Part 3: The Acquisitions (1994-1998)
Unlike Disney Interactive, which ran its own in-house team, Universal Interactive would never have its own in-house development team. There’s a roundabout exception, but we’ll get there. Instead, it was a production office – an incubator suite and contact point for other studios working on games for them. You could consider them a publisher, but the definition of “publisher” was blurring throughout the industry.
For instance, Disney Interactive’s predecessor Disney Software had a similar structure. There was no incubator, but they had just enough staff to be a buffer for licensing and production support. Instead of publishing games themselves, they’d rely on deals with others like Capcom and Virgin Software. Other companies like Id Software and later Valve would take on similar middleman duties for other studios, bringing them under their existing distribution deals.
The first to join Universal’s cause was Studio 3DO, the in-house developers within The 3DO Company. They were basically a package deal with the original three-way MCA-Matsushita-3DO relationship. A trusted team within Studio 3DO was tasked with making a tie-in game to Jurassic Park. Not much was made public about the production of the game, but reportedly Spielberg personally gave the team at least his blessing.
It didn’t help much, though. The original holiday 1993 deadline was well forgotten as development dragged on into 1994. Leo Schwab, who was on an adjoining team working on Escape from Monster Manor for EA, recalled during a playthough of the game that he didn’t think its gold master in 1994 was much better than demos he saw the prior holiday.
In any case, the game got a display stand at 3DO’s booth, at the same Winter CES where Skip Paul made his case. Another game did as well, but before the show came about, there was a quiet battle for control over it.
Morgan & Friends
Trip Hawkins had sent a 3DO development kit over to a pair of developers he knew from EA. Naughty Dog worked on Keef the Thief after an embarrassing episode of noticing a gutted Genesis in the halls of EA, then being whisked away to a side room to sign non-disclosure agreements over it. The duo were burned by them after realizing they weren’t going to print a second batch of beefy Keef cartridges, when favor was given to the leaner Madden.
But their relationship with Hawkins was given a second chance. Despite declining to sign with a publisher during the actual development process, Jason Rubin and Andy Gavin had faith that they could find one with a self-financed game.
Thus began a strange bidding war, recounted in an interview by IGN Southeast Asia. They had three major bidders for their fighting game, Way of the Warrior: Trip Hawkins himself for EA once again, an unidentified rep from Crystal Dynamics, and Rob Biniaz at the brand new Universal Interactive. The deal boiled down to returning to their persuasive former boss, risking to rework their game into a different IP, or being promised to work in a Hollywood studio with creative freedom.
The rest of that story is history. We’ll touch on it a bit more, of course, but let’s stay macro for a bit.
Unlikely Office Mates
A videotape ended up in the UIS office. It was a Doom-like demo run on 3DO hardware that was made by Ted Price and Alex Hastings over the course of a month. They had sent them out along with cold-calls to every game publisher they could find, from their small office in San Diego. Their company was tentatively named Xtreme Software, and was operated on Price’s savings from working at his family’s local medical startup.
After months of sending tapes, they got a callback from Mark Cerny. He offered them a three-game contract to move up the coast to Universal City and finish their game. They eagerly agreed, and brought along Alex’s brother Brian Hastings to join the company.
They found themselves in the same building where Spielberg was collecting servers full of depositions from Holocaust survivors, in the early years of the Shoah Foundation. Schindler’s List was that impactful.
To join the UIS family, there were a few simple stipulations. First, the IP for your games and their artistic elements would be owned by UIS specifically. Source code, by contrast, is fair game. Second, the offices and amenities may be subject to change. Third, you would be assigned a producer employed by UIS. All of these are typical for publishers, but we’ll get to the nuances.
Xtreme Software were assigned Michael John, who was recruited out of Philips. Naughty Dog were assigned David Siller. Siller was recruited right out of Sunsoft at a time when their operations in America were failing, and he brought over the rights to his previous game Aero the Acro-Bat.
The first thing MJ hashed out to his team was to change the name. Insomniac was the result. From there, the staff began to be filled out. Craig Stitt was brought in from STI. For a time, then-production designer Catherine Hardwicke lent her time between film projects.
