Bungie alum Harold Ryan launches ProbablyMonsters to incubate AAA studios

James Brightman, Wednesday, October 9th, 2019 1:46 pm

Game development, at times, can be an arduous task. Crafting the next big game is that much harder when you’re worried about whether you’ll have a job next month. Sustainability, particularly in AAA development, is a big buzzword and for good reason: we’ve seen far, far too many studio closures and layoffs over the last 12-18 months in this business. With ProbablyMonsters, which has been in stealth mode since 2016, former Bungie president and CEO Harold Ryan is setting out to prove that AAA games can be built sustainably. 

Today, Ryan and ProbablyMonsters revealed that the company has raised $18.8 million in a Series A round led by Jerry Jones, Owner and President of the Dallas Cowboys, and John Goff, Founder and Chairman of Crescent Real Estate and Goff Capita. Ryan serves as CEO at ProbablyMonsters, which labels itself as a new kind of game company. Rather than dedicating itself to development or publishing, ProbablyMonsters is seeking to develop whole studios and set them up to be sustainable from day one. 

“As we enter a new generation of gaming, the industry needs a better model for building AAA studios where game developers can reliably turn their creative vision and effort into exceptional experiences that delight players,” said Ryan in a release. “Our mission at ProbablyMonsters is to unite, guide, and empower talented game developers in a stable and predictable business environment that respects people, culture, and creativity.”

ProbablyMonsters has already established two AAA studios thus far, Cauldron Studios and Firewalk Studios, with talent “hand-selected by Ryan,” and each studio also has been signed by a leading publisher for an original IP.

Specifically, Firewalk Studios is led by Tony Hsu, who used to run the Destiny business for Activision Publishing. Aside from Destiny, he’s worked on the massive launch of Call of Duty: Black Ops. Firewalk’s Game Director is Ryan Ellis, who also comes from Bungie where he served as Creative Director. He previously worked as Lead Artist at Oddworld Inhabitants.

Cauldron Studios is being overseen by Dave Matthews, who has more than two decades of experience in the AAA space, having managed and helped build franchises like God of War and Myst. Matthews was a Lead Character Artist at Sony Computer Entertainment of America and Art Director at Bungie and WB Games. CJ Cowan also joins Cauldron as Game Director. He worked at Bungie as well, having served as the Story Lead for Destiny’s House of Wolves and Taken King releases, and Bungie’s Director of Cinematics for the majority of the Halo games.

Source: ProbablyMonsters
Source: ProbablyMonsters

ProbablyMonsters is close to establishing a third studio as well, Ryan told GameDaily: “There’s absolutely a third studio that we’re actively working towards pulling the right leadership team together for, and then three to five years in the future, we’ll have shipped a couple of games by then, and we’ll absolutely be looking at growing beyond the first three studios at that point.”

Ryan’s pedigree in the business has seen him oversee the generation of $5 billion in revenue from his days at Bungie, as well as roles at Ensemble, FASA, and Microsoft where he worked on Age of Empires and MechWarrior. Importantly, he also negotiated Bungie’s divestiture from Microsoft back in 2007. Joining Ryan at ProbablyMonsters is Lonnye Bower (COO), formerly Worldwide Technical Lead at Microsoft, Douglas Kikendall (CFO), formerly CFO at TheTVDB.com and Oak Harbor Capital, and Shannon Armstrong (Chief People Office), formerly Senior Recruiting Manager at Amazon.

The roster of talent across the company and studios is impressive, but how exactly does under $20 million in funding so far even support a multi-studio system, much less make it sustainable?

“I think the first purpose of our fundraised money is to allow us to pull together the team of talented individuals, to work with them on their idea and their business case to really make sure that when we take the next step and set the target range for scope and scale of their games, type of audience they want to build to, that we give them a solid baseline to start from, and then after we get past that point is when we start to look for a partner to really take the game to market,” Ryan explained. 

“We budget a decent, like up to $3-$5 million to really stand a team all the way up and harness their idea, and then look for partners when they’re ready along the way inside that budget. If you think of the $18 million, in that range is more than enough to stand up three studios if that’s what we had to do, if we went to full budget before we signed with a partner.”

