[In a super-long but, I think, super-interesting interview, Christian Nutt speaks in-depth with Robert Walsh, CEO of Australia's largest independent studio, Krome (Star Wars: The Clone Wars - Republic Heroes) about the company's vision, plans, education initiatives, and more.]

Founded in Brisbane, Australia in 1999, Krome Studios has become the largest independent game development studio in that country, as over the years, the company has grown to 400 employees through recruitment and acquisition.

The company, which has offices in Brisbane, Adelaide, and Melbourne, now includes teams once belonging to Midway (Ratbag) and Atari (Melbourne House, Australia's oldest studio) -- also hiring staffers who were let go after the dissolution of Pandemic's Australian arm by Electronic Arts.

The firm started out by making surfing games, apposite for an Australian studio, including Sunny Garcia Surfing in 2001, but is likely best known for its Ty the Tasmanian Tiger and its work on multiple Star Wars games for LucasArts, including the upcoming Star Wars: The Clone Wars - Republic Heroes.

Here, we speak to CEO Robert Walsh about the company's growth, strategy, and perspectives on how it runs prototyping, outsourcing, and tech and tool development -- as well as how the company turned a personal tragedy into an educational legacy.

I'd like to get an overview of the studio and your history. When was the studio originally founded?

Robert Walsh: This is our 10th year anniversary, so we started in November, '99. We started with five of us, pretty small back then. Over the years, we have massively grown in size now.

So how big is your organization in total now?

RW: Just hit 400.

That's very large for an independent developer.

RW: Yeah, it is. And some of it has been natural and some of it has been acquisition. So far it has worked really well. I think this year, like everything else, we'll have a year of consolidation, stay a little bit more focused and weather out the economic storm. And, come out stronger on the other side -- which, we'll see how that plan works out.

It seems like right now, you're concentrating a lot on work with LucasArts, doing Star Wars games. To what extent are they and other work-for-hire projects part of your plan for stability? Short-term, long-term?

RW: No, the work for hire thing -- over the years, our studio has always been 50 percent original IP and 50 percent work for hire.

Well, you had several Ty: The Tasmanian Tiger games.

RW: Yeah, we had the Ty games, and the surfing stuff was original IP that we put together. We were actually working on our next Ty when we were approached by Lucas to do Force Unleashed. It was reported to the Ty team: "Do you want to finish Ty, or do you want to do Star Wars?"

My partner, Steve [Stamatiadis], is a huge Star Wars fan, and it's not very many times in your career does that opportunity come along, so we put our hand up for it and said, "Yeah, sure." Obviously the rest is history. It's done really, really well. The SKUs have been commercially really successful.

I'm sure I'm forgetting something, but I think in the history of Electronic Arts, Ty was the only real mascot platformer that really had any traction.

RW: Yeah. It's one of those things that it's not a part of their stable portfolio. But EA, from moving product, they're undoubtedly one of the best in the world. They are a really, really good partner. They helped launch it. They are great to work with. There are a lot of resources there.

We've been really fortunate over the years that most of our partners have all been really strong. If you look at everybody we've worked with, it's been EA. It's been Activision, LucasArts, Microsoft, Konami, Ubisoft, Mattel. We've always had strong people, and I think that's been really helpful. As we've grown the business, we've been working with some top tier people.

We're a shop that gets the job done. That's been a stable of Krome. We always ship. When Force Unleashed became all consuming, now we're starting to get back into some original IP. We've got some stuff that we're putting on the plate. We're going to test in a few areas. The problem with the original IP right now I think is just the barrier to entry is so high. The cost of getting something to being totally demonstrable is in the millions of dollars.

The Key to Developing Original IP

Do you have a prototyping team going?

RW: Yeah, we actually have two at the moment. Two of them are working on original IPs. One is a fair way along. We're looking at an online PSN/XBLA style experience. We've taken it to a new level where we're spending a lot more than the traditional title for that. We'll probably put $1.5 million [U.S. dollars] into that. We want to test the market for it. It's a new IP. We want to throw it out there. We want to see if we get traction on it. That team is about 20 people.

