MARCH 20, 2009 • DFC Intelligence continues its regular series of profiles on game development hot spots around the world with this month’s look at the Research Triangle Park area of North Carolina.

The region has a strong history in game development including such storied studios as MicroProse and Interactive Magic. Assisting DFC in learning more about the current state of this East Coast game hub is the Triangle Game Initiative, the trade association for the Raleigh-Durham, North Carolina interactive entertainment industry.

DFC: Can you give us some background on the history of game development in the Research Triangle Park (RTP) area of North Carolina?

TGI: The RTP area has been deeply involved in the game industry for decades going back to the graphics programs at NCSU and UNC in the 1960s. Those graphics programs created talent and companies that focused on computer graphics. Several of those companies, such as NDL and Virtus, saw an opportunity in video games. They were early innovators in 3D graphics and game tools. The first real-time 3D design tool was developed by Virtus Corporation in Cary.

The first ever first-person 3D adventure game, “The Colony”, was created here in 1987 by David A Smith, of Virtus, who later co-founded Red Storm Entertainment. In fact Red Storm Entertainment, Timeline, and iRock all have roots with Virtus. At Virtus, all the gaming spin-offs also had major entertainment visionaries involved. Red Storm had Tom Clancy, Timeline had Michael Crichton, and iRock had Ozzy Osbourne.

NDL, founded in 1983 out of UNC-Chapel Hill, provided 3D graphics rendering technology products to the computer and game industry. NDL worked closely with Interactive Magic, another Triangle company, founded by MicroProse co-founder Bill Stealey in 1995 in Cary, NC. I-Magic later became I-Entertainment, a pioneer in massively multiplayer online gaming. NDL went on to create the Gamebryo engine in 1997 and later merged with Emergent in 2005.

Another company from the Triangle, SouthPeak Interactive, got started as a subsidiary of SAS Institute in 1996 and today is one of the fastest growing video game publishers, recently acquiring Gamecock Media Group.

Founded in 1991, Epic Games founded its North Carolina presence in 1999 and set up offices in Cary, NC. Epic, which is known for the Unreal Engine, the Unreal series of games and the Gears of War franchise, is now one of the largest developers in the area.

MicroProse itself had a development studio in Chapel Hill until 2000. Those developers stayed in the area and founded Vicious Cycle the same year.

Funcom established its US offices in Durham, NC in 1999, and Themis Group moved here in 2000. Destineer opened a studio here in 2006, EA arrived in 2007, and Insomniac in 2008.

Today, more than 30 companies are located in RTP, and the Triangle is the game engine capital of the world, and a hub for pioneering work in 3D graphics, serious games, online gaming, and more.

DFC: What are the advantages for developers setting up shop in RTP?

TGI: The RTP area has one of largest concentrations of game development companies in the U.S., and is a low cost, high quality of life region with home prices that are less expensive than comparable hubs such as Austin, Seattle, Boston, or San Francisco. RTP has an infrastructure of support services familiar with the game industry, including legal, accounting, marketing, and customer service firms. Developers have close access to world’s best game engine providers. The area has a very strong IGDA chapter, as well as two trade associations devoted to the industry: Triangle Game Initiative (TGI) and North Carolina Advanced Learning Technologies Association (NCALTA)

The region provides a great source of talent from local universities and community colleges. The Triangle’s community of higher education faculty are proactive in recruiting game industry professionals to serve in advisory roles.

RTP was voted No. 2 Best City to Live, Work and Play by Kiplinger’s (July 2008), and No. 1 Best Place to Live in the US by MSNBC (June 2008).

DFC: What can you tell us about the education infrastructure in the Triangle area?

TGI: There are many outstanding local universities and colleges, with combined enrollment of well over 100,000 students, and programs specifically catering to the game industry’s needs.

● North Carolina State University has 31,000 students, $315 million in R&D expenditure annually, is home to the Digital Games Research Center, and offers game-specific concentrations in both its computer science and industrial design departments.

● UNC – Chapel Hill has 28,000 students, $593 million in research grants (2006), and a renowned computer graphics program. Especially notable is the graduate school’s research in virtual environments.

● East Carolina University has 24,000 students, concentrations in game development, animation, interactive design, and is a national leader in advanced learning technology.

