Electronic Arts, the worlds' largest games publisher, which dominates the industry, has just bought Criterion, an up-and-coming Guildford-based developer and middleware vendor.
The way in which the American behemoth swallowed the British minnow tells us a lot about where the British games industry is heading. Essentially, British publishers are finding it impossible to compete with the Americans and Japanese - but British developers are bouncing back after a disastrous year in 2003, and remain in demand.
There are two sides to Criterion's business. Criterion Games has two games in development, Burnout 3 and Black. The first two Burnouts were published by the ailing American concern Acclaim. Criterion was cock-a-hoop when EA snapped up the publishing rights for its next two games, and even more so when it bought the company. The other part of Criterion's business could suffer. That is the RenderWare middleware suite, designed to help developers craft their games quicker and more easily. Without it, for example, Grand Theft Auto: Vice City would have appeared a year later than it did.
The question is whether other publishers will trust Criterion not to divulge development secrets to EA.
David Lau-Kee, head of Criterion, counters that argument robustly. "People understand what we're trying to do, and issues to do with confidentiality are non-existent. Criterion has often been in a situation where we're supporting games from different publishers that we know will go head to head. The RenderWare side of the business is going to be managed separately from EA's internal studios, so we've just acquired a very large internal customer."
Lau-Kee adds that Criterion will even be able to cherry-pick technology from EA's numerous internal studios, which could be added to RenderWare. Middleware has become increasingly important, as games are already being developed for the next generation of consoles, which have more power and complexity, and require bigger development teams.
Increasing development costs means it becomes harder for developers to acquire funding from all but the biggest publishers, which in turn means the biggest publishers grow stronger and the smallest weaker. Last week, for example, Ron Doornink, chief executive of Activision Publishing, the second biggest publisher worldwide, announced that his company is expanding as quickly as it can, to take on EA.
But the state of British games publishing is not great. The next versions of Eidos's two biggest franchises - Tomb Raider and Championship Manager - are in the hands of different developers from their predecessors and, despite recent healthy financial returns, the company's Hitman Contracts failed to sell well. However, Eidos is putting much effort into cracking the US market.
SCi is doing well, thanks mainly to its Conflict franchise, but is a small, homespun, niche company. Empire Interactive, despite the success of its driving game Mashed, is rumoured to be short of cash, a problem for any publisher. And it is not just British publishers that are suffering: Vivendi Universal Games recently laid off staff. Following its takeover by the pachinko giant Sammy, Sega is fighting the apparent disbanding of its highly regarded internal development teams.
Tiny publishers pursuing niches, however, such as Sold Out, a PC games republisher, and Just Flight, a flight sim specialist, are doing well, and a new UK publisher, Digital Jesters, which concentrates on PC games, has appeared in the past year. Developers/publishers of mobile games such as Digital Bridges and of massively multiplayer games such as Jagex are thriving, taking advantage of new gaming forms that challenge the old developer/publisher model.
EA's purchase of Criterion may highlight how the British games publishing industry no longer competes on a global basis, but it also illustrates how important British developers are in the eyes of the world.
