Atomic: First up, congratulations for Micro Forte's 25th Anniversary.
John De Margheriti: We keep on surviving while everyone s else keeps struggling away. It's a bit different from the other companies in Australia, who are struggling or going under. It's so sad because we've seen many companies over 25 years go under; it's a constant theme.
You've been around for 25 years. Can you go over some of the highs and lows that you have experienced?
We were university mates who got together during university, with the dream of making video games. Back in those days the budget was small and tight back. This was in the 1980s, where it would take two people 12 weeks to make a game. So there were small projects, but similar to the way indy projects are now today.
So the first difficulty was getting started, getting a break, getting a chance to get a contract with EA - which was a start up back then. The hardest thing we learnt back then, was what companies are learning now. So we learned through three years of doing game work for Electronic Arts, and working our hearts out, that you know that rules wouldn't necessarily be followed. A project would get cancelled along the way, promises of payments don't come through... the little things, all the issues involving games which is just part of the duty.
Publishers cancel things, and as the developer you don't understand that; but you accept that and start to think that publishers are evil. Publishers aren't evil - they have a business to run. If the game developing is lame or for whatever reason, they don't think it's going to have a space in the market, they're going to cancel it earlier, rather than later because they don't want to waste the shareholders' money.
You grow up and realise that these issues are there. That was the first time, realising that; most developers realise now is that cancellations happen. That if you add more developers and you sign up more publishers, then there is a different problem that happens. We tried to grow; we tried that different strategy, where we grew to a few hundred people, or whatever, so we had to learn along that way.
Amongst the different things we learned was the need to diversify, how to de-risk the business from cancellations.
So what was your strategy, what did you do to diversify?
First off we realised we had a problem with talent back in the early 90s, back with 3D animation. So we decided to set up the school (The Academy of Interactive Entertainment), we will set up the business unit as Micro Forte, and we spun it out as a not for profit. The early days, back in the mid to late 90s, we slowed down but still we had the academy. But the academy was helpful and by having the academy, we had all the talent we needed and we were able to tap into that and hire. So that de-risked things, which means you can start the project fairly quickly, so you mix the young blood with more seasoned developers.
We experimented a bit more in the mid 90s, so now it's just normal for us to take on young talent as we need and mix with the development team to make it work. Some developers, they never saw the opportunity the academy presented for them, we saw it and we established Micro Forte within it. So that was useful.
We set up other businesses, like tech parks. Even though they aren't business like Micro Forte, they're owned by the majority stake holders of Micro Forte. Even though they were different from our revenue streams and they wanted to be a player in the incubator businesses, it means it raises the profile of myself and a couple of key people, and by doing that Mirco Forte went for applying for government grants. It was more likely to get government grants because it was seen as more of a doer of things.
We applied for government grants, and that meant we could achieve things. The other thing we did was to go diversify outside of games - we went into middleware. Back in the mid 90s we came up with a patent, a system, a method for computers to connect together, and get online in a sense, and because we had those patents. So we diversified in to that.
So what we learnt was, even though we were a bunch of individuals that were a very creative bunch, we all work on our different strengths so what Micro Forte is, basically, is small, but with different strengths. The founders were all strong in different areas.
We started to realise: John is good at setting up new things. So, John you go and set up lots of new things keep us afloat. Simon (Simon Hayes), you will be the CTO, you'll be the genius behind Big World Technology, build us big business. Steve (Steve Wang, Vice President), you are very good at managing teams. So he is very focused on making our teams operate efficiently.
What we realised was that our friendship was more important than making money. We would rather be 60 year old rock and rollers, rather than going out with a bang and die of a drug overdose at the age of 35. We're constantly trying new things. We have weaned ourselves off having to be tamed by publishers seven years ago. We did that by focusing on Big World and making online games.
Some of the companies making MMOs had problems. So Micro Forte specialised in fixing those problems, and we tend to have teams who fix other peoples games or start off a game because they don't have a team of people who can make it. We create our own customers, we create a constant stream.