All the while, the teams got to appreciate the work being done to keep them active.
Skip [Paul] would come by from time to time. He had a couple of dogs, and he would bring him through the studios. He never was, like, trying to order anybody around.
He was like, “Hey, looks good. Looks like you guys are working hard.” And I’m sure he was doing stuff behind the scenes that I was not aware of, because I was just a producer, but yeah. We certainly knew that Skip was there, and he had our backs.
If you are in a big company, and you want to do something interesting, it’s really helpful to have somebody that is kind of your Captain America, like shielding off all the garbage, and Skip was very much that for that group. He was like, “No, you guys. I got their budget, they’re doing stuff. Everybody else just stay away.”
One sticking point was making the cutscenes for their game, Disruptor. Though the teams were each effectively promised “a huge sack of money” for their first product, Insomniac’s choice to have live-action video was arguably an experience they could’ve been given better resources to handle. But although the end result was as corny as you’d expect from first-timers, it wasn’t entirely their fault.
To get a sense of what Universal was like at the crux of the mid ’90s, you can look to possibly their biggest non-cinema project of that time, The Adventures of Timmy the Tooth.
Timmy started out in a loose variety show, a hired three-person puppet troupe for birthday parties. The show eventually found a home in the now-defunct Gypsy Playhouse in Burbank, before they pitched the show as a direct-to-video series. As soon as MCA brought them in to pitch, representatives from several departments were on hand to both listen and contribute overhead ideas. Marketing especially was supportive of the series, as is evidenced by two leaked screening cassettes for retailers.
Part of the reason, as the creators admitted on a reunion video by Under the Puppet, is that they were “on the heels of Barney“, and the studio was happy to have a competitor on their roster. Another reason, though, might be that MCA Home Video was such an integral unit that corporate oversight was a given. Timmy the Tooth, for all intents and purposes, became a full-on Universal production, and the creators were perfectly happy with that.
By comparison, Universal Interactive was arguably too autonomous. Cerny admitted in a talk that they opted out of marketing in-house. That decision would affect Disruptor in more than just the cutscene production value. Unlike the benefits of Sony Computer Entertainment taking up marketing for Crash Bandicoot, neither UIS nor overseas publisher Interplay – actually another MCA asset – were in a position to send out much more than magazine ads and press reviews.
Incidentally, UIS’s initial marketing director Kelly Flaherty was unduly put in the spotlight, with veiled accusations that she and producer David Siller undermined Naughty Dog’s creative control over what was initially titled “Project Wombat.” While I’d rather not re-open those wounds, one might argue that the team were too comfortable in their indie dev mindset to take orders from others. After all, they made it there explicitly by making a game without a publisher.
By contrast, Insomniac were more a blank slate. Ted Price and the Hastings brothers had little practical experience, so Cerny and MJ were able to mold them into what they considered an ideal team. Their staff over time was filled out with former artists from Sega and Disney Interactive, both very similar corporate outfits. They were still accused of idea theft by QA lead Anthony Perkins, but there were fewer questions of open hostility.
So back in Japan through this whole time, the asset price bubble had burst catastrophically, and the effects just continued to get worse. Major companies switched from permanent staff to temporary workers en masse. Suicide rates surged in the late part of the decade as compounding factors weighed heavily on the Japanese public. Scholars now call the ’90s in Japan the Lost Decade as economic stagnation set in.
Matsushita Electric was forced to make a decision. They had to unload their baggage. Entertainment being a gamble of budget and returns was clearly a lot for them, so they sought to cut their losses and recover. Their buyer of choice for MCA in 1995 turned out to be a Canadian beverage company, Seagram. Bruce Willis fans who recall my mention of Die Hard in the backlash against Japan may get the dark poetry of that.
But the purchase was not without its critics, especially within the Universal family. In fact, it might be best summarized in this internal short film made by Trey Parker and Matt Stone, and starring a bunch of familiar faces.
And of course, with new owners means new management, and a new name. For the next two years, several changes were made to the media giant. The MCA name was phased out – everything was now Universal. Divisions were realigned into a few core pillars – films, television, and music.
