pass through Act 5, the new act, and yeah, this big whole, you know, World Stone, fate of Sanctuary kind of thing playing out. Tyler and Phil did great work. Obviously there were other people that worked on it under them as well, and created a really great expansion, and they did it without crunch. Even then, they were not afforded full autonomy that you would necessarily usually get in that kind of lead position, because they were still Max looking over things. Some of those problems are still there. There's a lack of ability to advance, and there's a lack of, for a lot of the company's history, a lack of suitable compensation as well, and these are problems that are all going to come to a head in the aftermath of the launch of Diablo II and its Lord of Destruction expansion, as the company tries to figure out what to do next.

You know, as we kind of said at the top, Dave and Eric were especially burned out. Even though it was inevitable that at some point, someone was going to do some kind of thing that was going to turn into Diablo III. The next project, which by next project I mean the project after Diablo II has launched, but while the Diablo II expansion is still under development, so there is still a small team focused on Diablo product. The next product has definitely got to be something else. Because they done. But what that something else is, is not entirely clear. It goes by the nebulous name of Project X, and it's going to be Dave Brevik that's in charge of it. They know they want to still do some kind of action-y RPG, because they know that that's what their bread and butter is. But they're not looking to just kind of repeat the Diablo formula, or do Diablo in another venue. They know it probably needs to be in 3D at this point, because 3D is very mainstream, by 2000, 2001. They just start slowly, over the course of a couple of years, just blowing through a bunch of different ideas without being able to settle on anything, which, again, all comes down to Dave Brevik at the top just being burned out and not being able to get excited by any of the concepts they throw out there, and he has the final veto power. He's still very much in charge. The first thing they kind of start on is a game that ends up taking the name Iron Monkey, which is a martial arts-focused action, RPG that has a real emphasis. It's not the entire game, but it has a real emphasis on one-on-one martial arts duels. It's primarily inspired by Jordan Mechner's classic 1984 game, Karateka, which consisted of a series of one-on-one karate duels. We've talked about that game before in our Broderbund episode or something like that.

Jeffrey: [Chuckles]

Alex: So that was kind of their first thing, and they worked on that for a goodly while. And then Dave Brevik just wasn't feeling it. And he said, no, we're not doing this anymore. Let's do something else. So then they started on a superhero project called Titan City, and they worked on that for a bit. They were starting to move towards maybe doing something more MMO-like. Because, of course, MMOs are big, and MMOs, as we had talked about in our previous episode, it spread through Blizzard North like wildfire. So it's like, let's do some kind of superhero thing, this Titan City. Did that for a few months, and then that one fell apart. That was particularly frustrating because basically after Iron Monkey had been canceled, Dave Brevik, rather than having another top-down, like, this is what we're going to do next, was like, okay, guys, you pitch me on something. So Titan City was a concept that was pitched to him, and he said, okay, let's do that. Then just a few months later, he's like, ha ha, just kidding. I just, I'm not getting excited about this. So they canned that one. Next, it was like, well, Pokemon is big right now, like this idea of gotta catch em’ all is really popular with the kids. Why don't we do a character collection kind of game? Not with monsters. It's not going to be a Pokemon ripoff. It's not gonna be Pokemon with guns, you know, like Palworld. It's just like this basic concept of going out and collecting a bunch of characters and then having paddles with them. This became a cops and robbers style multiplayer squad based game called Headhunter. They worked on that for a while. Then that got canceled. These are some of the ones that Craddock mentions, but it sounds like from Craddock's book that even though those are the only ones he mentions, that there were several more that were pitched to Dave and Eric as well, all of which were just turned down. So they were just starting and stopping, starting and stopping, and spinning their wheels over and over again. You know, this goes back again to some of these same problems I'm talking about, which is that they just didn't have the structure in place. Because they weren't empowering their teams with enough authority to go out and try to implement a really good idea. Everything was still in the hands of this one studio head. Eric was there too, but especially David, this one studio head who just had veto power over all of these different projects. But it's also an example of there wasn't necessarily effective leadership from the top either, because first, on the one hand, I'm complaining that the top had so much power. But on the other hand, you can also argue it the other way, which is that it's okay for the project director, which Dave is functioning as here, even if he's also one of the studio heads, it's okay for them to have final authority and have a lot of power. But if they're going to do that, they need to share a vision and have the ability to manage the team and push the team towards creating a singular vision, and it's clear that Brevik was so burned out by Diablo 2 and his divorce, and so checked out from the company that he was simply incapable of this. That's one of the problems you see when one of these small developers tries to make the transition into the big time, is that the individual who was really good at creating a game themselves, or being the first among equals on a small team building a game, isn't necessarily the person that you need to be in charge of building a big game with big teams in this modern era. There can be a real disconnect in skill sets, but the upper management has an aura of reverence around them because they are the founders of the company. They are the ones that had the initial vision, and Dave Brevik is a person who's had very strong vision in the past, obviously. Diablo was his baby. That vision carried through to an incredibly successful franchise that still exists and is still profitable to this day. You know, clearly there's some of that skill there, but there's still also obviously a very clear disconnect to being able to do that on a small scale and replicate this on the much larger scale that is now demanded of AAA development circa 2001.

Jeffrey: What I am really hearing here, from what you're saying here, is there is a real lack of someone with true business acumen there.

Alex: Mhmm.

Jeffrey: This would probably be a really good example of what can happen even with a bigger company when you just have creative out of control and they don't have any kind of structure to them.

Alex: Mhmm. Exactly. There needed to be some project management here. I mean, it isn't necessarily even, you know, purely necessarily business skills so much as it is project management skill. That just doesn't feel like something that Blizzard North necessarily has. They've kept the top of the company very lean. They've only grown the company, I think, as much as they felt they've had to, to cope with bigger games and bigger game development. But they've never put these structures in place with leads and project managers and all of these people that can actually handle something like this. So they're just spinning their wheels over and over again because you've got this single linchpin, or maybe two if you count Eric as well, who is also there, at the top of this thing, and they're just still completely and utterly burned out by the last project. Even if they have some of those skills somewhere deep inside them, right now, they are just in no position to manifest them because of the burnout.

Jeffrey: Let this be a lesson to you. If you are in a position of management or leadership, take some project management courses. Take the time to educate yourself on how to properly manage a project and manage people. Read Dale Carnegie's book, How to Win Friends and Influence People.