Then we have another team of about 10 to 15 that's working on mechanics and concept at the same time. Here's some core mechanics, and what is the story that is going to roll into that? We'll rotate. We'll probably start a third one in about three months. The plan is to have two ongoing all the time. If one gets really strong traction, we'll blow that out and turn it into triple A high end next year.

Some of the other staff will start looking at that smaller online work just to keep some of the teams going, and go to the space that we're not currently in. It helps build up our online and our community stuff, so we'll feed that into the pipeline and just come out with a portfolio of products for it. It's kind of fun. It's a little bit different in a way from what we're currently doing with our other stuff too. Some of those have really, really big teams.

Your process of testing original IP begins internally, but do you at any point bring in gamers to evaluate it or do you rely on publisher feedback?

RW: If it's prior to showing a publisher, we'll test it. First of all, you're right. The test is internal. Does it resonate with ourselves first? Then we go outside, because over the years we've always been a big believer in game consumers to come in and focus test.

Then, the next stage definitely is let's focus test what we think the target demographic is and see if it resonates. We'll make changes from that. Then, once the thing gets to the publisher level, they will have also their own opinion et cetera. So, you may have to make more changes, and then they'll do the same thing. They'll put it into testing.

Most of the major publishers now, that's the first thing they do is go out and do a focus test, get all the data, do all the matrices, give you the feedback and then you can do course corrections and take it to the next level. It's really important throughout the process of development to always put it in front of people, get feedback.

Sometimes, as developers you are too close to it, and we can sometimes lose sight of who's the target and what do they really want, versus are we doing what they really want? I think it's always good to course correct it if you need to. The other thing is even if you don't need to course correct it, it actually confirms your choice.

Are there limits to the effectiveness of it? The really good place to do it seems to be gameplay-focused testing -- in terms of, are people able to play the game. And of course the classic example at this point is Portal, where they just tested it over and over again, and that game is, like, perfect.

RW: Yeah.

But at the same time, not that gameplay is not creative, but I feel like sometimes the focus on testing can just water down...

RW: Again, then the problem with focus testing can be you can never get enough people for it to be a proper sample. If you only test with 10 people and you've picked two that are wrong, it can really, really skew your results.

I think it's one of those things. I think you use it as a guide. I don't think you take it as gospel, because it's really easy to get off track if you've got the wrong guys coming into the room. You're right. You can never get hundreds and hundreds, until you get beta online or something, where you get that feedback. I still think you have to trust your gut. You just take it all on board, and it's like, all right.

I have a feeling that some games that have been really great might not have focus tested -- try to describe the concept of Portal to a bunch of 18 year olds: "Hey, there's this wacky talking computer, and it's kind of a shooter... but not..."

RW: Exactly. And sometimes, especially with the original IP, if you are trying to do something that is different, that kind of validates it. If you can't explain it that well and people actually play it, touch it, feel it, get it, then it probably is like, "Okay, we're onto something good." Especially in the groundbreaking area, I think it's really important to get that because it makes your publisher feel warm and fuzzy as well.

The Secret to Working With Publishers

Now, when dealing with publishers, it's tough because people's goals are different, sometimes. Particularly, an independent developer might...

RW: It's funny because the real challenge there is always there are so many vested parties at a publisher, that to get the stars aligned, it's not just your production team. You've got to get sales. You've got to get marketing. You've got to get focus testing of the consumer groups.

Even to the extent that you've got to get QA. All those people have to be on board. You're right. It's a lot of moving pieces, and it's a real, real challenge.

Again, the biggest tip for the external developers of the indies is whoever your champion is at the publisher, whether it's your producer or creative director, you need to constantly give him the tools to do his job, to allow him to manage all those different parties so there's not this huge disconnect.

