Joystiq: How long has the acquisition process been in development?
Robert Altman: I had my first meeting with [id Software CEO] Todd Hollenshead at E3 a year ago. We had a general discussion about how our two companies might explore matters of mutual interest and the conversations then took place over the ensuing months. So it's been almost a year, on and off, that we've been having these conversations.
And how long has Bethesda – or ZeniMax in this case– been looking to expand that studio range outside of just Bethesda and Vir2L,etc.?
RA: Well it has been a part of our strategic plan for a long time to be expanding the numbers of titles that we will be releasing. Part of that is done through external development. At E3, for example, this year we announced that we are going to be publishing a game called Brink from Splash Damage. We're gonna be doing a game called Wet from A2M. So we have been expanding beyond just the titles that Bethesda has created internally. And we are also increasing the internal capabilities at Bethesda. But beyond that we are looking at other studios that might join together with us and at the top of our list, the most prized and most desired from our perspective, was id Software, for all the obvious reasons.
John, how about from id's perspective, as one of the most successful independent developers of all time? How long have you guys been seriously considering a buy-out?
"Well, we've had offers since before Wolfenstein was even published. The original one."
It's been great that every title that we've done internally has been a huge success, but when you've got 50 or 100 people on there, all their families and everyone counting on you there, the idea of "What if you screw up once?" or "What if the market changes?" Some of the things that can be completely outside of your control, that can turn something from a major hit to just an also-ran on there, and the dynamics of the successes in the markets and all these things on there at least made us somewhat more concerned about things. So we were expanding the scope of our business. We weren't just the one title at a time, every four years or whatever. We had staffed up to do Doom 4 internally in parallel with Rage. We also had our mobile and Quake Live departments. We were taking a lot of steps to kind of provide a little bit more scope and protection for ourselves. And we certainly were listening to offers from all the majors about acquisition.
But we did think that there would be some significant costs to, kind of, our core culture and whatnot if we were acquired as another studio for Activision or EA. And the big deal with Activision or EA is that: they're huge, they've got lots of studios, they have lots of studios that do very similar things to what we do, and if we became a part of one of those companies we would be just another studio. And in fact we would be the new kid on the block there, and we would have to be in a situation where we would have to fight for the attention and resources inside the publisher to do a good job with everything. And yeah, it was always possible that an offer could be laid that would have been good enough that would have made us consider wanting to do that. There was always some level of trade-off that we were looking at there.
With ZeniMax, it was an interesting situation, where, at the beginning, I hadn't even heard of ZeniMax. It was only when they mentioned Bethesda that things clicked into place on there. At first blush, it seems like a strange thing. When people heard id Software's being acquired, everybody just assumed it would be Activision or EA. Why would we even consider going with a publisher that wasn't of that same size? And the primary reason is that, again, Activision/EA are huge while ZeniMax here, we've got Bethesda doing top notch, triple A titles – best of breed stuff but in the RPG space – with exactly zero overlap with what we do in the FPS space. And while I think there's probably a lot of fans who are mutual fans of both games, both titles, and are going to think this is the greatest thing in the world, from a market standpoint and publisher focus, there is not going to be any hint of a conflict of interest. When we produce our titles, and ZeniMax goes out to go sell the titles, they'll say, "Here's the best RPG in the world and here's the best FPS in the world. You want a whole bunch of both of them."
How are these two separate divisions that are, in a lot of ways, really peers in this relationship working together? Is there any chance of us seeing Bethesda develop titles using id properties, or id develop titles using Bethesda properties?
JC: Right now, sometimes it's not completely clear that there are plans already in place for what we're doing two, three, in some ways even four or more years in the future, and this acquisition doesn't wind up having us bulldoze any of the major plans that are in place. So, no, there's no near-term dramatic change in anything going on there. But there is going to be a lot of cooperation, in that because we are sister companies here, and we're both roughly the same size, in terms of number of developers between Bethesda and id, each of our contributions is very important to the larger company, and essentially the success of one teams' games is helping to pay the bonuses of the other teams' employees while they're working on the next game. And we are going to do everything that we can to try and make sure that every product that comes out from the company is a success. Because not only do we have the direct benefits of more sales of our games is good, but more success in the publishing arm of the company is the other half of the pie that we never really participated in as an independent developer.
"The notion that Bethesda's going to do a Quake title is not contemplated, nor is it contemplated that id will do an Elder Scrolls title."
JC: Although I wouldn't be surprised if there are little – now that it would be legal to do so – that there will be little bits of homages and fun stuff in the titles that may tie between the different franchises.
RA: Yeah, it's been suggested we'll put bobble heads in Rage.