Alex: Mhmm.

Jeffrey: These are soft skills that are so, so critical to properly leading any kind of company. I think what really happened is that you have David, Max, and Eric there still have that developer mindset.

Alex: Mhmm.

Jeffrey: Then they're being thrust into this leadership role and they can't step back from that. Once you hit that leadership role, you can't always jump into the trenches. You can't do that in that kind of mindset anymore. You have to really manage, truly manage the company, manage the people, and have to trust on them to do the things, and give them that power to do so.

Alex: Exactly. Then on top of that, you still have the same problem. Again, according to these interviews, you have the same problem that was one of the problems that led to the crunch time on Diablo 2 that we talked about in the previous episode, which is that this is a company by gamers for gamers, run by gamers, where everyone loves gaming, and there's just too much gaming going on. There's no one that's really putting their foot down and being like, okay, productivity is really slipping. We have to maybe play a little less EverQuest or a little less pool, because they had a pool table as well, a little less pool, and maybe put some work in on these projects. I know I've hit this point several times, but I do feel it's kind of the theme of the episode, is that this is oftentimes what happens when you get these developers suddenly thrust into these positions of management, and we're focusing on Blizzard North because we have the interviews, we have the details. But I think if you were to look at most of the developers from this period, you would find a lot of the same issues. These issues are as much why some of these companies failed to adapt to the bigger game industry and new corporate overlords and not just business people coming in and mucking things up. Though we are going to get to the business side of this disaster in a little bit as well, because there is some of that in the Blizzard North story too. They've gone through all these pitches. Finally, they seem to finally be settled on something. A couple of employees start developing a new concept called Dragons. This would be in 2002 now. So Project X has been theoretically going on since not too long after Diablo 2's shipped. So, you know, late 2000, early 2001. Now in 2002, Dave comes back and finally says, we need to have a vision. We haven't had one, and I'm finally here to give you a vision. You know, so many of these things had been pitched to him, and he'd greenlit them, and then he'd lost interest in them. He says, we're going to do a high fantasy game based around dragons. This particularly intrigued two individuals, Joe Morrissey and Eric Sexton, who really decided to take this concept and run with it, and they developed this whole world, and they developed this lore backstory to it. Morrissey's a writer, so there's a lot of that kind of stuff going on as well, and they're really getting into this. They put together what they think is a great kind of proposal for what this thing could look like. Still going to be an RPG, but now you're like riding and controlling dragons and stuff. Then it ran into problems of all things, and this is just one of those things that we all kind of know is always sitting in the background of the video game industry, particularly at this time, but isn't necessarily always said out loud. This one runs into friction because the main character, the main protagonist, is a woman, and the main story is kind of a romance story, a love story, featuring this woman. The male-dominated echelons of the Project X team are very uncomfortable with the idea of playing through a love story as a woman. There may have been other things that were going on as well that people didn't like about the concept, but this is one that definitely seemed to cause particular ire towards this concept. So this one failed as well, just like all of the others before it. Now it's 2003. 2003. This has been going on for probably about two years, maybe a little longer.

Jeffrey: Two years of spinning your wheels when you probably just could have said, everyone, take six months off, recharge your batteries, come back and let's attack this fresh, and then you would have saved a lot of money.

Alex: Potentially. Finally, Eric Schaefer comes into the rescue and is basically like, okay, no one can figure out a new direction to go. It's time to pull out this concept that we talked about a while back. This is an old concept they pulled out, and let's just do Diablo in space, okay? So after all of that, all these attempts to move in different directions, they finally decide that they're going to basically just do Diablo in space.

Jeffrey: Nothing more sophisticated?

Alex: [Amused] Indeed. And obviously there'll be some differences. But yes, in this game, it never gets an official name, but it is referred to around the company as Starblow, as a joke, because it's like Diablo in space.

Jeffrey: And Starcraft.

Alex: Yeah, so Starblow. That's where they finally end up in 2003, after all of this going back and forth on all these concepts. That's one thing that's going on in the company. There are two teams. There is the expansion team that did Lords of Destruction, which, as I said, was a much smoother process. Max was not nearly as burned out as Eric and David were. Then you had some people under him, like Tyler Thompson, that were actually committed to doing some real honest-to-God project management and make sure that they had the time and the resources they needed to execute properly. That one went smoother, and of course the expansion was a success. And then that team... was the team that then became the core of what was going to start work on Diablo 3. Now, we have to be very clear. There is a game. You can open up Battle.net right now and buy it and play it. There is a game called Diablo 3. It exists.

Jeffrey: I, in theory, own this game.

Alex: Indeed. That is not in any way, shape, or form what is starting here at Blizzard North in late 2001 early 2002 after the creation of Lords of Destruction. The Diablo 3 that came out was a complete do-over from scratch after all of the problems that we're talking about in this episode occurred and Blizzard North closed. They didn't take anything over. New developers, new concept, new everything.

Jeffrey: Which is why there were so many problems trying to just get that same structure and try to recapture the magic of Diablo 1 and Diablo 2 because you have none of the developers that made it.

Alex: Indeed. This Diablo 3, it didn't get very far, even though they worked on it for years, they had some of the same problems the Project X team had of just spinning their wheels over and over. This one didn't get very far. But we do know a few things about it. First of all, this was going to be much more MMO-like. They weren't entirely sure how they were going to handle everything, like they weren't necessarily going to do a monthly subscription or whatnot. Just because it was going to be an MMO, it didn't mean that it was going to be an MMO like EverQuest or World of Warcraft. They wanted to keep the same type of basic gameplay in place. They wanted it to be massively multiplayer. They wanted to have a persistent and fixed overworld, and a large one, where all of the players congregated and all the players interacted and might even have dynamic events taking place across that overworld. Then, on top of that, have procedurally generated, dungeons where most of the meat of the gameplay took place. They were still, from what looks like, they were going to keep the isometric view, they were going to keep the fast click, click, click, click action, they were going to keep the procedural generation, they were just going to limit it to the dungeons, but then the MMO aspect would be the persistent online world where everyone is interacting together rather than the previous two games, which were single player with the option of multiplayer, and if that multiplayer occurred, you were just going off with a few of your friends in Battle.net and creating your little up to eight player Diablo experience without interacting with anyone else other than in the chat room or whatever. Kind of taking that core Diablo gameplay loop and applying it to an MMO world. They also, because this was very popular in MMOs at the time, they were also going to implement a faction system. The factions changed constantly throughout development. Craddock mentions a lot of the factions at various times. We won't go into that here. You can read his book. They changed constantly, but the idea was there would be three different factions, and your choice of classes would depend on which faction you chose.