All of a sudden, marketing thought you were making an online shooter and you're making a driving game and it's like, "What?" The biggest problem is if marketing came in late and said we need this, and we didn't know and we thought we were going to get it, and you're in that boat where it's like... They're trying to move your product, you're trying to make them happy. You can sometimes put a spanner in the works.

Again, the upside is if you have all of those things in alignment, then as a company they are going to get behind, you're going to get a better product. It's going to get in the market better. It's going to get a lot of support, and it's going to far more successful. So, that's part of the job.

I think a lot of developers, and I think things have changed over the years, but there was this kind of perception started in the development community that the publisher was your enemy.

But you're not powerless in the end -- they can't do it without you. There is sort of an antagonistic relationship, because it's hard to talk on the same level, right, just in terms of different perspectives.

RW: Well, and that's the thing. With a lot of the developers that I've talked to, I've said, "One of the first things you can do from the business side is understand the publisher's business. Understand their model." And it's not that hard because most of all the good publishers are publicly traded companies. You get to see where everything is.

So you can do your homework. And once you understand that publishing is a really, really tough business, then it kind of gives you a different insight about how you can approach it. Look at the numbers from last year, a lot of them lost money in a year when sales went up 10 percent.

The Rebounding Economy of Entertainment

The economy adds some additional wrinkles to the challenge of finding a concept that can compete and finding someone who's actually willing to spend on it. Is it harder?

RW: Yeah, I think it is, but again, I think there are signs that the economy is returning. The one thing that we've seen, I believe, is that if you look at the box office numbers over the last couple of months, there's been a real strong attraction to entertainment and media.

It's a lot cheaper to go to the movies and spend 100 bucks than it is to go to Florida or to go to Disneyland. I think games are still in that space. As people will still spend in that space, and as the economy picks up, I think we'll get that incremental spend faster than things like tourism and travel.

If you look at Resident Evil 5, granted it's an established IP, but it sold fastest in the entire series. They announced they were approaching five million by May, and it came out in April.

RW: Yeah, I think Force, in all SKUs, has hit six million or something. I think you're right. If people are going to spend money, they're going to spend money to stay at home. I don't know what the DVD numbers are, but I'm sure they've gone up also. I think our industry at large is in a good space to ride out the global meltdown.

EA did a big reduction in force globally, and other publishers have lowered their studios, but they're still going to need SKUs down the road. I've heard of some talk about that potentially benefiting external studios, in the sense that the publishers are now looking to bulk up say 18 months down the road.

RW: Yeah, that's the thing. Most publishers that I've spoken to, everybody contracted really, really fast. They cut SKUs. They cut product, and...

Eidos, prior to the Square Enix acquisition, they cut 14 SKUs that were in works. That's ridiculous.

RW: Yeah, for them, that's probably half their portfolio. Come 2010, 2011, those big companies still have all their overheads. Their fixed overheads. They still have buildings. They still have staff, they still have distribution networks. They still have all the channels, and the only thing that they need is good quality product to fill it. Especially '10 and '11, there have to be some massive holes in revenue forecasts right now. You're right.

I think it's going to take a long time for a lot of the internal studios to rebuild, just because going through that bulge then purge, bulge then purge is not a good cycle. Again, that's one of the things where we have really, really strong tech and process, and again, once we get out of this, I think you're right. Independents are going to be in demand to try and help in the hunt for revenue.

Tech Perspectives

Do you have internal engine solutions or do you license engines?

RW: We have an internal engine solution. Ever since we started Krome, we've always worked on our proprietary tools and technology. Right now, I think we have over 40 people that just do R&D, tools and tech, and team support.

That's a pretty large core tech team.

RW: Well, again, we are working across multiple platforms. Next-gen, and we're still doing some PS2 work. They support three studios, five or six titles. So, it is a big team, but we still do license in some middleware.

I don't think anybody gets completely away from that.

