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Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

July 18, 2011 at 10:03 AM

ArenaNet thriving after sale, a PopCap omen?

The fate of Seattle’s PopCap Games — one of the most respected studios in the region and the industry — is now in the hands of a giant California company that has zigged and zagged across the Northwest for more than a decade.

Electronic Arts (EA) has bought and moved studios and hired and fired hundreds of developers from Seattle to Vancouver, B.C., as its strategy evolved, new trends in gaming emerged and fresh ideas surfaced along the Salish Sea.


The selling price of EA’s acquisition of PopCap last week — $750 million in cash and stock and the promise of a $550 million performance bonus — may offset concerns about the future for PopCap’s 500 employees.

But the question of what’s next still looms over the studio and other acquisition targets, such as Bellevue’s Valve Software and Seattle’s Big Fish Games, as well as numerous other tech companies that are in play as deal making heats up.

For some perspective, I chatted with Mike O’Brien, co-founder of another local studio that started the same year as PopCap and was also scooped up by a huge, publicly traded game publisher.

O’Brien, 40, is president and executive producer at ArenaNet, a Bellevue studio with 270 employees who build and run “Guild Wars,” one of the world’s most successful multiplayer online-game franchises. Seven million copies of the fantasy, role-playing PC title have been sold; now, ArenaNet is nearly done with “Guild Wars 2.” (Screenshot above.)


O’Brien is confident the game will overtake “World of Warcraft,” the market leader produced by Irvine, Calif.-based Blizzard Entertainment, where he and ArenaNet’s other founders worked before starting their studio in 2000. (He’s pictured here in yellow, perched on his desk during a recent press event at the studio.)

Looking for a location away from Blizzard, they chose Seattle, where the tech scene was going full tilt and Microsoft was a fountain of software talent. Among the crowd of startups were three other game developers who moved up from California and started PopCap at the same time.

“We talked with all the different studios in the Seattle area — it was an exciting place, an exciting place to be founding a game company,” O’Brien said. “Some of those companies have grown up around us.”

That vibe continues, he said.

“I don’t know if people outside the game industry appreciate it. You look around and it’s Microsoft, it’s Boeing and it’s T-Mobile,” he said. “I don’t know if they appreciate what a thriving game-development community there is in Seattle. We may be the top — and if not the top one of the very top — game-development locations in the country.”

Different routes

ArenaNet and PopCap took different routes. PopCap was largely self-funded, making relatively inexpensive, downloadable PC games. It didn’t take outside funding until 2009.

ArenaNet needed more funding sooner, to build a huge and costly online world that would take years of work before the first sale. It started with venture financing, then began looking for a large industry partner in 2002. It ended up being acquired by NCsoft, a large Korean game publisher that used ArenaNet to build its presence in the United States. NCsoft later expanded in Seattle, opening its U.S. and European headquarters here in 2008.

In deciding whether to sell, the team chose to avoid being “in a position where we were scraping for every dime trying to build No. 1 games with lack of resources to do it,” O’Brien said. “Being an internal studio really gave us the resources we need to compete at the top of the industry.”

O’Brien doesn’t know how things will turn out for PopCap, but he said being acquired was great for ArenaNet.

“It was just kind of a perfect fit from the beginning,” he said, recalling how the companies clicked from the first pitch to NCsoft executives. “We were giving them the presentation and they were completing our sentences for us.”

ArenaNet kept its autonomy and creative direction, in part because it has enthusiastic support from NCsoft Chief Executive Taek Jin Kim, a gamer and game designer. O’Brien said their conversations tend to be about game design, and Kim wants “to make games that he’s proud of, that gamers are going to love and that are going to be the No. 1 games in the industry.”

Most important, ArenaNet found a buyer willing to wait until a game is fully polished, instead of pushing releases out to meet a quarterly earnings target. It’s among an elite group of studios that can say they’ll ship a game “when it’s done” because quality is more important than the schedule.

That’s rare, “but the companies that can do that create the games that gamers most look forward to and sell the most copies,” O’Brien said. (Here’s a screenshot from “Guild Wars 2” which will have underwater play.)


Others in that category include Blizzard, Valve and Bungie, the Bellevue studio that created the “Halo” franchise for Microsoft. PopCap has also been in this group, and co-founder John Vechey last week told me it will continue making games “at the same glacial PopCap pace.”

O’Brien said EA has been through “some seismic shifts over the last 10 years” as it tried different strategies. “I would be nervous as an EA employee — is there going to be another one of these dramatic shifts?” he said.

One of the last temblors was during the downturn in 2008, when EA laid off 1,000 employees and closed the downtown Vancouver office of its marquee Black Box studio, consolidating the creator of its “Need for Speed” racing franchise into a Burnaby, B.C., campus.


NCsoft has also made adjustments, including a 2008 reorganization that led to nearly 100 layoffs in its Seattle-based NCsoft West organization. But O’Brien said it’s been steadied by having a “singular mission” to make online games.

The parent company has also continued to invest heavily in ArenaNet. It had 12 employees when NCsoft bought it, but grew to 65 by the time it launched “Guild Wars” in 2005.

Offline, ArenaNet’s success is reflected in glamorous new offices it moved into this spring in Eastgate. There’s room for 450 employees to work on several floors connected by a woodsy, open lounge area filled with couches and a fireplace — designed to be like a huge Starbucks for informal meetings and hanging out.

Was this positive outcome an anomaly?

O’Brien said he’s heard about acquisitions that worked out well and those that didn’t. “We’ve certainly heard all the horror stories,” he said. “We end up hiring a lot of those people.”

Comments | Topics: ArenaNet, EA, Games & entertainment


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