Jeffrey: Sort of like the original Warcraft-- WoW.

Alex: Yeah, exactly, in a way. Each of those factions were going to have three classes, and again, those classes changed ridiculously over time as well. They were all variants on classes that had existed previously, like the Barbarian and the Rogue. I called that, they were new classes, but they were classes that contained elements of the Barbarians and the Rogues and the Sorcerers and the Paladins and all of these things that they had done before. But they were going to be brand new classes, and again, the classes changed constantly over time. Here, we're getting into the problem that afflicted Diablo 3, which was similar to the problem that afflicted Project X. Now, Project X was having conflicts on a higher level, because Project X could not even decide on a concept. The Diablo 3 team knew they were doing Diablo 3, but everything else was in a constant state of churn. They kept coming up with different factions. They kept coming up with different classes. They were still debating whether this would be a 2D or a 3D game. You know, it was going to be in that isometric view, but there were some who still wanted to keep it two-dimensional, you know, sprite-based graphics.

Jeffrey: Not do a 3D setup where you have that top-down fixed camera view onto a 3D world sort of like how they did Diablo 3 and Diablo 4.

Alex: Right. The camera was a lot of the problem here. It wasn't just for aesthetic reasons or for comfort zone reasons that they wanted to keep it 2D. They were really afraid of what going to 3D would mean for the camera and for how they would have to build terrain. Because the kind of the luxury of the 2D fixed isometric world was that they didn't have to worry about all of that stuff because the player wasn't zooming in and out. The player wasn't rotating the camera. The player had a fixed view at all times of what they could see, and that was very easy to work with, and they were very afraid that they were going to increase their work exponentially if they had to deal with a 3D terrain and a 3D camera system. They were just going back and forth on everything, and again, Max Schaefer, according to people who were at the company, was not a dynamic leader. He and Eric both, you know, they're brothers, which is why I mentioned them in tandem. They were good at being your pal. They were good at hanging out with you and being easy to get along with, but they didn't like having to make the big decisions. They didn't like having to ruffle feathers.

Jeffrey: They didn't want to be the bad guy. And unfortunately, in that kind of leadership role, you just have to be the bad guy sometimes. It sucks. It really sucks. But ultimately, you're there to do a job, and if the people under you aren't performing that job or don't have the direction they need, where you're cutting through and being direct, yeah, it's going to lead to problems.

Alex: Exactly. You know, and in Max's view, they could take their time. Diablo 2 was a massive hit. Diablo 2 has a long tail. It is generating money forever. So he kind of just saw this early period as, oh, we're just in pre-production. We're just spitballing ideas. It's all good. You know, eventually we'll exit pre-production and, you know, then we'll make the tough decisions. But that just left them kind of endlessly spinning their wheels and not getting anywhere. Then, because there was still a lot of freedom, like these were the two main project groups, but if there were people at the company that didn't want to do either of these things, they had some freedom to explore their own projects as well. Which led to even more confusion because they ended up having two different groups deciding that they wanted to build a new 3D engine that could be used in Diablo 3 and whatever other games. Like they weren't building the engine to target a specific game. It's just like, it's time we had a 3D engine we can use for our games.

Jeffrey: You didn't have the leadership at the top saying, oh, you both want to do a 3D game. Why don't we split off the people who want to focus on that over here. The rest of you work on your assets and game design for these games, and work with the engine team so that you can have an engine that can accommodate both of you. Which will probably give you greater versatility, and let us do more and varied games in the future.

Alex: Mhmm. They decided to let both of these teams have at it and try to make their engines. They even thought that, you know, having the competition between the two might even spur innovation. It led to more cliques and more politics, and in the end, they could only use one of those engines. And they did only use one of those engines. Which led to a lot of hurt feelings as well. This kind of hands-off from the top in making decisions was really leading to a lot of factionalism. In Craddock's book, there's talk about three kind of main factions within the company, and I'm not going to get that detailed in the company politics for this. But there were basically these three different factions. Just like there would be three different factions in the Diablo 3 game. There were three different factions at Blizzard North that had different ideas about where the company was and where it could be going. And it was becoming a bit of a mess, and you had these projects not going anywhere.

They also had a couple of other projects going on that never made it very far. A couple of people thought it would be fun to do a Diablo game for the Game Boy Advanced. Management was like, oh, that's kind of cool, but why don't you target the Game Boy instead, because there's more of them out there, and they're like, okay, fine. So they started working on a game that would be a prequel to the first Diablo and would be a little more child-friendly, because it's on the Game Boy, that they were informally calling Diablo Jr. It never had a name, but they were calling it Diablo Jr. They got a ways through that, and then Blizzard in Irvine, main HQ, decided, eh, this seems like too big a risk, I don't think we're going to make a return of investment on this, so let's stop. So that was cancelled. They also made a deal with Capcom. Capcom wanted a console Diablo game, like a new one. The original Diablo had been ported to the PlayStation by Climax, Japanese company, but Capcom was looking for an original console game for the PS2. Again, a prequel, though this time in the way distant past, it was going to be a prequel when demons were first entering the world of Sanctuary and kind of the beginning of the conflict. That was going to be more of an overseeing project, like Capcom was doing the work and Blizzard North was just offering input. That project died when they got the first build back from Capcom, and it was absolutely terrible. Blizzard North said thanks, but no thanks, you know, as the license holder, as the IP holder. They're like, we're done here. So they had a couple of other things spinning along, but the the main things were project X, which was ever-shifting, and then Diablo 3, which was a little more concrete in concept, but was still ever-shifting in implementation. Though it was moving forward, I mean, they did finally decide on an engine. They decided to use the Axe engine, one of those two 3D engines that had been under development, and they were starting to get some basic ideas of how things worked. I mean, it was moving along, even if it was kind of slow and haphazard and politic-filled. You know, I'm talking about all these problems at the developer level, and I told you we'd get to the business side. The final death knell actually did come from the business side of the equation. Now, I think all of these problems were going to make it difficult for the company to continue to sustain itself anyway.

Jeffrey: This hastened the end.