RW: No. We have our own internal physics solution, but we also use third party middleware for physics. I mean, you've got your Bink-s. You've got your FMODs. There are certain solutions that just fundamentally make sense as middleware solutions, but the core tools and tech is all proprietary.

It's one of those things. You can be master of your own destiny. I think a pure middleware company isn't too bad because they're focused on support. If you have middleware companies that make games as well as middleware, there is a potential there that sometimes their products may come first.

I've heard it both ways. Some people like game developers who work on middleware because they feel that they better understand the challenges, but some find that the support is lacking. Maybe people feel both at the same time.

RW: I think for smaller studios middleware makes sense. We spend a lot of money on engine, so our engine team's bigger than some game teams. Not all people can do that. Because at the end of the day I don't think technology makes great games. Content makes great games.

So if you're a small group focusing on content it's keen. As long as you pick the middleware solution that is right for your game, then I don't think it's a problem. If you're matching the wrong middleware, maybe, because stadium engines are different to driving.

Do you guys outsource for art, or for any production, or do you mostly keep it inside?

RW: I'd say we keep 90 percent inside. We do outsource. We've actually outsourced both art and code.

I've heard so many negative things from people about outsourcing code.

RW: Yeah and on the code front, we only use people we've worked with for a long period of time, relatively local. We make it fairly contained. So, for an example, we might take an Xbox 360 game and we might outsource the keyboard mapping for the PC. So it's more...

Absolutely. I see what you're saying.

RW: Yeah, I think outsourcing systems, and that sort of stuff, would be really challenging. But we have had occasions where somebody who's worked for us for a while, if they want to move on. Like, for family reasons, if they relocate or whatever, we can still work with them because they're so familiar with our architecture and stuff.

And these days with internet speeds and with VPNs, it's relatively easy for them to do it virtually. But that's a very, very rare occasion.

We do outsource some art, but I think [for] everybody I've spoken to, the perception of outsourcing art has fluctuated. All of the sudden it was like, "This is the future," and then it's a little more challenging than we thought.

Then it's like, "Wow, not quite as inexpensive," because all of a sudden we're redoing the same thing three times. I've got production management. I've got flying people to and from the outsourcing company.

One of the art guys on Mirror's Edge had to go live in China for six, eight months and actually manage the team directly. He was up for it, but not everybody's up for it.

RW: Exactly. Yeah, when you load that overhead, your actual savings... I think from our perspective, if you don't look at outsourcing purely for a monetary perspective it's more [useful]. Can they do LODs? Is there a specific thing that allows your team more effectively on the AAA stuff?

And, as long as you don't put it in the critical path, I think there's a place for it. I probably could be wrong, but I don't see the day where all of a sudden, we're going to outsource the whole game of art, and just have a bunch of coders sitting there and letting the art come in.

A Tragedy Turned Around

I'd like to talk about the scholarship you guys have recently established.

RW: It's going to be an annual thing. We had a tragedy at work. One of our key art guys -- Ian Lovell -- was killed in a plane crash. It's probably, in all the years that I've worked in the business, the hardest thing that I've ever had to deal with. Because Krome, although we have our size, we try to run it very family. So everybody's really, really, really close. Yeah, I don't think there's anything that they can teach you that prepares you for something like that.

He was an amazing guy. He was the art lead of the Clone Wars stuff. He spent a lot of time doing it, really passionate about it. It was just one of those things; after everything settled down afterwards, it was like, "We should do something." It's kind of like putting back. What can we do?

We thought, "Okay, well, an art scholarship would be good." Ian's passion was animation, so we then went down the animation route. As I was talking to the school that we are partnering with on it... A tragedy shouldn't have just led to this. Good came out of it, but it's kind of a tough way to get there.

You can't reverse something like that, but you can at least find something positive.

RW: Yeah. And before we gave the scholarship out his mom emailed me, and she'd been going through all these school things, and all the work he did. For me, it was kind of like rebirthing Ian as this new person, because she'd gone through and relived his schooling just at this time we're about to launch this kid into his new career.