So, Robert, another huge part of this acquisition isn't just be id's talent and their IPs, but also the technology: id tech 5 specifically. Is that something that you'd be looking to take advantage of in other parts of the ZeniMax business, either MMOs or Bethesda titles?
RA: Well first, when you start with the technology, I'd start with John Carmack. We'll certainly take advantage of the expertise and brain of John Carmack throughout the organization. Specifically, what we will do with the technology, the id tech engine, and the proprietary technology that's been developed here, is to be discussed. We haven't determined how we are going to handle that proprietary technology, going forward. So, it's just one of the agenda items for us as we integrate these organizations.
JC: Yeah, they're not going to do anything disruptive, and change technologies on a project underway ...
RA: No, no, no, no.
JC: ... but it does mean that as new projects start up, whether it's directly with the in-house studios, or with external studios, there is the option of working on top of this technology.
How about the focus on some of id's less big budget games? So, thinking specifically about the iPhone stuff that id's been doing, the mobile stuff, and also projects like Quake Live. Is that going to continue to be a focus, not only at id, but at ZeniMax in general?
JC: It probably stays at about the level that it is right now, where ... I'm pretty passionate about the benefits of the iPhone, and so is Todd Howard, here. So, I think that we're going to wind up continuing several things. I mean, I've got a slate of iPhone titles, I expect to have an iPhone release every two or three months for the next year, as we go through our classics line, and I move over that I'd probably do Doom RPG, and we'd have to go with Wolfenstein RPG, and eventually do something Rage-themed on there. These are not the big, involve-the-whole-company sorts of strategic directions; these are things that get a few people put on them for a little while, are fun for everybody involved. And so far it looks like they're making pretty good money. But they're not the blockbuster titles that they go do $100 million dollars.
RA: ZeniMax will be fully supportive. We believe that market is a growth market and it's something we want to be involved in, and about the other part of your question about Quake Live, it will go on unchanged as it always has. It's something we are supportive of.
Right now you have titles like Wolfenstein and Quake Wars – id properties being developed by external studios. Is that something you plan on continuing to do going forward or are you going to be bringing a lot more of that development back in-house under id?
JC: That's exactly what's going to be happening. As we look back at the things with the external teams working on it, we've had some hits and some misses with that. It hasn't had the same record that our internally developed titles have, and what all of the publishers expressed to us when we were shopping future titles around was: it was going to be so much more valuable for everyone if we did develop them internally, and that was why we had already started the process of staffing up and working on the Doom 4 project and the idea was that eventually, we were going to wind up with three teams.
There's no mad rush to get a third team up and going but we're growing the experience base on the Quake Live team – they're going to be working with id tech 5 doing multiplayer stuff for both Rage and Doom 4, and then eventually they will be grown into a full team. We'll have three teams, we'll have Wolfenstein, Doom, Quake, and Rage and one of them will be taking a vacation each cycle and that will depend on what we want to be doing each time.
Will Bethesda be using QuakeCon as an opportunity to show off some of their published games? I'm thinking specifically of Brink.
JC: They are fully behind QuakeCon. It's going on as usual this year and I do expect them to go ahead and have some presence down there. I think everybody's going to be psyched about that and that should just work out great for everyone.
How about digital distribution? I know id made a big splash with all the back-catalog titles on Steam. Is that going to change at all?
JC: ZeniMax is participating with digital distribution on a bunch of levels but fundamentally, the high level belief is that boxes in stores will remain the dominant form for the near-term. You know, in the long-term everybody believes that digital distribution is going to be everything but it's not the express belief here that the next couple years are going to be the sea change point.
Structurally in terms of how these two different units are going to integrated, you know, id still stays in Dallas and the press release stated something about long-term employment contracts. So I mean externally, from the press perspective, a lot of things are kind of the same.
"If we didn't make an announcement about all of this a couple of years could go by before anybody would probably notice anything different actually happening."
RA: Id will stay in exactly the same offices with the same people developing the games that have been previously announced so none of that process is going to change.
And from a business perspective, Robert, at ZeniMax are you looking to increase the visibility of id tech 5 in the highly lucrative middleware market now? Is that something that, from a strategic perspective, that you're looking to take advantage of?
RA: Not necessarily. We haven't really made our plans for what we will do with that technology with that engine. It is something that we would look at, you know, how best to use any of the assets of the company going forward but again, no dramatic changes in the near term.
JC: The focus is going to be on how we can best use it for all of our titles.
RA: Correct. Our focus here is on making triple A games. That's what our focus is on.
Well, thank you gentlemen for the time and congratulations on the announcement.