Alex: But business is what ultimately killed them. For this, we have to go back a little bit and talk about some things that we touched on a little bit in the other episodes, but we didn't go in depth on. Blizzard North started out as the independent company Condor, and Condor was under contract with Blizzard Entertainment as a contracted developer to deliver the original Diablo. At that time, they were working under an agreement that they would get royalties on the game, a very standard contractual developer kind of agreement. You get a development budget, and you hit milestones to receive milestone payments from that development budget, and then your real payoff comes from the royalties that you get after the game is released. Well, in early 1997, of course, the company is acquired by Blizzard Interactive's parent, Davidson & Associates, and technically by their parent, Sedant Corporation. When they're acquired, all of the contracts that they had go out the window. So they're no longer working for royalties on Diablo. That contract is just voided as part of the purchase. So they're given stock options in Sedant, the parent company, which is public, as compensation for losing out on the royalty plan. Well, then the big scandle that we hinted at in the previous episode happened, because Davidson Associates had originally been purchased by CUC, which had then merged with another company to form Sedant, or Sendant, I guess it's probably pronounced. Then it was discovered after that merger that the CUC people had been cooking their books for years. I mean, the CEO, Walter Forbes, ends up going to jail for this. I mean, it's serious. They're really cooking the books. Sendant's stock goes into the toilet because of this. Obviously. Big Wall Street scandal. So they were supposed to get royalties. Now that's not happening. Then their future is tied up in stock options that are suddenly not worth very much at all, that have lost the vast majority of their value. You know, they're a small developer. It's not like they're making huge salaries. Like, the payoff they were relying on was royalties, stock options, that kind of stuff, which has now all fallen apart. The people in Blizzard... At Blizzard Entertainment are kind of in a similar situation at the main headquarters as well. So they present a unified front to Sendent. Max, Eric, and David at Blizzard North, Mike Morhaime, Allen Adham, and Paul Sams, the upper management at Blizzard Entertainment at Irvine. They get together and tell Sedant, Sendent, I don't care. Look, guys, we need a royalty plan. We need you to authorize a royalty plan for Blizzard. We are producing a lot of value for this company, and we are getting nothing in return, especially now that the stock is in the tank. So you need to do right by us, and if you don't, all six of us are going to resign. Good luck maintaining the only successful part of your entertainment business without us.

Jeffrey: Pretty much going the nuclear option.

Alex: Exactly. And the company caved. They implemented a royalty plan. It was a pretty good royalty plan, and it covered all Blizzard North and Blizzard South employees equally. What I mean by that is when StarCraft became a big hit, the people at Blizzard North also were able to participate in that success. Then when Diablo II became a big hit, the people at Blizzard Entertainment in Irvine, which the Blizzard North people like to call Blizzard South, participated in that, and the amount of royalty payment you got was based on a merit award system. So people that were seen as better or more important or contributors got a higher percentage of royalties, and all of that, the system worked pretty well. At some point, and I don't know which corporate owner they were under at this point, because Sendant sells out to Havas, and then Havas sells out to Vivendi. I don't know if this was under Sendent or Havas. I don't think it was under Vivendi, though. But at some point, they decided that the royalties were insufficient, and they played the same trick, basically, saying, we need to up the royalties in the program, or we're all going to quit, and again, second time, this worked. They got higher royalties. So now the company is owned by Vivendi, and Vivendi has realized that they have made a horrible, horrible mistake. The chairman of the company that had pushed what had been a utilities company into the entertainment space, not just in video games, they also bought Universal Studios. They were in the movie business, they were in the video game business. He is ousted because this is not going well for Vivendi. The new people in charge have decided, we need to get the heck out of this stuff. We should have never gotten involved in all this entertainment. It's a disaster. We need to get out of this. We need to get out. So they start looking around for a suitor to take Vivendi Games, which is Blizzard, it's Sierra, it's other odds and ends, you know, the entire package. For a while, it looks like Microsoft's going to buy. That never happens. But they're looking to sell the company, preferably altogether, but I think at the end of the day, if they have to, they'll do it piecemeal too. Now, this has the Blizzard folks, North and South, really nervous because they don't want to end up someplace they absolutely do not want to be. So they decide amongst themselves they need to have a say in this sale. Like, we can't let Vivendi just horse trade us someplace awful. We have to be a part of this. They decide that they're going to do their same old trick again, and they are all going to resign unless Vivendi agrees to include them in the process of finding a buyer for Vivendi Games. But at the last moment... And Craddock doesn't have interviews with Blizzard South management, so I don't know the reasons why, but at the last moment, the Blizzard South people chicken out and decide that they will not use the nuclear option again.

Jeffrey: So since you don't have a unified front, that's going to greatly diminish their bargaining power.

Alex: The Blizzard North people, they got enough advance notice out of this to rescind their resignations. They didn't get left high and dry. But they decided, David, Max, and Eric, decided that they would go through with this anyway, and submit their resignations in the middle of 2003. Those resignations were gladly accepted by the powers that be at Vivendi. Third time was not a charm. June 2003, to be exact. Their resignations were accepted, as was the resignation of a fourth person that we haven't really mentioned very much, Bill Roper, who had been with the original Blizzard Entertainment since its very early days, had come up north, to be Blizzard Entertainment's representative producer on Diablo 2, but was embedded at Blizzard North and became more and more friendly with the Blizzard North people while he was there. So Bill Roper was also part of this round of resignations, and his resignation was also accepted alongside David, Eric's, and Max's. Then, of course, the ironic thing is that, you know, this is June 2003. In 2004, World of Warcraft launches and is such a phenomenal hit that Vivendi completely changes its mind about getting out of the video game business. So they end up resigning for nothing because the company doesn't even get sold.

Jeffrey: Then they lose out on all that extra money and goodwill.

Alex: Yeah, they lose out on that World of Warcraft money. Assuming the royalty plan was still in place. I assume that that made a wee bit of royalty for everybody involved.

Jeffrey: Just a bit.

