The Cluster: How important is your work environment?

When we started in the computer game industry, there were few options available for someone who wanted to start a new games studio from the ground up. Today, The Cluster is now available to any games entrepreneur with a vision and roadmap to making the next blockbuster title. We’ve got you covered if you need a workspace and equipment.

A few years ago (15 years, to be precise) a bunch of us kids decided we wanted to make computer games. We applied to all the local game studios in Melbourne believing they would line up to hire us. With no real experience, we didn’t even get interviews: Quelle surprise! “We play heaps of games,” we protested. “We know everything about every game ever made!!”

Undeterred, we thought the only way we could break into the industry was to start our own game development studio and work exclusively with the world’s largest Hollywood movie studios on blockbuster titles. That’s what you do when you’re broke, just out of university and have no experience! So with no money, no clue, plenty of hubris and a dollop of gray matter, we scraped together all our worldly assets (a few thousand dollars) and I got on a plane headed for L.A.

Blue Tongue Entertainment was born in 1995. (The company was originally called Blue Tongue Multimedia because the government was crazy about all things multimedia back then). The rest is history, and Blue Tongue went on to work with Hollywood’s largest movie studios on blockbuster titles.

The biggest title we worked on at Blue Tongue ended up being Jurassic Park, which the local state government helped launch in 2003 alongside Universal Studios, who flew down for the event held in Melbourne. The highlight for us was appearing on every news channel in Australia. The headline read, “Fuelled off baked beans, pizza and coffee, local company Blue Tongue makes Jurassic Park game for Universal Studios.”

I was the CEO of Blue Tongue for eight years. Today, Blue Tongue Entertainment is still going strong here in Melbourne and some of the original team (a very talented bunch) remain working there. Hat’s off to those guys; you know who you are! Blue Tongue is now owned by THQ, a successful international publisher of computer games worldwide.

One of the biggest challenges we had starting Blue Tongue from the ground up was finding a suitable office. Most of the people we were working with, or who we wanted to work with, lived in or around the city, so we needed a central business district address. Renting was simply too expensive, and we didn’t have the startup money to rent and set up an office of our own. We knocked on many doors looking for a home. Having access to the Internet was critical as our business was all done in and out of the United States. No e-mail, no business. Having Internet access in the mid-90s was a big deal.

After about six months, we eventually discovered Melbourne IT, a commercial arm of the University of Melbourne. The university was setting up a high-technology incubator within the university itself, and we happened to be in the right place at the right time. Having our own office inside the university was handy. We had access to resources. We were close to computer science students. And the offices made us look professional to our clients. Being associated with the university also gave us more credibility and opened up even more opportunities. Melbourne IT regularly introduced us to potential business partners. The university was one of the few locations in Australia where you had access to adequate broadband, and we didn’t have to pay for it. Without it we would not have been able to do business internationally. The university effectively became a shareholder in Blue Tongue.

Nine years after we started Blue Tongue, we went on to start another game studio called Redtribe. Redtribe has been running now for six years. As with Blue Tongue, when we started Redtribe, we were basically starting from scratch with limited resources. Serviced offices were just too expensive and didn’t really provide the facilities we required. You use a huge amount of computer resources and Internet bandwidth when you make games, and the typical serviced office in Melbourne makes you pay for every little bit you use, completely unworkable for a modern high-tech company in this day and age. We asked around to see if there was space that we might be able to sub-lease, but the search was fruitless in the end.

We looked at many options, asked for assistance from the state government (who helped us with a small grant) and we eventually rented a warehouse in Carlton for almost nothing, doing all the work ourselves to make it suitable for human habitation. Redtribe grew and grew, and eventually went on to generate revenues around five times that of Blue Tongue in 2003. We grew to around 100 people across two offices and several companies and moved into new offices in the central business district. We released Australia’s first “next-gen” title on Xbox 360 and Wii. By the 2008 financial year, the company had amassed more than $5 million in profits on revenues in the tens of millions of dollars.

Having experienced how difficult it was to establish a game studio—twice—we decided it would be great to help others start their own game studios and give them a leg up.

In 2010, The Cluster, a “creative industry cluster” in the heart of Melbourne’s central business district, was born. The Cluster is a serviced office, virtual office or office space that has the facilities needed for start-up game companies and/or other high-tech creative enterprises.

You want to make games, not become an expert in real estate. We started The Cluster with the goal of helping local computer game start-ups get on their feet without having to worry about the logistics of establishing their own office. It’s not so much about making a profit, as it is establishing an entrepreneurial co-working space where creative high-tech companies can come together, work together, share ideas and ultimately share resources to reduce their costs.

If you’re looking to setup up your own game studio here are a few costs you will have to consider:

• Rent —of course— which is paid monthly in advance. (Typically, you will be signing a lease for a number of years, and they may want personal guarantees, although I would never give those myself. Where possible, try bank guarantees instead, which means more money up-front, but limits your maximum personal liability. Bank guarantees will lock two-three months-worth of rent in an account that you cannot access until the lease is ended. A lease can potentially make you liable for hundreds of thousands of dollars should things not work out.)
• Bond, which is typically one or two months rent held in trust. You will need to pay this upfront.
• Fit out and equipment (this is typically your responsibility)

1. Desks and chairs can cost you anywhere from a few hundred to thousands of dollars per person.
2. Computers, faxes, telephones, printers.
3. Network cabling.
4. Power cabling (because game developers use more power than most typical businesses. That doesn’t even include development kits. It all adds up to massive power bills).
5. Flooring. If you want it to look nice and attract the right crowd.
6. Air conditioning. Having lots of bodies and computers in close proximity in a small office means things get very hot, very quickly.

• Maintenance. Typical rental properties will require that you maintain things like air-conditioning, fixtures and fittings. You want to make the landlord responsible for ensuring that the building is kept watertight and you have access at all times.
• Insurances (these will be your expenses not the landlord’s)

1. Building insurance.
2. Contents insurance.
3. Public liability insurance.

• If it’s a net rental, then you will have to pay other outgoings such as council rates and body corporate rates which can be significant. In our office our body corporate rates alone are around $50,000 a year.
• Electricity, Internet, telephone. We are currently paying $30,000 a year in electricity bills. Internet and telephone are also expensive.

The Cluster was a risky experiment for us. We did the sums and every way we looked at it, we couldn’t see how to make it break even. With a bit of jiggling however, we’re happy to say The Cluster has been a huge success and is going strong. We now have The Voxel Agents, Roo Games, Redtribe, Evil Monkey Entertainment, Blue Ninja Entertainment and the Game Developers Association of Australia all under the one roof. Not a day goes by when we don’t get to see something cool or hear about the latest game technology or marketing trend.

We can’t wait to see where it all ends up. As before, we’re sure it will be a rewarding, scary and an exciting journey for all. If you have any questions, need advice or just want to drop in for a coffee and a chat, then please feel free to contact me. My door is always open and I will try to help you the best way I can. I’ve been making games in Australia now for 25 years, and I think the industry is more exciting than ever!

I hope to see you at The Cluster soon!

Chris Mosely is CEO of Redtribe, game developer based in Victoria, Australia. He is also co-head of The Cluster with Kirsten Koci.  The Cluster is a creative industry co-working space in Melbourne which now has more than 30innovative and creative companies within it. Previously, Chris was CEO of Blue tongue Entertainment, which he founded in 1995 and sold to industry powerhouse THQ in 2003. In his spare time, Chris is making a game exclusively for the iPad, purely for fun.