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Innovation Economy

Local video game industry shrinks in 2012

Zynga Boston created lucrative games that interfaced with Facebook.

Zynga Boston created lucrative games that interfaced with Facebook.

On a Tuesday in late October, most of the employees of Zynga Boston, a video game studio, met for drinks after work at Charlie’s Kitchen in Harvard Square. Their 48-person office was only six weeks from finishing a new mobile game built around sharing funny photos. But instead of celebrating, they were commiserating: They’d all been laid off abruptly that day when their parent company, based in San Francisco, decided to shut Zynga Boston.

“There was just shock,” says Seth Sivak, one of the top designers at the Boston studio. “Up to that day, the message from San Francisco was that we were doing great, and that the new game was important to them.”

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The loss of Zynga Boston, part of a public company that attained fame by cranking out money-making games that ­integrated with Facebook, was just one of many kung fu kicks to the sternum for New England’s video game sector this year. Providence-based 38 Studios declared bankruptcy and laid off its staff after its founder, former Red Sox star Curt Schilling, couldn’t raise the money to finish 38 Studio’s marquee product, an online fantasy realm code-named Project Copernicus. Framingham-based ImaginEngine folded after launching more than 200 games, and Play140, after creating just three.

There were layoffs at Stomp Games in Concord and Turbine Inc. in Needham. “I’d call it a string of bad luck,” says Hank Howie, an industry veteran who wound down his own small start-up this year, Beach Cooler Games, and joined another company.

Video games are an important business for New England not because the industry is a major job creator (it employs about 2,000 people in Massachusetts, according to a recent survey), but because our universities are already home to some of the top game-development programs in the country, and retaining that young talent is a good thing. So what happened in 2012, and how could things change in 2013?

Many companies are still trying to figure out how to consistently make money with Web-based “social games” that tie into Facebook, or games for phones and tablets, most of which are distributed on the crowded virtual shelves of Apple’s iTunes Store. And some game developers who sell high-end, disc-based games for console systems are waiting for a new wave of consoles to be released in 2013 and 2014, says Nabeel Hyatt. Hyatt was the studio head at Zynga Boston until earlier this spring, when he left to join the Boston venture capital firm Spark Capital.

Boston is not one of the hubs of the gaming industry, like Los Angeles, San Francisco, or Seattle, with publishers and major developers based here, says Hyatt. “Boston generally expands when there’s heavy investment in the overall games sector,” he says. “But when there’s a period of industry contraction, the extremities feel it the most.”

Venture capitalists have also taken a break from the sector. The only two recent examples of companies finding funding locally are LuckyLabs, which makes a bingo game that can be played on Facebook and mobile devices, and The Tap Lab, which is developing mobile games. They have raised relatively small amounts: $3.5 million and $500,000, respectively.

The Tap Lab provides one reason to be optimistic about 2013. Though the company’s first mobile game didn’t catch fire, it is working on a new one called Tiny Tycoons, which is “sort of like being able to play Monopoly in real life,” according to cofounder Dave Bisceglia. Players vie for ownership of places they care about, like a dorm or café. Bisceglia says his company will also offer tools so others can develop similar location-based games, which require players to be in a particular place for certain things to happen.

Two very early start-ups to watch are Tiggly, a Harvard Business School project that is designing objects toddlers can use to interact with iPad games, and Physical Apps of New Hampshire. They plan to market a foam ball that can safely hold an ­iPhone or iPod touch (or so they promise). Relying on movement sensors in the device, the ball invites you to play active games like Hot Potato or bowling, with the phone keeping score.

In 2013, the Massachusetts Digital Games Institute in Worcester plans to expand its summer innovation program, which invites college students to spend three months turning ideas into prototype games. MassDigi, as it is known, is also exploring the idea of “serving as a new kind of publisher for indie game developers in Massachusetts,” helping them with promotion and distribution, says director ­Timothy Loew.

Quincy’s Irrational Games will release its long-awaited BioShock Infinite, set in the floating city of Columbia, in March. And Harmonix Music Systems, which most recently released Dance Central 3, will debut at least one new console game next year. Last year, the Cambridge studio released a mobile game, VidRhythm, which was popular but didn’t generate much revenue, says Harmonix cofounder Eran Egozy. “It was a fun product, but console development — developing big-budget, full-screen, immersive experiences — is what we’re all about,” he says.

In November, Sivak, the former designer at Zynga Boston, joined four former colleagues to form Proletariat Inc. They found office space in Cambridge two weeks after the shutdown, relying on savings and severance money to begin developing iPad games. “I’d rather play games on my iPad than a console right now,” he says. “It’s a really great gaming device, and it’s an underserved market.”

Everyone tells you that the video game business is like making movies or music: It’s a hit-driven industry where conventional wisdom about what people like is constantly upended. And because of its high profile, it has a similar allure.

“The beauty of the game market right now is that you don’t need a lot of money, or a big team,” says Howie, now chief operating officer at Disruptor Beam, a Boston company developing an online game for the cable series “Game of Thrones.”

“You just need that light bulb going off, and you might hit it,” he says.

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

Correction : An earlier version of this story mischaracterized LuckyBingo.

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