Universal Interactive was now part of a new nebulous division called Universal Studios New Media Group. It was led by Paul Rioux, who you may remember from our segue into Sega. He had stayed on through the launch of the Sega Saturn, and then got recruited to take up this new role.
Also, you remember our other segues – some with Spielberg, one with David Geffen, and one with Jeffrey Katzenberg at Disney? Well, by this time, they had already strayed off and co-founded DreamWorks in the Amblin building, also at Universal City. Not only that, but Skip Paul was talking with Sega on an idea he cooked up with the DreamWorks trio, to launch a chain of gaming restaurants called GameWorks.
Spielberg himself was also an investor in a game studio called Knowledge Adventure, which was purchased in 1996 by CUC International in a story I’m about to tell. As a stipulation of that purchase, Spielberg offered the KA staff a fast-track to DreamWorks Interactive, which was a joint venture with Microsoft because… Wait, wasn’t there another game studio on the Lot?
That’s not to say Universal Interactive was stagnant. There was simply a broad hiring freeze at a certain point, which limited how much the middleman outfit could expand. However, that didn’t mean nothing else got done.
Matsushita’s gamble with 3DO didn’t really pay off either, and so by dumping MCA, they were free to strangle 3DO for the trouble. Not only that, but by being dumped, Universal Interactive was no longer under pressure to deliver for 3DO. And so, after a short lunch meeting, it was agreed that Disruptor would be permanently ported to PlayStation. It wouldn’t solve the marketing issue on release, though.
Michael John was also tasked to produce a racing game with a remote team called Blue Shift Studios. Along with Brian Allgeier, who would later join Insomniac from Spyro 2 onwards, they produced Running Wild, featuring characters so cartoonishly generic that I couldn’t help but call it “Hollywood: The Game” to MJ in our interview. He didn’t take to it.
Separately to UIS, there was some activity in the greater New Media Group. Roger Hector, who ran Sega Technical Institute in Mark Cerny’s place for its last years, led a second team called Universal Studios Digital Arts. This is the exception to the lack of in-house development staff, although it was functionally unattached to UIS. Despite the bombast, they developed a game based on Xena: Warrior Princess and nothing else. Paul Rioux also took in a promising interactive story made with Adobe Director called Madeleine’s Mind, helping co-sponsor its hosting.
By 1997, though, the teams at Naughty Dog and Insomniac were given just enough for their next titles to start staffing up. By luck, Disney Interactive had laid off a quarter of its in-house staff in April, allowing a few of its artists to move a small way from Glendale to Universal City. While Naughty Dog had an easy choice to do a sequel for PlayStation’s unofficial mascot, Insomniac had a tougher decision.
So Disruptor ships, right? And like all developers, Insomniac was like, “Let’s do a sequel!” (laughs) And we’re kind of like, “I don’t think I really sold to the level that’s good to justify a sequel. Let’s try something different.”
I don’t honestly remember who came up with the idea of doing the dragon game, but it was I think an easy sell with that group.
But there was like fifty of these meetings. I mean not fifty, but there was a lot. The first one was, “How do we make sure everybody’s on the right page, that we’re not gonna do a Disruptor sequel,” which took some time. And then it was like: “Well then, what do we do?”
And then there’s so there’s like many conversations that have to happen so that everybody’s on board, especially because Ted [Price] was always was really concerned that everybody felt included within Insomniac, so he didn’t want to move forward with a lot of ideas without the whole company feeling like, “Okay, I had a chance to throw in an idea or two.”
So began the long and challenging process that was the creation of Spyro the Dragon. While hiring was ongoing, though, designs were already being made.
It was really just me in the beginning. And then we hired John Fiorito, who’s an excellent draftsman. Yeah, it was tiny, and it expanded after I left. Ted was really good at picking people and listening to people.
I didn’t do any proper “conceptual design” artworks, but I’d sit there in the meetings, and I’d have a little sketchbook and just come up with ideas. Then I’d just start modeling the backgrounds, and select a list of textures that were different for each level. I think it was pretty much just me and the guys. The programmers would go, “Ooh that’s nice” or “Mm, not really sure about that.” It was very democratic.
