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Meet Kowloon Nights, the group funding Fumito Ueda’s next game

Sep 13, 2018

After The Last Guardian shipped in 2016, director Fumito Ueda found himself in a fortunate position. Despite the game lingering in development for more than a decade, and despite its reception not reaching the acclaim of Ueda’s earlier work, players loved the vision. And the game industry was ready to sign him to a new publishing deal.

Only one problem: He wasn’t sure he wanted one. At least, not right away.

Following The Last Guardian’s release, Ueda says he met with several publishers and could have taken an offer to fund a new project. His team GenDesign could have staffed up, hired external help and moved quickly into production, similarly to how Ueda had approached projects in the past.

But he and his team had something else in mind. Instead of jumping into a publishing deal right away, they wanted to give their ideas room to breathe.

“There was a lot of new game ideas that popped up during our extended production period on The Last Guardian, and we really wanted to take our time to explore them — on our own and at our own pace,” Ueda says.

So GenDesign paused its publisher discussions. It looked at alternative funding options, in an effort to buy time to work through an extensive prototyping period before putting a game back on the market.

And it landed on a new investment fund called Kowloon Nights.

 

THE FUND

 

The idea for what would become Kowloon Nights originated a few years ago, when Alexis Garavaryan was working on the ID@Xbox program, managing Microsoft’s investments into independent games.

He had been friends with Jay Chi, a consultant who had spent many years working with game publishers, and the two regularly talked about how more and more small studios were self-publishing games, and how the role of a publisher needed to evolve to work with those studios. Developers no longer needed publishers to get their games into stores, as the distribution model for games had changed. And while publishers still brought value in areas like marketing, it was a different kind of value than it used to be.

“We had this firm belief that the function of publishing and funding needed to be decoupled,” Garavaryan says.

Initially, Garavaryan says, these were just talks between friends. The two saw it as an interesting business to tackle, but didn’t yet see the value they could bring.

Garayaryan went on to a job with Tencent, working on its WeGame service to push independent games in China. And while he was there, Steam began taking off in the country. He started to see the potential in selling independent games in China, Japan, Korea and Southeast Asia.

“A light bulb went off,” says Garavaryan. “I remember Jay and I having breakfast in Hong Kong and Jay saying, ‘This is it.’”

The two felt that their knowledge of and access to Asian markets would bring the value they’d been looking for.

Fast-forward to today, and Garavaryan, Chi and a small team are formally unveiling their fund that sees these ideas through. They aren’t revealing the investors behind the fund, apart from saying they’re based in Asia and come from the game industry, which Garavaryan says gives the group more flexibility because those involved know the risks involved with making games.

“That removed a lot of the financial pressure you see in a typical fund,” he says. “I think for us, the incentive is much more signing great games, signing things that [...] people will remember, and hopefully they also are profitable. But we’re not, first and foremost, revenue-driven. That’s not the philosophy.”

The group advertises itself as developer-friendly. Kowloon Nights — which gets its name from Kowloon City in Hong Kong, to reflect “the Asian roots of the fund” — promises to let studios keep their intellectual property and sequel rights, and will remain “completely hands-off” in the development process, says Garavaryan. It’s investing in projects, not studios, and Garavaryan points out that it doesn’t have a typical milestone process with payments tied to approvals.

For many small studios, these are things they often request, and don’t always get, in publisher negotiations. Asked about giving up this sort of control, Garavaryan says he feels projects tend to turn out better when studios take on more responsibility internally.

“That’s maybe something that we see slightly differently,” he says. “In my mind, and in my experience, titles where the teams were sort of left to do their thing [...] and [didn’t get significant feedback] from an outside party turned out to be better.”

He points to some of the games he worked on while at Microsoft, such as Cuphead, Ashen and We Happy Few.

“I look at the portfolio of titles when I was at ID that came out, and the amazing games that came through that program [when Microsoft generally left teams alone],” he says. “The quality of the content was generally much higher than any of the other things that I’d seen in my previous roles, where we had like, a full production process where we had external producers, etc.”

A common criticism of the ID@Xbox lineup, though, is that many of its games — including all three that Garavaryan mentions — have pushed well past their original estimated release dates and have ended up costing significantly more to make than the teams planned.

“They have. They have,” acknowledges Garavaryan. “I think when you look at the teams that were signed to that program, a lot of them were first-time studios, so they also maybe could not predict as well as someone who’s been in the industry for 20 years the challenges that they were going to encounter through production. I think that’s perfectly normal.

“[Also,] some of the games that were initially small drastically expanded in size. [...] I think the visibility that the developers got and sort of the initial support from the platform gave them a push to continue and readjust the ambition. I think ultimately it’s great for the studio to be able to go through that process and sort of expand on the title. That, for us, would be a great ton of success, if we pick up a title that is initially quite small and, like, grows and expands and becomes something much larger. I think we would all be very excited about that.”

THE LINEUP

 

Over the past year or so, Kowloon Nights has signed 10 projects, most with budgets between $500,000 and $5 million.

“It’s a little flexible, but that’s where we like to stay because it allows us to find and work with newer teams and work on a self-publishing kind of mantra,” says adviser Lindsey Rostal, who oversees Kowloon’s production side. “Once they get a lot bigger than that, publishers become much more helpful.”

The 10 games range from the already released (Darwin Project) to the announced (A Place for the Unwilling, Scorn, Sea Salt, Mad Streets) to a handful that have only been teased — including titles from GenDesign, Duelyst studio Counterplay Games, Tokyo-based Too Kyo Games, Montreal-based Thunder Lotus and a new studio formed by Hyper Light Drifter designer Teddy Dief.