● Duke University has 13,000 students, $747 million in research grants (2006), and the Duke Immersive Virtual Environment (DiVE), the Southeast’s only fully enclosed virtual reality environment.

● The School of Communication Arts has over 500 students enrolled, and virtually all the local studios employ graduates. Its curriculum is focused on animation and digital arts.

● Wake Tech Community College offers an AAS degree in Simulation & Game Development with over 140 students enrolled.

DFC: Compared to other regions, what differentiates RTP in terms of how it fosters technology and innovation?

TGI: RTP is the world capital in game engines, with market leaders including Epic Games, Emergent Game Technologies, and Vicious Cycle. We are a leader in serious games and advanced learning technology, developing new interactive applications for military training, medical assessment, and education. RTP is developer-centric rather than publisher-centric.

This is a place where real innovation in game creation happens, not where it gets farmed out from. Furthermore, the Triangle is home to technology companies such as IBM, Cisco, Red Hat and others that touch the game industry through crossover applications, overlapping talent pool and IT services.

DFC: Can you give us some specifics on developers and games that have been developed in RTP area and what you see as some of the top upcoming products?

TGI: New products we can look forward to include:

● Emergent’s Gamebryo has been used in over 250 titles, including EA’s WarHammer and Dark Age of Camelot, Friaxis’ Sid Maier’s Pirates! and Civilization 4, and Bethesda Softworks’ Oblivion.

● Epic Games develops the Unreal Engine, which has been used in hundreds of games. Nine out of the top 10 publishers worldwide license Unreal Engine 3, and upcoming triple-A, UE3-powered titles include Activision’s Singularity, Take-Two’s BioShock 2, Microsoft’s Mass Effect 2, Sony Online’s DC Universe Online, and America Army 3, the U.S. Army’s game with over 9 million registered users. In addition, Epic is responsible for the multimillion-selling Unreal series of games – the first of which shipped in 1998, marking the debut of the Unreal Engine. Epic is most well known for the Gears of War franchise, which has broken sales records for and helped push Microsoft’s Xbox 360 platform.

● Red Storm develops Tom Clancy’s Rainbow Six and Ghost Recon series of games, and is working on an upcoming, announced title.

● Vicious Cycle developed Deadhead Fred for PSP, the Flushed Away game for GameCube based on the DreamWorks movie, several SKUs of the award-winning Puzzle Quest, and Ben 10 Alien Force for PSP, PS2 and Wii, and the upcoming cross-platform game Eat Lead. Vicious Cycle also develops children’s titles like Curious George and Dora the Explorer through its Monkey Bar Games label.

● Funcom operates both Anarchy Online and Age of Conan out of RTP.

● Icarus Studios has an upcoming MMO, Fallen Earth, which is just entered closed beta.

● Destineer’s RTP studio is working on an unannounced AAA title.

● Insomniac’s RTP studio is working on an unannounced AAA title.

DFC: Over the years there have been many developers and publishers that have come and gone in the RTP vicinity: MicroProse, Interactive Magic, Southpeak, Red Storm, Epic, and others. How much of the creative talent pool has stayed in the RTP area? Does RTP hold onto its talent when the economy goes sour?

TGI: Both Epic and Red Storm have set up shop and stayed, of course. And while other companies have come and gone, in general the creative talent that arrives in the region stays in the region. For instance, when MicroProse closed its studio in 2000, the former employees stayed in the area and created Vicious Cycle. We have over 1,000 game developers working in the Triangle region, with more than 200 new jobs created here in the last year. IGDA meetings, which initially drew crowds in the 3040 range, now regularly attract attendance of 200-plus with minimal promotion.

DFC: Does RTP have a draw similar to Austin, where game industry professionals want to find a way to bring their operations to the area, or come back to the area at the first opportunity? If so, why?

TGI: Yes. EA recently opened up a sports game studio here. Destineer moved its game development operations from Minneapolis to the Triangle area. Emergent closed its studio in Walnut Creek and relocated its Norther Calif. employees in favor of bringing all of its R&D under one roof. And L.A.-based Insomniac is building a development studio here. Why? The Triangle offers great quality of life, low cost, and all the infrastructure a game developer needs.

DFC: Raleigh has grown into a worldclass commercial center. What is the climate there like for venture funding, business lending, etc.