Because ProbablyMonsters is looking to guide studios as they’re built from the ground up and ensure they build relationships with publishing partners, the company sees itself as more than a simple incubator. 

“I think compared to the typical definition of incubator, we’re a bit different in the category of business,” Ryan said. “Our primary goal is to help really pull those talented teams together, and then grow them and be not just a structural advisor or a deal advisor, but actually help them build strong foundations for their teams, and to get better at that over time. One of the core tenets for ProbablyMonsters is, from the business side, is to be predictable, to help people be predictable for their employees, predictable for their business partners, and I think that’s a big part of sustainability, is being able to have people know what to expect they’re going to get when they’re working with you or becoming a part of the team.

“There’s a couple things I think are important. One, we’re absolutely, from a leadership point of view, founded by a bunch of forward-looking and repeatedly successful in the past AAA leads. We’ve built franchises and studios that have lasted a long time, and resonated with millions of fans, and at the same time, we’re absolutely focused on building for the future. I think it’s more important these days than ever to build to the future consumer, but also think about building to the future employee or team member. I think being ready for things to evolve, you look at how people communicate and what they expect and the iteration they expect both in their entertainment to evolve with them, but I think the workplace, too, is a place that has to evolve, and to me, really the core of that is about focusing on culture, and making the culture of the studio, the culture of the team an ongoing conversation.”

Source: ProbablyMonsters
Source: ProbablyMonsters

The number of pure AAA studios that are independent in the industry has been dwindling. Just recently, Insomniac Games finally tied the knot with Sony, giving up its long-standing independence. Meanwhile, Microsoft has been on a buying spree, acquiring a variety of AA and AAA studios, such as Obsidian, Double Fine, inXile, Playground Games, Ninja Theory and more. The market has changed considerably in the last decade, but Ryan wants to build the next generation of AAA studios. 

“Certainly my passion has always been building teams and building original IP, and I think it’s one of the things that as I think about what I wanted to do for the next, I don’t know, 20 years of my career, was to really help establish potentially long-lasting studios, and looking to make it so that we could build stable environments for teams where they could thrive,” he commented. “The business side, the product marketing side, picking an audience, knowing how to negotiate good deals, all those things that aren’t really about core creative game development, I think one of the reasons why there aren’t as many independent AAA studios is that it takes experience to be able to open those doors and make those deals the right way so that teams have a stable baseline to grow in. 

“I think it’s a really important thing for the industry, and I believe it’s going to lead to us building a bunch of original IP into AAA games that really meet the needs of the fanbase, too, and so it’s definitely something we’re excited about.”

Work/life balance is one of the core tenets for ProbablyMonsters. In addition to ensuring that the business and each project is predictable, the company is taking a deliberate approach to headcount. It’s not uncommon at major AAA studios to see teams expand to as many as 400 or more staff. Needless to say, when studios get to that size, it can be difficult to give each team member individual attention. It also dramatically increases the overhead costs for a company. Ryan said he’s committed to not exceeding 120 people per studio to foster better team dynamics and creativity.

Ryan continued, “Part of what exists in the structure of the company and the goals of the leadership is to provide that guidance from the ProbablyMonsters team to the studios when we’re looking at what’s their capital reserve or what capital reserve do we have to help back them, what kind of business relationships do they have in the industry? When you look at a team coming up to finish a game, have they worked on pre-production for their next title? If they’re going to transition part or all of their team, do they have long-term transition plans? In one capacity or another, I led Bungie for 15 years, and we grew throughout that without layoffs. I was really proud of the stability of the company as we grew and moved forward, and I did get to experience a bunch of teams. I’ve published, when I was at Microsoft, probably 30 to 40 titles and got to work with a bunch of different devs.

“[We’re] really always looking at long-term plans, like what is the three, five, ten-year plan for the company, and because of the history of the leadership of ProbablyMonsters, and even now to the fact that we have two studios in our family, and growing to three, our ability if needed to bring in additional investors or pull down a line of credit, or in some cases, even sign a building lease or get insurance are all things that are hard as a game studio, too. We solve those problems, and I think that really helps to add to the stability.”