Alex: The resignation of the founders didn't necessarily have to be the end of Blizzard North. But as we talked about before, there had never been a very good job of creating any kind of hierarchy at the company. Creating any type of leadership strata at the company. As a result of that, it wasn't necessarily exactly clear who should lead the company in their absence. I mean, there were some people that stood out, like Tyler Thompson and Phil Schenck, the people who were involved in the Lords of Destruction. But it wasn't necessarily obviously clear who should take over at this point, because there hadn't been that much establishment of structure. Furthermore, we haven't talked about this, but Blizzard South, Blizzard Entertainment, kind of had a little bit of disdain for the people at Blizzard North. They called them the 70 percenters. At least some people there did. It might not have been universal, but they definitely had a reputation as the 70 percenters. The reason for that is we talked about this particularly in regards to the original Diablo, how basically everyone at Blizzard South at one point or another ended up working on Diablo to get it over the finish line. Diablo 2 wasn't quite that, I don't think, but there was still help from Blizzard South to get it finished. Blizzard North kind of had this reputation of, yeah, they get a project 70% of the way there, and then they need to come running to us to finish it. So there was kind of this idea, I think, floating around the Blizzard Entertainment, do we even need Blizzard North? If the leadership is gone, is this really a separate entity that we need to keep going? Or is this something we can part ways with? That doesn't play out immediately. It kind of plays out in slow motion. They don't close the studio right away. They do lay off about a third of the staff. They do pick Phil Schenck, the artist who had played such a big role in the story of Diablo 2, to lead the studio. And this is a true story. Only to discover at the meeting where they're going to introduce him that he is no longer at the company because he has chosen to join Brevik the Shafers and Roper at their new venture, Flagship Studio.

Jeffrey: [Laughs]

Alex: They're literally in the meeting, and they announce your new studio head will be Phil Schenck. Uh Phil, are you in the room? Then they have to be told by the Blizzard North staff, uh dude, he's gone.

Jeffrey: Not appearing in this picture.

Alex: Uh-huh.

Jeffrey: Wow.

Alex: Yeah, I know.

Jeffrey: That just speaks to how clueless they were. You would think before you make that kind of announcement that you would at least know, does this person work here? Just think of the morale--

Alex: [Amused] Yeah I know...

Jeffrey: --hit and the loss of confidence that, just gives when you say, we're giving it to this person that resigned.

Alex: Yup.

Jeffrey: You didn't even realize that. So how clueless are you at that point?

Alex: Indeed. They do ask Tyler Thompson, who did such a good job of managing the Lords of Destruction project, if he would like to take over as the head of the studio, and he said, no, I don't really want to do that. I don't want to be the leader. You know, according to the book, they then were basically said, okay, thank you very much. We accept your resignation. [Laughs]

Jeffrey: Wow...

Alex: They finally do settle on a new studio head, Rick Seiss, a programmer who had been with the company since nearly its beginning. You know, one of the old guard. So Blizzard North did continue for a small period of time, now under Rick Seiss, but the relationship was very different at this point. All the founders were gone. Schaefer Brothers gone. Brevik gone. Seiss is an early employee. He was one of the first hires, but many of the early employees are also gone. Many of the employees that served in some capacity as project managers are just gone.

Jeffrey: So it's really more like the entire heart of the company is gone. The soul of the company is gone, really, because you've lost the three core founders who really shepherded everything. Everyone who learned things about them is gone. It's like you're building a whole new company from scratch, and they're expected to be gods of design.

Alex: Right, and the thing is, Blizzard Entertainment down in Irvine, wasn't really interested in building a whole new company. Now, at this point, they were going to keep it going. They had a long-standing relationship with them. They were going to keep it going, but they decided that it was going to take a lot more supervision from people down in Blizzard at Irvine. Of course, Bill Roper, who was one of the people that left, was the person that had been installed to give that supervision. They were talking about doing more supervision again, but they didn't actually move anyone up there this time. You know, the Starblo Project, is gone, the Diablo in space thing. We're down to just one project, which is Diablo 3. As we said, Diablo 3 had some ambition behind it, this idea of making it more MMO-like. But with all of the talent that they lost, and the need to just get something jump-started and get something going, because the fate of the studio was literally at stake, they decided to really scale back. So they kind of scrapped the semi-MMO thing that we already talked about and really fell back on, let's do Diablo 2, except, you know, a little better, a little more polished, whatever. They did that and they built a vertical slice, which is a term in the industry that basically you take one section of a game and you build it completely so that that section works in every single one of its systems. You use that for a model saying like, this is what the game's going to be like overall. They build a vertical slice. Management down South is happy with it, and so they're like, okay, keep going, make that. We'll let you make that Diablo 3. Well, there's a new book that just came out, Play Nice, The Rise, Fall, and Future of Blizzard by Jason Schreier that doesn't cover Blizzard North very much. It doesn't add anything really to what we've already talked about in our previous two episodes, but it just come out even after those two episodes were recorded. It discusses just very briefly this period of time, and basically you had some of the big project managers, lore masters down South, like Chris Metzen, who we talked, talked about in the Diablo episode, who were kind of keeping an eye on this thing on the Blizzard Entertainment end. According to the people interviewed in Schreier's book, because Craddock's book really stops when the founders left. So Schreier just kind of fills in a little bit of those last two years. They would come up North, they would review progress and they would say, you know, okay, great. Now do this, this, this, this, and this. So they'd kind of come through, up end a bunch of stuff, and the team would then have to scramble to make these, changes because they weren't getting regular, consistent project management from down South. They were just coming through when they were able to.

Jeffrey: It's the same kind of problem they had with David Brevik, Max Schaefer, and Eric.

Alex: Yeah.

Jeffrey: It's just worse. It's just absenteeism of leadership.

Alex: Yeah. Yeah.

Jeffrey: And then when they do show up, they're just like, and we're changing all these things. Get back to work.

Alex: Exactly. And even on top of that, there was still some tension between the people that were like, no, we do need to seriously cut back now after all of the, changes and just make a better version of Diablo two, and the people that were still clinging onto this idea of let's make something new and exciting again, and not just do a incremental update to Diablo two. So with all of this going on, the game is just going nowhere, and remember, as we said before, this Diablo three is not the Diablo three that came out. This is a completely different project, and at this point over this two year period between ‘03 and ‘05, the project is just absolutely spinning it's wheels. It's not getting anywhere. They keep adding stuff, dungeon levels and items and whatever else, and they're just not able to find the fun, quite frankly. This leads Blizzard South to the very logical conclusion that they need permanent direct supervision of this game project from staff down at the Irvine office. They can't have this thing where someone like Metzen and just goes up and says some things, and then, leaves and then comes back and says some more things. It's chaos. In the past, the way that they solved this problem was they had someone from Blizzard in Irvine embed themselves at Blizzard North. That's what they did with Bill Roper. Well, at this point, 2005, there's this little game that the Blizzard folks and Irvine are working on. They might've heard of called World of Warcraft.