TGI: Business 2.0 famously called Raleigh the “Number One Next Boom Town” and they were right. Business fundamentals are very good here. It’s the No. 1 Best Place for Businesses and Careers, according to Forbes 2008. The Triangle area is the No. 4 Major Market in the South, according to Southern Business & Dev, Winter 2008. As a major hub for technology, we benefit from the presence of several major venture funds, including Southern Capitol Ventures, Intersouth Partners, Hatteras Venture Partners, and Aurora Funds.

DFC: What cost advantages does RTP have versus other game industry hubs in North America, and why?

TGI: Our lower cost of living helps translate to a lower cost to do business, which can be seen via a sample of home prices.

Since the RTP vicinity never had a speculative boom in housing, there is no suffering from the housing collapse. The Triangle area remains a place where a game developer can buy a house for a reasonable value and have a reasonable expectation of appreciation.

North Carolina is a “right to work” state with low unionization rates, and state worker comp legislation and insurance rates cost employers less money than in most other states according to National Council on Compensation Insurance. And of course there are tax credits available for creating jobs and for investing in business property, and there are grants and funds available for expanding knowledge jobs.

DFC: How does the development community in RTP break down between offshoots of large international publishers like Ubisoft and home grown startups?

TGI: Epic is the largest game company in the area, and one of the largest and most successful independent game developers in the world. Insomniac is also a large and highly influential independent game development studio. Ubisoft acquired Red Storm, while EA recently established a development studio here, so the area is increasingly of interest to the major publishers. Destineer and Insomniac both moved a portion of their development here from other locations. Destineer has made a significant commitment to growing R&D in its Raleigh facility. The remainder of local development companies are “home grown”.

DFC: Can you tell us about the Triangle Game Initiative and the Triangle Game Conference?

TGI: Triangle Game Initiative is the trade association for the Raleigh-Durham, North Carolina interactive entertainment industry. Members are market-leading companies and prominent industry figures who have gathered here, at the Research Triangle, to master the arts and sciences of gaming. Our mission is to build a thriving community of companies and professionals dedicated to the advancement of the interactive entertainment industry in the Triangle region.

We are launching Triangle Game Conference with the support of the region’s leading companies, including Epic Games, Insomniac, Red Storm, Destineer, Themis Media, Emergent, and Virtual Heroes. We are proud to present a program including a keynote by Epic Games’ President Dr. Michael Capps, and five tracks with content drawing on the strengths of the region. In addition to over 35 different lectures and panels, Triangle Game Conference will also feature a two-day Expo, Game Development University and Career Fair in the City Center Ballroom.

DFC: Do you see there being any interest from the hardware vendors: Intel, Nvidia, or AMD to provide support for development equipment to companies in the region?

TGI: These companies have been very supportive of the local studios. In addition, Nvidia has a local office. Lenovo has partnered with Epic to sponsor the $1 Million Make Something Unreal Contest. Epic works with all the major hardware and software vendors, including Intel, Nvidia, Dell, AMD, Lenovo, and HP to test their latest products.

DFC: What about tool vendors like Autodesk? How does the development community in the RTP area work with them for game-specific development tools such as cross-platform portability, motion capture or game audio?

TGI: Relations with tool vendors like Autodesk are very strong. Emergent, for instance, works closely with Autodesk to insure their tools all work together. Autodesk is also a member of Epic’s Integrated Partners Program.

DFC: Is there anything like an open studio facility that supports those development components that developers can “rent out” for short periods?

TGI: There’s actually an initiative underway in the Triangle that’s going to include an open studio facility as well as more services for game developers. Expect a big announcement later this year.

DFC: Montreal has been very successful in incubating “3D” into a regional hot bed for development companies for a number of industries: gaming, film, and military. Have you looked at any other regional industries that might make for good partners to cross-collaboration and developing 3D beyond games for the region?

TGI: We have leveraged our strength in game development with the region’s educational, military, and medical industries to become the world leaders in serious games and advanced learning technology. U.S. Army Special Operations Command, located 60 miles southwest of Raleigh, has significant interest in partnerships with RTP game companies for the development of simulation and training software. Two of the largest universities in the state, UNC Chapel Hill and NCSU, are both pursuing federal funding (National Science Foundation, DARPA) in partnership with local game companies to create new games technologies for use in advanced personalized learning software.