For Counterplay, on its previous game Duelyst the team both ran a Kickstarter campaign and ended up signing with a publisher. This time it’s doing neither of those things, in large part because it’s making something bigger and more experimental — to “nestle between that double-A and triple-A sort of status,” says Counterplay CEO Keith Lee — and wanted the budget and flexibility to do so.

Its new game is a fantasy third-person online action title called Godfall, which Lee says gets many team members back to their roots of working on larger projects, such as when he worked on the Diablo and Ratchet & Clank series prior to starting Counterplay. The team plans to release the game in 2019.

Team members at Too Kyo Games say that working with Kowloon Nights is not especially different from working with a publisher. The studio, announced earlier this week, is a sort of collective of creative talent that plans to partner with external teans as projects arise, and came out of the gate announcing four titles — one of which is being funded by Kowloon.

“We’re fusing visual novel and action game elements in this new project,” says Too Kyo’s Kazutaka Kodaka, who earned a reputation for making games about death with the Danganronpa series. “It’s not going to be just another death game. It’ll be something you haven’t seen before.”

Teddy Dief says the main advantage of working with Kowloon is the “simplified relationship” compared to working with a publisher. “The downside is that means that we’re taking it all on ourselves,” he says.

After leaving Square Enix following a game cancellation, Dief signed with Kowloon and built a new company, though he’s not sure yet whether he intends to give the studio a name or to let the staff themselves headline it. He describes his new project as having a narrative focus and “mishmashing a lot of genres together.” Asked if the game has a codename, Dief says it didn’t before we brought it up, but he will now refer to it as a Prince-style symbol in the form of a palm tree emoji.

Ultimately, Dief says that regardless of what sort of deal a team signs, a lot of the benefits and challenges come down to the people behind the money, and how comfortable they make the process.

“There’s no such thing as money without a relationship, or money without a process,” he says. “You always want to be careful before you take money. That being said, I think I’m part of a group of indies that are much more comfortable with taking money. I think that there was a period a little bit earlier in indie games, maybe like 10 years ago or something, where the reaction against being involved with other organizations was so strong. It was like, if you can self-fund your project, do it. Don’t take anything from anyone. Just go off and make the game, you know? That’s the safest way to do it. [...]

“I’m more of the mindset of, like, I, even if I could fully self-fund, I wouldn’t. If I had to, for the rest of my career, give someone a piece of the profits of the work to reduce risk, to make this a sustainable career, to keep getting, to make things that I want to make, I [would] happily do that every time.”

 

THE OUTLIER

 

For many of the games mentioned in this story, Kowloon is funding them from start to finish. That’s not to say there aren’t exceptions — in the deal with Counterplay Games, for instance, Counterplay is putting up some of the money itself. Similarly, the teams behind Sea Salt and Scorn both ran successful Kickstarter campaigns before signing on, and each studio in Kowloon’s lineup is free to sign with a publisher, should they choose to.

But at the moment, the big outlier in the group is GenDesign’s game.

For Ueda’s game, Kowloon is only funding the project to get it off the ground, at which point the team will attempt to find another partner to see in through. This is, in part, because Ueda and his team wanted time to experiment before locking in their plans. But it’s also because they envision the project on par with the ambition and scope of their previous games, says Ryan Payton, an adviser for Kowloon Nights, and thus it will cost more than $5 million to make.

Payton says that when Kowloon began looking for teams to work with, GenDesign was at the top of its list, so it was willing to bend its approach to make a deal work.

“Generally, I think we do prefer to sign titles that we’ll fully fund all the way,” says Garavaryan. “There are just odd cases where we’re just really passionate about the team or we feel like we can provide something that will ultimately help them. In titles, for example, that are larger than we can typically fund, I think for them coming in to see other partners, like a publisher or platform holder, with a prototype that’s quite advanced, that’s playable, can help them secure a much better deal.”

“Ueda is obviously a huge exception to the way we typically work,” adds Garavaryan. “When there are creators like him that we all admire and, like, grew up playing his titles, we’ll do it. But I think it’s not something that we’ll do for a lot of people.”

Since GenDesign’s The Last Guardian shipped almost two years ago, Payton says the team has had plenty of time to experiment with different prototypes, has narrowed down its ideas into one more focused concept and is starting to move into “the next phase of pre-production.”

Ueda, meanwhile, says that despite various job listings appearing on GenDesign’s site over the past year, the studio hasn’t increased much in size, with the team currently consisting of approximately 10 people — roughly the same size it was when Polygon interviewed Ueda at this time last year.

Asked whether he’s considered a timeline for this project falling in line with the next generation of game consoles rather than the PlayStation 4/Xbox One generation, Ueda says he doesn’t see much of a technical reason to worry about that at this point, noting that he sees more limitations with overhead costs than hardware.

“The size of the studio in the future will depend on the project,” he says, “... so we’re trying to be flexible.”

 

NO COMMON THREAD

 

At this point, Kowloon’s team has placed its initial bets, and is both looking for more and waiting to see how the current ones play out.

Garavaryan notes there’s been little consistency in the investments so far. The games don’t all fall into the same genre. They don’t all share a similar look. They range pretty significantly in terms of target audience and budget. Even the plan to help these games get into Asian markets isn’t something that will play out with every game. While Garavaryan says that was a motivating factor for getting the fund off the ground in the first place, it’s not always a key factor in each of Kowloon’s investments.

“I mean, we would like to have as many as possible come out in China,” he says. “Some of the titles will not make it; we already know that [...] some titles will not pass censorship, for example. But I think for the titles [that] can, we’ll do our very best to make sure that the teams are able to release [there] and that they get the exposure.”

And for future investments, he sees Kowloon planning on staying the course — looking for what excites its team, not worrying about consistency, and hopefully, in many cases, getting the games into Asian markets.