Jeffrey: Definitely didn't go anywhere.

Alex: Yeah. So everyone, quite frankly, was busy. I mean, Metzen was on that. All the other people were on that. That was taking the majority of everybody's time. They really couldn't afford to send somebody away to manage a project up in Silicon Valley because everyone was needed at least some of the time to be working on this monstrous beast that was World of Warcraft. They made the only logical decision that they could in these circumstances and said, okay, Diablo 3 needs more supervision from us. We can't go up there. So it's going to have to come to us. So on August 1st, 2005, they officially closed Blizzard North. They moved any staff or almost any staff that wanted to relocate. They did give them the offer to come down to Irvine to continue working on the game, and there were employees that did take that offer. So they didn't just lay off everybody up there and resolved that Diablo 3 would be finished, and ultimately, as it turns out, started over, though they didn't know that at the time, in-house, in Irvine, at what the Blizzard North people always colloquially called Blizzard South. So that's the end of Blizzard North. But of course, it's not the end of Brevik and the Shafers. And we do want to follow quickly here that thread to its conclusion as well. Because of course, they weren't ready to get out of the game business. They resigned as a tactic and it backfired on them. They still very much want to make games, and so the three of them joined together with Bill Roper, as I mentioned. The former office manager at Blizzard North, Kenny Williams, no relation to Ken Williams of Sierra, different Ken Williams, and the aforementioned Phil Schenck, Tyler Thompson, and two other longtime employees of the company, Peter Hugh and David Glenn, who also left Blizzard North, in the wake of their resignations, to form this new company Flagship Studios. Flagship Studios is kind of its own interesting cautionary tale. It's really a cautionary tale of how hard it is to be an independent developer in this time period.

Jeffrey: It's a lot easier now.

Alex: Well, it is if you're in the indie game scene, but I mean, AAA independent developers have pretty much entirely vanished. But yeah, there's a thriving indie scene, but they weren't trying to do a smaller indie scene kind of game. They were trying to do the next big thing at Flagship Studios. What they decided on is, okay, we're going to stick with our Diablo roots, but we spent so much time trying to figure out how to do another action RPG. That's not what we're going to do this time. This time we are going to merge Diablo with Quake. We're going to merge Diablo with the first person shooter. We're going to have the same idea of procedurally generated environments running through, killing everything, gathering loot to improve your character. But we're going to do it in a first person shooter setting a la Quake rather than an action RPG setting. They were actually kind of taking some of the ideas from Diablo 3 as well. Their Diablo 3 that never saw the light of day. Because they decided we want this to be an MMO type game. Because again, those are very popular at this time. Even before World of Warcraft's launch, which will obviously really take them into the stratosphere. Just like with the Diablo III that had been in the works at Blizzard North, they were going to have a persistent overworld hub, where all the players mingled and interacted and whatnot. They would have factions, just like in Diablo III. Then you would enter procedurally generated dungeons in order to do the meat of the combat. Since this was a first-person shooter, obviously those dungeons couldn't be catacombs and tombs and all of that. I mean, they technically could be, but it's a little bit of a mismatch with something that's more modern. At the same time, they were hoping to get a real international appeal to this game. So they didn't want it to be overly American. I mean, they're all Americans, but they didn't want their game to be overly American. So they decided on the city of London as a setting because, you know, it's Europe, it's cosmopolitan, it's international, it's not so US-centric. There's an ancientness to London that lends it a certain interest. Then, you know, your locations, your dungeons can be in, like, the London Underground and such. So that's how we get Hellgate London as this first-person shooter with Diablo overtones. The other interesting thing that they did here, and this is really the start of a new genre, even though this game itself ends up being a bit of a failure, is they want to keep that idea of Diablo, where you have stats that improve, and as those stats improve, your character gets more powerful so they can mow down more enemies and get more treasure, and they want this virtuous cycle to continue. But stats don't make much sense in this time period in the context of a first-person shooter. First-person shooters do not have heavy stats on their characters. These days, there are first-person shooters that have light RPG elements and have character stats, but not so much in 2003-2004.

Jeffrey: We don't know how to properly merge the two genres together. What level of RPG do we incorporate? What does that mean as far as gameplay goes? Because, say, if my dex is too low and I'm trying to have fun shooting a person, and my dex being low means that it just randomly starts jerking my mouse randomly, that's no fun. I'm not going to play that game.

Alex: We're looking at you, Mass Effect. [Chuckles]

Jeffrey: Exactly. What does that mean? What does having stats mean? How does that really enhance the gameplay in a way that makes it so that I want to play this more, as opposed to this is just a hindrance getting in the way of my FPS?

Alex: Exactly, and so they decide to merge the idea of stats and improvement with the whole gathering items and more powerful items thing, and instead of having the character's abilities really dictated so much by stats, they're going to have the character's abilities dictated by all sorts of wild capabilities of individual weapons. So the focus moves from the character to the weapon. Now is this sounding a little like, I don't know, Borderlands?

Jeffrey: Just a bit. I need to have my shotgun that shoots fireballs, and um have my sidearm pistol that shoots lightning bolts.

Alex: Uh-huh. So they decided that that's where they could create the interest, and then taking a cue from the gem, socketing system from Diablo 2, which we talked about in that episode where you could further improve the stats of your gear in that game by attaching gems to sockets, they decided that in addition to have all these crazy weapons, they would also have a system where you could use components to improve your weapons. Similar to how gems could improve your items in Diablo 2. That's still sounding an awful lot like Borderlands.

Jeffrey: Just a bit.

Alex: Yeah, I mean, and this is pre-Borderlands. Hellgate London is really the first looter shooter. Again, we don't really deal in firsts here. It's always possible that you could go and find an earlier analog that had some of the same things, but believe me, because they've said it, the creators of Borderlands, the creators of Destiny, even though Hellgate London was a failure, these people were paying attention to Hellgate London. This is kind of ground zero for that sub-genre that we know is the looter shooter.

Jeffrey: It's at least 90% there, 70, 80, 90% there.

Alex: Yeah.

Jeffrey: And it's enough of a hit, or at least significant enough that other people in the industry see it and go, you know, that's great. It's fantastic. It's just neat to have this extra sauce, this whipped cream on top, and this cherry to make it really sing.