And the thing that we've done with it is we're also offering an internship if he wants to take it. But that's not part of it. We'll support you in finishing up, and then if you want to go into film, go into film. If you want to go into FX, or if you want to go into media or creative, that's your choice. Ian was really, really passionate, so whatever your passion is. If it's games, great, you can come and work in the games industry. If it's film, we'll try and help you launch in that. It is a really good thing, but again it's a really, really tough, tough time.

Yeah, it was freakish. When I heard, it was like, "It can't be true". It's just one of those things. But, the studio, his close group of people will always remember him at work. I was talking to Ian's partner, Sam. Because it's been really, really tough on her. She said, "It's like he's immortal now. The bastard's probably up there just laughing."

And then, he was a Manchester United fan, so it's been his year now. Because Man United got up, so. But, like I said, some good came out of a tragedy. And we just really hope that over the years some good people come out of it, and understand what it took to get into the industry, and how good it is.

I think that's one of the other things. All of those really, really creative and talented people can make choices. Part of their education process is, I was talking to the scholarship guy's parents, and it's like, "Games is a real career. We're not in a garage. We're not three kids anymore." I said, "This is a really, really big industry."

And I think all these sort of things, in working with the educating people, helps. You can be [in the industry] for a long time. And you can do some really, really cool stuff. He's going to graduate and have two days off, and then he's going to come into work.

Oh, did he elect to come to Krome?

RW: Yeah.

Excellent. I think some of the really intelligent studios are starting to really put a focus on working with education. Because the typical path has been letting folks get trained somewhere else and then poaching them from another studio -- not necessarily maliciously, but that was the way things worked.

RW: Yeah, it kind of was. And I think we're definitely starting to look at interns more, and graduates. I think the biggest problem for us is because our industry is relatively young in the scheme of things, when you compare us to film and television, there's a certain mentality that it takes.

How do you mentor somebody? We're always in that crazy [mode]: "We have to ship our games, we have to ship our games!" How do we put the right process in place to say, "Okay, you sit beside Johnny, and he's going to teach you for six months"? And you really have to have that set up, otherwise the poor kids would just come in.

These guys are really, really busy. I think it took us some time to get mature about putting the training in place. We have a training office, and all that sort of thing. Mapping out the careers, and et cetera. That was kind of the thing that hindered it more than most, was I think, on our side, preparing them, being prepared for when they get there.

You're talking specifically about once you hire people fresh out of university.

RW: Yeah, fresh out of University. And so that's kind of like phase one. And the second part is, it took a long time for the industry to take us as serious as it should be.

I know what you're talking about.

RW: And now they are. We have to be able to affect curriculum. And part of the problem, especially at the university level, it's very, very hard to get a curriculum change. And our industry moves so fast that by the time the change comes in, we've moved on. And then we've moved on again.

So, we have a lot of our guys do guest lectures and stuff at the local colleges and universities. And I think that's part of us becoming more integrated into it. Some of the other things we've done in the past, is we've given out tools and tech to local institutions to allow them to train up on real time stuff. So, yeah, if we don't do it... The industry is growing faster than what you can steal people from other studios can, so we actually have to get people in.

And the other thing, too, we're starting to get more people starting to come in from visual effects and films. I mean, we've hired lighting guys from visual effects industry. We've hired character guys and that sort of stuff. So there is some cross pollination with that industry as well, whereas our stuff is getting higher and higher and higher, or I should say closer to what they're doing.

It's kind of a trade-off. Do I want to work on Shrek's toenail, or do I want to come and do an entire character in Resident Evil? Because as glorious as some of the animation work sounds on that side, it's like everything. It's going to take a long time for you to become the lead animator at Pixar.

So, I think you can grow your career faster in the game space than on the other side. There's always exception to that. But, yeah, it's like everything. If we don't foster new people, new creative content, be careful that things go past us.