I left to have my first son. They were very sweet – I was massively pregnant. They bought me a special lead-lined apron so I could sit in front of my computer! (laughs) I was there until I think I was eight months pregnant.
Not only that, but the experience of making Disruptor and Crash Bandicoot opened up more bold involvements.
I was big into The Police when I was in like high school, and had followed Stewart’s work afterward when he was doing soundtracks, and kind of unique stuff. And I just had in my head, “I’ll bet Stewart Copeland’s music would sound really cool with this game.”
We made a little demo, with a few people’s suggestions of what might be good music, and we just put that on the game. You know, you just rip it off the CD and put on the game. And so I had a particular track that I had ripped off of one of Stewart’s CDs, put it on the game, and everybody in the team was sort of like:
“Oh yeah, that’s that’s definitely the closest. Who is that?”
“Oh, that’s this guy Stewart Copeland. We probably totally can’t get him.”
I said, “Well, we call up his talent agent and we tell him that we want to hire him to do this.” And he was like, “You know how to do this? Okay, go for it.”
So I tracked down his talent agent and I called him up.
We set up a meeting, and took the game in the portable debug PlayStations, the bright blue PlayStations, took it to his house.
I was super nervous. Like, I was dying nervous meeting this guy, who was like my childhood idol and showing the game. And of course, we showed him the game with his music on it, right? Which is totally cheating, but whatever. And he really liked the game…
And he also had little kids. We left the PlayStation there, and we’re like, “Hey, why don’t you look at this for a few days? Let us know what you think.” And I know his kids must have played it, you know?
So he’s like, “Alright, let’s make a deal,” and next thing you know he’s making the music for the game.
So began a years-long relationship with Stewart Copeland. His apprentice, Ryan Beveridge, would be credited in the special thanks of the first two Spyro games before taking on co-composing duties. However, fans of Stewart might recognize in his PSU piece that he was not strictly working from home, where his now-opulent Sacred Grove is.
It was in Culver City. It was a rented space at the time. I was building a house, and so my studio was – actually, it was over a three-year period. So some of it was done at the studio in my house, the first year, and then moved all my gear into a rented studio for three or four years.
Because I had the experience of working in the music industry, I knew that nothing was unapproachable. That everybody’s just a person, and they want to work and do what they’re good at.
After Running Wild and the first Spyro the Dragon came out, however, priorities started shifting for MJ and Cerny. Naughty Dog had an especially grueling job making Crash Bandicoot: Warped in barely ten months, their new designated office devoid of color, and they were keen to move out of Universal City as soon as their contract ended. Insomniac still had one more game in their contract, and they would eventually make two Spyro sequels from it.
To keep the creative leadership intact, Cerny resigned from his position as then-president of UIS, incorporating a consulting team called Cerny Games. Jackie, their number-three, had been understudying sound design with Mike Gollum at Universal Sound Studios during Spyro, and chose to bring that into a position inside Insomniac.
On a day-to-day basis, it didn’t matter. We were all just working cooperatively to ship games, and make stuff that was awesome.
The power vacuum at UIS was filled in short order by Jim Wilson, named alternately President and Senior VP/General Manager, who would honestly give a conflicting narrative of UIS for the next few years. His standard bio credits him for “creating the game business at Universal.” Wilson actually came from Universal’s Consumer Products Group, in a move that on paper aligned the whole New Media Group beneath it.
Much of the group’s console game publishing through ’98-99 was helped along by 989 Studios, a Sony unit. However, Wilson penned a five-year deal with Konami for first-rights publishing, anticipating multi-platform development for the incoming next generation of consoles once Insomniac backed off.
Still, just when things felt like they couldn’t possibly change even more…
Okay so, this is gonna get weird. This section doesn’t touch Universal, but it’s relevant to the big fork in the road coming up. This should get a whole article to itself – honestly it should just be more well-known. But I’ll summarize it here just to be safe.
So this guy named Walter Forbes (no relation to the more famous Forbes) finds his way onto the board of two video game publishers – Sierra On-Line and Davidson & Associates. By this time, Davidson had purchased a few companies, including Chaos Studios, aka Blizzard. Sierra was publicly-traded and doing well as a diverse publisher in its own right.