Alex: Exactly. Obviously, there's a direct line, you know, from Hellgate London back to Diablo and Diablo 2. Diablo gets us the looter shooter in a roundabout way, which means that Rogue gets us the looter shooter in a roundabout way, since Rogue in a way gets us Diablo. You know, I like these chains of connection, as our listeners know. Ethan Johnson, friend of the show, likes to make fun of me for it, but he understands. He really does. Shout out to Ethan Johnson, friend of the show. This was kind of the important step on the way to the looter shooter.

So what went wrong? Well, again, in a lot of ways it comes down to the problems of being an independent developer in this time period. They knew that they wanted this to be an MMO-like game. This required them to have a robust server structure, similar to a Battle.net. They are a small company. They have no plans to try to do something like that themselves. They're shopping around for publishers, and they have wide publisher interests. Because, I mean, these are the guys that created Diablo. These are big names in the industry. They get a lot of suitors. But they decide to go with Namco. Because at this point, Namco America is staffed by some very ambitious people who want to make Namco a real force in the PC space. So they're looking to build online infrastructure, and they need games to take advantage of that. Namco's like, fantastic, you're doing this thing. Come on, and we'll do it together and we'll take care of all the network infrastructure for you. That's great! Then in 2005, Namco merges with Bandai, and the entire priority of the company changes. All of those Namco America people with big dreams of a PC online empire are laid off or leave or whatever. I don't know the specific circumstances, but they're not there anymore, and Namco Bandai, Bandai Namco has no desire to do all of this craziness. Now, Flagship is going to have to do the online stuff themselves. They're going to have to build their servers and everything. In order to facilitate that, they bring in another publisher as an investor. A Korean publisher by the name of Hanbitsoft. Now, we have to remember that by this time, StarCraft has become a national pastime in Korea. Big televised matches and everything. Korea has become a big online market. They are big fans of Blizzard and Blizzard Games. So Hanbitsoft is very interested to get into business with them to create what they hope is the next online phenomenon. They found a subsidiary, Flagship does, called Ping0 which when spelled out is the word ping and then the number zero at the end of it. Ping0. In order to take care of the online portion. They also make a deal at around this time with The Nine, a Chinese company that's known for bringing Chinese games into that market. They get these additional investors and at some point Namco backs out entirely and EA, who had courted them heavily earlier, comes in as the main publisher. They have all of these publishers but the cost of the game are spiraling out of control. They are running out of money. They are constantly running out of money which is one of the risks of being an independent developer. They have trouble getting support from their publishers for more money because the problem is now that they have three separate publishers none of them wants to be the one that's taken advantage of and is spending all the money. According to interviews with Brevik and whatnot, this is not Craddock anymore because he didn't cover Hellgate London, but according to interviews in other places with Brevik and the like, no one of their publishers wanted to give them any more money unless the other two publishers also put in money. This basically created a stalemate where none of their publishers would ever give them the amount of money they needed to create this game.

This led them to do a couple of things. One thing it led them on was a fantastic misadventure of hiring a completely separate team to make a completely separate action RPG that they thought would just be, a little throwaway product that they could use to make a little money. They hired a guy named Travis Baldtree, who had made an action RPG called Fate that had very much attracted them. They created a satellite studio for him, and he started creating a game called Mythos that they thought would be a nice, fun game to generate some money while they were still working on this other thing. Then Mythos became a ballooning project with no end in sight. In large part because they're still having trouble building the network stuff, like having to do their own network infrastructure is a large part of their problem. Then they have to start shifting resources away from Hellgate London to work on Mythos, which was supposed to be this kind of throwaway game. That's draining more manpower and more money. So then they start getting all of these certifications. You know how oftentimes when you buy a game, back in the day they'd be on the box when there were boxes, but even today you'll get these a million logos on the opening loading screens where there'll be a Games for Windows logo and an NVIDIA logo and a this logo and a that logo.

Jeffrey: Yeah, I remember that. It annoys me. Get me to the game. I don't need to see someone's advertisement.

Alex: Well, so they start getting all of these certifications because you get paid for that. So they start having all of these companies saying, you know, this game has this label or that label, and one of the labels that they decide to get is the Games for Windows label, which is something that Microsoft was doing at this time, which was meant to kind of give Windows games the same unifying, easy-to-install, easy-to-support kind of environment that you find on a console. It was their way of trying to keep up a little bit with console infrastructure. But having a Games for Windows support means that you have to meet certain standards as well, and one of those is the way that your game installs on Windows. So they got money from Windows, from Microsoft, for making their game a Games for Windows game, but then they had to devote resources that they could not, afford to have doing something else, working on an installer for the game, that was only needed to be a particular way, because they had the Games for Windows certification.

Jeffrey: So they went to get the money, they got the money, and they had to spend that money and more, in order to get the money.

Alex: Indeed. Then the other problem they had is, they weren't sure what the business model of this game should be. They didn't really want it to be a monthly subscription, like an EverQuest or an Ultima Online, because they were, really known for their memorable single-player experiences, and they wanted to be able to offer that. Offer the ability to do it single-player, even though there would be a multiplayer mode, very similar to Diablo and Diablo 2. So they didn't want it to just be a flat subscription. But the concept of microtransactions, for better or for worse, was not really well embedded yet. The concept of DLC was not very well embedded yet in the psyche. So they decided on a hybrid model, where you purchase the game, you had complete access to everything in the game, including playing it online, by buying the game, but then they planned to keep supporting the game with additional content after it came out, and that's what you would pay a subscription for. You would pay a subscription for post-launch content, and that would also give you a few other perks, like priority queuing for servers and stuff like that. A kind of weird model that didn't really make sense then, and really in a lot of ways, maybe would make a little more sense now. I mean, when I say it makes sense, I mean, those kind of games as service games have a horrible rap and often justifiably so. But when I say make more sense, it's something that customers expect and understand today, even if they hate it. Whereas back in 2005, 2006, when they're working on this game, it's a model that doesn't necessarily make sense to the consumer.

Jeffrey: Especially when you look at something like Battle.net and you go, why aren't you doing that?

