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Innovation Economy

Can Mass. video game industry hit restart?

For those who work in the video game industry, there’s an inherent faith in the ability to restart - an opportunity, after you’ve been blown to bits, to take a few steps back and start over.

The Massachusetts video game cluster is doing that now.

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“I feel like we’ve gone through two or three cycles of ups and downs in the gaming industry, and each time we go down, we seem to sink a little lower,’’ says Mike Dornbrook, who recently served as chief operating officer of Harmonix Music Systems, the Cambridge company that makes the games Rock Band and Dance Central.

Let’s start with last summer, when retired Red Sox pitcher Curt Schilling announced he was moving his video game start-up, 38 Studios, from Maynard to Providence, lured by a $75 million financing package from the state’s economic development agency.

Zynga, the leading maker of so-called social games played on Facebook, acquired two small Boston-area game companies, Conduit Labs and Floodgate Entertainment, for undisclosed sums - primarily to get its hands on programming talent. San Francisco-based Zynga promptly killed the two Facebook games Conduit had developed.

Harmonix, perhaps the second-biggest game developer in the state, laid off about 30 employees from its staff of 240 in February after getting acquired late last year by a New York private equity firm. In June, New Jersey-based Majesco Entertainment paid less than $1 million for most of the assets of Foxborough-based Quick Hit, which had built a Web-based football game and raised more than $13 million.

Smaller companies have struggled, too. Blue Fang Games, best known for the Zoo Tycoon series that invited players to manage a menagerie, laid off much of its creative development team last month. Four-person Macguffin Games called it quits last December after a Facebook game called Mustache Mercenaries didn’t take off. (It blended historical characters like Harriet Tubman with steam-powered robots.)

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By most estimates, the Massachusetts video game industry is tiny. The Entertainment Software Association last year estimated total direct employment in the industry at just shy of 1,300 people, with an average salary of $83,335. But let’s be honest: designing games is sexier than making low-input bias current amplifiers. (Sorry, Analog Devices.) And when game companies crank out hits, as Harmonix did with its Rock Band music game and as Irrational Games of Quincy did with BioShock, a game set in an underwater city populated by mutants, they can generate press around the world, and attract talent to the state. The gaming business also provides a reason for recent college grads to stick around.

The very first video game, Spacewar, was created at MIT in 1960, in part to demonstrate the capabilities of the PDP-1 minicomputer made by Digital Equipment Corp. In the 1980s, Massachusetts was home to game publishers like Infocom, which made text-based games like Hitchhiker’s Guide to the Galaxy, and Spinnaker Software, which focused on educational games. But more recently, the action has shifted to cities like San Francisco, Seattle, and Austin.

Canada, meanwhile, has woven a lavish welcome mat for video game companies, including tax credits and no-strings-attached funding. Ontario’s Interactive Digital Media Fund, for instance, has supplied $7.7 million to 76 different projects in that province. (Incentives proposed in Massachusetts earlier this year seem to be stalled on Beacon Hill.)

“We’ve got good programmers in Boston, and artists, too,’’ says Dornbrook, the former Harmonix executive. “But we’re kind of an awkward outpost. We don’t have any of the major game publishers or console manufacturers located here, and we don’t have enough investors who are comfortable putting money into this segment.’’

In addition, the industry is shifting. People seem to be spending less on traditional gaming systems like Xbox or PlayStation and devoting more time to free or cheap games that they can play on the Web or their phones. Boston doesn’t have a major developer of social games. When the website Seek Omega earlier this year ranked the top 25 developers of games for mobile phones, not a single Massachusetts company made the list.

Investors have been shoveling money into mobile and social games companies on the West Coast, observes Albert Reed, founder of Demiurge Studios in Cambridge. “More money is going into those companies than you have revenue coming out,’’ says Reed. “Boston is just more practical and pragmatic.’’

Dornbrook says that if he was starting a company today, “I’d move to the Bay Area or one of the stronger gaming clusters. I wanted this area to succeed, so it pains me to say that.’’ (He says he has invested in four Boston game start-ups in recent years, two of which are now defunct.)

But I’m rooting for a resurgence. It could come from LuckyLabs, a new start-up in Cambridge from Steven Kane, one of the pioneers of free-to-play Web games. It might spring from the video game design programs at Becker College or Worcester Polytechnic Institute. The industry is eagerly awaiting a sequel from Irrational Games, BioShock Infinite, due out next year.

Needham-based Turbine Inc., acquired by Warner Bros. last year, is hoping to add about 40 employees to its current head count of 364, though it won’t talk about new games under development. Entrepreneur Satayan Mahajan is trying to raise money for a venture capital firm that would primarily invest in video game and digital media start-ups. And just yesterday, 150 game developers were expected to gather in Cambridge for the fourth annual GameLoop conference.

Demiurge, a 35-person studio that mainly does contract work for other game developers, is readying its first original game for release. Shoot Many Robots is set during a future robot apocalypse. Reed voices the industry’s hard-wired optimism when he says, “Who knows how well our next game will do? We could be at 400 or 500 people in a few years.’’

Scott Kirsner can be reached at kirsner@pobox.com. Follow him on Twitter @ScottKirsner.

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