Ryan likes to talk a lot about relationship building, both inside studios, and with big publishing partners. Of course, he experienced firsthand what it’s like to work out deals with companies like Microsoft and Activision. When he “stepped down” from Bungie in 2016 and Pete Parsons was promoted to take over as CEO, rumors pointed to his actually being fired. It was a time of upheaval for Bungie with other high-profile departures like Marty O’Donnell and Joseph Staten. The relationship with Activision and the culture at Bungie may have been affected (and, now Bungie has severed ties with Activision). Ryan never did issue a statement at the time, so we asked him to reflect on it now, three years later. He said that he still occasionally meets with Bungie’s leadership or the board for breakfast or camping trips. 

“The Bungie team and the company, it’s a team I love. It was a giant piece of my life as I built it, and I very much wanted to focus on them being able to move forward without me, which is why I didn’t make any statements,” he told us. “Even if you dig back into other scenarios in there, too, I wanted it to be their story and their PR moving forward, and to very much take my time and wait until I was ready to talk about ProbablyMonsters.”

Ryan’s experiences with Microsoft and Activision taught him a lot about big company relationships. You’re probably not surprised to hear that the legal side of publishing deals is critically important for studios. 

“When you look at the deals that teams have around their contracts and contractual relationships, just to pick on the legal side, which a lot of times can be what causes a studio to shut down, they end up running out of money and signing a deal that means even after they ship their game, they might not have money again, and those kind of things happen,” Ryan explained. “So part of that is the business plan, but then it’s also negotiating and signing and managing deals, because I think it is, in all cases, it’s about the culture of your relationship, and I think it matters all the way through the business. Having led the divestiture of Bungie from Microsoft the first time around was a big, long set of negotiations, and… I think getting that right, bringing that business maturity to a company really makes a difference in that aspect of it.

“And then I think the other thing is really about the relationship that the teams have with their business leaders, and with themselves because it’s often the case in entertainment that if you’re on track to something amazing and you have a functional team that’s thriving and growing together, that the business opportunities are there, and I think most of what happens in business is people, you lose the team first or you lose the culture of the team, and then the potential business opportunities dry up, and being ready and being flexible in that case is really important.”

One part of studio culture that every AAA game developer must address, of course, is crunch. After the Red Dead Redemption 2 controversy, former Blizzard head Mike Morhaime’s acknowledgement about crunch culture, and Bungie’s own decision to delay Destiny 2 content in order to avoid crunch, it’s clear that many in the business are still grappling with how to address the issue.

“I do think from a business point of view and business maturity, it is about making sure that the business needs don’t require a team to crunch, that you aren’t looking at 1,000 hours to get something done, but you can only pay for 500,” Ryan said. “I think if there was going to be one piece of advice I’d always push at a studio, it’s that, absolutely, your business plan, your publishing agreement, whatever you’re going to use to put constraints on the team, should not require crunch… And then when it comes to managing the development process over multiple years, that conversation with the team [is] for them to know that, ‘Hey, we’re stable, we’re safe. This is a place where you can tell us how much you want to work or if you feel like you’re being pushed hard.’”

Ryan talked about how crunch can mean different things to different individuals, and sometimes passionate developers want to work longer. But as we’ve seen, passion can all too easily be exploited in the games industry. Ryan stressed that ProbablyMonsters is backing up its talk with benefits like 14 weeks of parental leave, no seniority required, in addition to 3 weeks paid time off and 2 weeks sabbatical at time of hire.

“We have to get our job done, but the job is easy to define. It’s what happens in your life that should be the unpredictable part,” Ryan said. “I really believe in supporting people in their lives, and it’s reflected in our business structure. It’s the reason we raise money upfront instead of signing publishing deals early… so that we can take the time to set up plans and structure that we believe will enable us to get better at over time, learn with it over time, but to really have that expectation with the team that they’re going to take their time off.”

With the next Xbox (Project Scarlett) and the PlayStation 5 only a little more than a year away, you can bet that ProbablyMonsters will make its presence felt in the next generation. Ryan has always thought about the integration of evolving technologies, whether that’s 3D acceleration in the early days of Windows gaming, or the rise of Xbox Live at the start of the century. Technology like AI and the cloud can help deliver more immersive experiences for players, but it can also facilitate sustainable development processes. If ProbablyMonsters can truly deliver sustainable AAA studios and successful new IP, Ryan’s next chapter of his career might just be his greatest.

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