Alex: Yeah. You know, then worse, these are the people that made Diablo. So there's a lot of hype around the game. Then they have a really successful E3. They put out a really great trailer and some really great demo stuff at E3, which gets people even more hyped. But the fact of the matter is they don't have the time, the money, or the resources, manpower, to fully polish up this game. Unfortunately, they are not a new developer. So the standard is not, oh, hey, here's a new developer that put out a kind of good game that has some rough edges, that shows some promise. No, the standard is, these are the people from Blizzard who put out Diablo and Diablo 2. Blizzard, at this point in history, is known for never releasing a game ever unless it is polished to the hilt and is the most absolutely, most brilliant encapsulation of an idea you could ever hope to see with no flaws whatsoever. I'm exaggerating slightly, but only slightly. They are known for their polished games. They can't put out a, oh, it's kind of okay game. They have, they have to put out a Blizzard quality game, even though they don't have Blizzard's manpower or money.

Jeffrey: So they're just doomed.

Alex: They are. I mean, it falls apart. It's released in October 2007. It has a very lukewarm reception in the United States and Korea. Hasn't been released in China yet. And basically the Nine-- There are problems, issues releasing games in China to begin with. I mean, oftentimes the Chinese request changes. One of the more famous of those is that because of their view on skeletons, the Forsaken, art had to be completely changed in World of Warcraft to be able to launch that game in China, because in China you cannot have skeletons as player characters. There were already problems, and the Nine started saying, oh, the Chinese government isn't going to let us release this, because of course the government has final say on everything there, communist totalitarian state, because of all the blood and gore. But the people at Flagship think that they may have just been using that as an excuse, and that they just saw how poorly it was received in the United States and Korea and decided that, this was a convenient way to stop supporting it and get out from having to release it. It never launches in China, which was going to be a critical revenue stream for them. It just gets a lukewarm response in the United States and Korea. You know, it's one of those games that maybe if you were a big studio that had the resources, you could maybe spend some time and fix it. I mean, we've seen this happen many times. Final Fantasy XIV and No Man's Sky are probably two of the more famous examples of this, but we've seen it time and time again in the more modern times with this games-as-a-service model where a mediocre launch of what at its core is a kind of solid idea doesn't necessarily have to be the end of a product, but there was no way that they would be able to do that with the resources they had, which is, as we said, were already just overtaxed. They could never ever find enough money. So there was just no chance for them to fix it. It had problems. They had pacing issues. The levels tended to be very samey and very boring. There was not a lot of variety to the procedurally generated dungeons. Of course, it had some bugs and problems like that because they just didn't have the resources to fix it all. That all led to a very lukewarm launch, which meant that they didn't have the financial resources to keep going, and finally in 2008 they were forced to close the company. That's basically the end of the story. Brevik's still around. He has been involved in the indie scene since. He's done some small games. In fact, he even served as the creative director for a while on Dungeons & Dragons Online, an MMO that is still going on today. I mean, he's not involved with it anymore, but he was there for a while. They've gone on and done a little more since then, but that was kind of the end of the period of the big game ambitions that started with Diablo and moved through Diablo 2 and then moved through to trying to create the first looter shooter in the terms of Hellgate London.

Jeffrey: It almost gives validity to what Blizzard South was saying where they were 70% of the way there and they needed extra help to get the rest of the way. As sad as that is to say.

Alex: That's very true and it's very hard as an independent company to try to do AAA game development and this was right in the period of time when it was becoming impossible. Maybe if they had tried something like this even five years earlier. The tech might not have been there if they tried it five years earlier but the funding might have been there if they had tried it five years earlier but it just wasn't a period where that model, worked anymore and they unfortunately got caught up in that. They could never, no matter how many publishers they signed, no matter how many certification deals they made, they could just never ever get enough funding to complete their vision.

Jeffrey: It's interesting to see just how a company can rise and fall, how the people and the interactions there and how things are. It's just a life lesson on how to manage things, on how small indie things that get bigger and bigger, eventually if you don't manage it properly, it just, literally like a bubble, pops. Or a balloon pops when it just gets hyperinflated.

Alex: Pretty much.

Jeffrey: I guess that leaves us with just one thing. I'm done dealing with hell and cleaning up my bloody swords and magic wands and probably flame-shooting shotguns. What non-hell-related thing will we be discussing in our next episode?

Alex: Well, I hate to break it to you, Jeffrey, but we are staying firmly in the realm of hell because it is time for our massive livestream of the other week to become the next three episodes. So we will in fact be covering Dungeons & Dragons, Satan's Game. The creation of the game, the spread of the game, and how it influenced so many computer games and video games that came out in its wake. We're gonna need those magic swords and magic wands for at least three more episodes, Jeffrey.

Jeffrey: Oh, right. The livestream we did. It was so tramatic I blocked it out of my memory.

Alex: [Laughs]

Jeffrey: [Whispering Loudly] Never mind the fact that this is being recorded before then. Therefore, I don't know how it actually went, but that's not important.

Alex: [Whispering Loudly] I'm sure it went fine.

Jeffrey: So yes, we will be releasing the Dungeons and Dragons and Video Games episodes next time on They Create Worlds. If you wanted to see the livestream, eventually I'll get that thing edited and uploaded. But until then, we'll leave the mystery of the next episode to that and what comes after, not even Alex knows.

Alex: Nope.

Jeffrey: He never knows.

Alex: Nope.

Jeffrey: So we'll see you next time. Get those robes ready, clean off those magic wands and swords from Diablo, and get down with some dice to go dungeon delving as we release the edited version of the livestream. Next time, on They Create Worlds.

Check out our show notes at podcast.theycreateworlds.com where we have links to some of the things we discuss in this, and other episodes. You can check out Alex's video game history blog at videogamehistorian.wordpress.com. Alex's book, They Create Worlds, The Story of the People and Companies that Shaped a Video Game Industry, Volume 1, can now be ordered through CRC Press and at major online retailers. You can email us at feedback@theycreateworlds.com Please consider supporting us on Patreon at patreon.com\theycreateworlds. If you do sign up, please do so through the website and not through the iOS app. This saves you from the 30% Apple markup. We understand that you may not be financially able to support us, but you can still support us by leaving a review on Apple Podcasts, Spotify, or the podcasting service you use. We now have the podcast available on YouTube. Please like and subscribe. Intro music is Airplane Mode by Josh Woodward, found at joshwoodward.com/song/airplane mode, used under a Creative Commons attribution license. Outro music is Bacterial Love by Role Music, found at freemusicarchive.org used under a Creative Commons attribution license.