[New Zealand-based developer Sidhe (Gripshift, Speed Racer) is trying to transition its business model, and MD Mario Wynands spoke to Leigh Alexander about why it's a "crazy time to be trying to run a work-for-hire studio", and how the firm is attempting to evolve - an interesting tale.]

It may be the largest game developer in New Zealand, but as a studio that's primarily thrived on work for hire in the past, Sidhe Interactive is facing the same challenges as many small studios around the world alongside the shifting economic environment.

Although it's done an IP of its own, Gripshift, the company mostly develops projects for publishers -- over 20 in its 12-year lifespan. These have mainly been licenses like Speed Racer for Warner Bros and the recently-announced Hot Wheels: Battle Force 5 for Activision.

But managing director Mario Wynands tells us that Sidhe's long wanted to do more internal projects, and has put a plan in place to make it happen. The company's working on five titles right now, and one of them is its own original IP, Shatter.

"I guess we started like a lot of typical game developers started -- with wild ideas, thinking that we were going to take on the world with that first game," Wynands recalls. "That was about 12 years ago. As it turned out, we didn't actually know what we were doing at the time, like a lot of novice developers."

"I guess you could argue that we still don't know what we're doing," he laughs, "but at least we know it now, so there's been some growth there."

The Need For Change

But the desire to shift to more internal development and self-publishing is born from more than a wish for self-actualization -- it's actually becoming an economic necessity, says Wynands, who suspects many other work-for-hire studios will have to make the same transition.

"It's definitely a tough kind of marketplace right now," he says. "It's just a very crowded space, publishers are very conservative right now, budgets are coming down."

And as bigger studios thin their herds, many laid-off developers form their own new studios, which spells increased competition.

"It's a crazy time to be trying to run a work-for-hire studio," says Wynands. And while he says "we didn't necessarily see the credit crunch coming," he says Sidhe has seen the changes in the retail landscape on the horizon for some time.

"About two years ago, we sort of thought to ourselves, well, we see this crowding happening in the marketplace, we see what's happening with used games, and commercial outlets like GameStop. There's othing more annoying than mystery-shopping your own video game in somewhere like a GameStop, and having someone talk you into trying to buy a used copy," says Wynands.

"It's happened more than once, it's very persistent. We saw a lot of this, and were thinking, 'what is it that we're trying to do, and how can we position ourselves to survive this upcoming industry transition and thrive?'"

Investing In Evolution

Sidhe decided to move from what Wynands calls a "factory" mentality in terms of structure and philosophy to a more franchise-focused model that incorporates both development and self-publishing infrastructures.

The company's invested more in its pre-production and concepting functions, built up its internal QA, marketing and PR teams. in addition to investigating the downloadable space and emerging platforms like iPhone, it's also invested "quite heavily" in technology that Wynands says is geared specifically at downloadable games.

In particular, the company's downloadable development framework is intended to streamline the process -- and associated expense -- of compliance with platform-holders and decrease risk, and the New Zealand government has awarded the company two grants since October 2008 to support these initiatives.

"This is a time when the underlying strategy is [to be] exposed to the rest of the world right now," says Wynands. "We're working on our first IP under this new structure, and we'll start talking about new projects." The company's shored up its website and is making a revamp to its public face to be more marketing-conscious, too.

"Actually, we're in a position now where we're approaching IP holders and license holders to actually license content directly, and it's been quite successful," says Wynands. "It's all happening right now."

Challenges For All

This doesn't mean Sidhe plans to leave work-for-hire behind. "We've had some great relationships with publishers like Warner Bros. and Activision, and certainly we envisage doing that for some time," Wynands says.

He sees a polarization happening in the games space that makes evolutions like these especially necessary. "Long-term, I think it's something that a lot of Western developers in particular will struggle with," he says.

"There's such pressure, because there are kind of two types of gaming: you have your top-tier, AAA stuff which publishers are willing to throw whatever budget at they want, because they feel they need to make the investment to get the returns."

"But the majority of work-for-hire projects out there are very, very value-dollar conscious, and it just becomes harder and harder for your traditional studio, without a lot of outsourcing and without having a lot of your production work coming out of China or Eastern Europe, to compete."

Wynands says that to survive, developers must do more to embrace outsourcing or work with partners in less-expensive regions. "But ultimately, we're looking beyond that, and saying it's not just about making margin on the work that we're doing."

Mastering One's Own Fate

"We also want to experience creative control, and ultimately have more of our destiny in our own hands." says Wynands.

Control is essential given the risky environment -- Wynands points to the collapse of Brash Entertainment as a prime example. "We have this publisher who was only briefly on this planet, and they came in and talked fairly big and they were throwing a lot of money around, and a lot of developers kind of bought into that," he says. "And unfortunately, when Brash disappeared, they've taken quite a few developers with them."

"Because of somebody else's mistakes or somebody else's decisions, you can lose your studio, and that can be completely outside of your control," he says.

"Things are definitely changing right now," Wynands concludes. "I think everybody has to evolve in order to be successful in the kind of marketplace we're in right now."