In February 1996, Forbes goes to a board meeting at each company and blindsides them with an offer. His flagship product, Comp-U-Card, was a drop-ship retail service decades ahead of e-commerce, and though it only just got traction in the 90s, it was on a steep rise. He convinced Sierra and Davidson individually to join his company CUC International with the promise of also getting LucasArts and Broderbund. He couldn’t… so they had to settle with Berkeley Systems. And Knowledge Adventure, don’t forget.
Then, Forbes allies with another company called Hospitality Franchise Systems, a private equity venture which throughout the ’90s bought Ramada, Days Inn, Super 8, Century 21, Coldwell Banker, Avis, the list goes on. The two companies merged together, and in a truly sleazy move, put out a vaguely company-wide contest to choose a name for the company, not telling the staff that the executives already chose a name – Cendant.
Before we get further, let’s not mince words. This is one of the weirdest conglomerates ever assembled. A game publisher sharing a board of directors with hotel chains, real estate firms, and car renters? Not since maybe Kinney National and Gulf+Western had there been such an odd layer-cake of industries. But perhaps if you know about Kinney National, you know what’s about to happen.
The merger closed in December 1997. By April, someone inherited from HFS noticed something odd in CUC’s books. Before they merged, it turned out that Forbes and his executives colluded to inflate CUC’s reported profits, starting a year prior to his board meeting scheme. The discrepancy was made public that month, and all hell broke loose.
Cendant’s stock price tanked overnight. Shareholders sued for their money back. The SEC brought Forbes and his cohorts to court, for both civil and criminal fraud. Despite being quickly overshadowed by the Enron scandal, the ensuing decade-long dig into Cendant is considered by some just as appalling.
To make up for the fallout, Cendant quickly dumped its game studios – collectively Cendant Software – onto the nearest buyer, a French media and marketing company named Havas. But Havas was only a middleman. By all rights, ownership was already at its next milestone.
Before 1983, there was simply a utility company called Compagnie Générale des Eaux (CGE), originally created by decree of Napoleon III when Paris was being forcibly renovated to improve water supply and sanitation in the crowded city. Starting with the creation of Canal+ that year, the company pivoted into communications and media. It came to a head in 1997, when CGE took the first step in a five-year transition, changing its name to Vivendi.
Full control of Havas was purchased incrementally in February 1997 and March 1998, meaning Vivendi was already Cendant Software’s owner, though Havas was allowed to imprint its name for the time being. One more ingredient was needed, and it would be found in another fire sale.
Seagram’s position with Universal was… not quite a disaster, but certainly not in safe waters. Edgar Bronfman Jr., part of the family dynasty behind Seagram, had sunk a lot of money on some big acquisitions for the company, chiefly Polygram in 1998 for $10.4 billion. By comparison, the most expensive film in production at Universal was The Grinch at a reported $123 million, which would earn back nearly three times that in theaters.
Bronfman had also sold Seagram’s majority stake in DuPont, a blue-chip chemical powerhouse it owned since 1981, in order to finance the MCA purchase in the first place. Analysts agree that losing DuPont made Seagram more unstable, and Bronfman’s spending spree would come to a head when he met with Vivendi’s ambitious chairman Jean-Marie Messier in October 1999. On the horizon past Y2K, they saw a media empire to rival Time Warner and Viacom.
A year later, a deal was signed. A major deal indeed. Vivendi would purchase Seagram outright for a stock trade worth $34 billion. Investors weren’t all that warm to the reception, but news outlets eagerly name-dropped Universal’s music roster for a cheap pun.
The new company, named Vivendi Universal, quickly realigned everything in their roster into logical units. Havas Interactive became Vivendi Universal Games, beneath Vivendi Universal Publishing. Universal Interactive, an independent unit for the time being, slowly vacated the Universal City offices and moved south to a building near LAX.
Through the realignment, Jim Wilson put on a second hat as “Global Head of Development”, basically recruiting and managing studios for the new age. As long as Universal had properties to gameify, then he’d make sure they get made.
As long as business was doing well…