Private Division’s Michael Worosz and Blake Rochkind sat down with Vince Pavey to tell him all about Take-Two’s independent – but not indie – developer label.
You’ve probably played a Private Division game in the last half a decade, and you likely had a good time with it. First set up as an indie boutique label back in 2017, the sub-brand has since been responsible for some of the most popular critical darlings in recent memory like The Outer Worlds, Hades and OlliOlli World.
If Take-Two Interactive is the predictable but reliable patriarch of its game development family, then Private Division is the cool uncle, bringing his treats around your house from his travels further afield. It also tends to be the home of new and inventive intellectual properties for its parent company, with its releases usually carrying more prestige and excitement than its annual franchises and sports games do. But how did it end up operating on that level?
“We like to say independent, not indie, and we do that deliberately to connote that our releases are of higher quality than the large numbers of indistinguishable games that might be on Steam,” says the head of Private Division, Michael Worosz. “Our corporate strategy at Take-Two is to sustain our existing long term franchises with vibrant new versions, and also plant the seeds for new intellectual property. The games industry, not unlike other other parts of the entertainment industry, continues to have lots of sequels for its major franchises. The reason of course, is that an initially good IP can kind of punch through, but it’s the sequel that has the larger economic windfall attached to it.
“We need to continue to plant the seeds of new IP and the way we can do that is to work with independent developers. That can be established creators that are moving on to their next instantiation, or smaller developers that have had early success and are looking to take the next step up. That’s really been the strategy for Private Division since our inception, five years ago. I think we’ve executed pretty well on that.”
As it has expanded, Private Division has even made a couple of acquisitions as the games industry continues to consolidate. In November 2021, it acquired Roll7 and its intellectual properties, as the pair of companies headed towards the release of OlliOlli World.
“Roll7 was an interesting acquisition,” comments Worosz, “because a lot of times in M&A, you might buy an opportunity at arm’s length without having the chance to work with them in a partnership capacity. In the case of Roll7, we were already commercial partners on OlliOlli World. Our relationship was close. Roll7 is one of those developers out there that is increasingly rare in this world, where they ship on time and on budget.”
“We got a solid 60+ person team that was accustomed to working remotely from day one, which is no small thing during the middle of a pandemic. Their games will now be part of our catalogue long term and most importantly, their next ambition is to build an even better game. That’s what we’re working on now and we knew that going in. It’s an extension of our strategy to bring great developers in house.”
While many of the game properties that Private Division has taken on have gone on to have sequels (OlliOlli being the prime example), Worosz doesn’t necessarily think that’s due to external pressures, but is rather down to the reasons independent developers set up their own studios in the first place.
“I think the people who found new studios are motivated to create those studios by a creative idea that hasn’t been done before. I think if they’re successful in breaking through and shipping a product that’s successful, they often want to double down and create the next version of that game. I think that’s what leads to sequels, isn’t it? That’s okay, because you’re starting with a new IP or franchise to begin with.”
With that in mind, addressing the new-to-sequel balance going forward is just a matter of finding new games to nurture and continuing to team up with the best in the business.
“We’ll continue to do new publishing partnerships. We announced a Bloober Team partnership recently. They’re a team we’re extremely excited to work with. Bloober has continued to put out better releases with each iteration. We’re working with them on something that has never been seen before in the survival horror genre.”
Worosz is keen to point out that when independent developers work with Private Division they get to retain their ownership.
“We work with the right developer, and it’s their IP. The philosophy there is that when you own a property, you’re a much better long-term steward of that property, and you put your full weight behind it. You give everything you’ve got to it, as opposed to renting. We want to empower developers as owners.”
Five years into Private Division, the lessons learned by its staff have been almost as varied as the games the company has published.
“It’s all about the team,” says Worosz. “That’s both our internal publishing team of producers and marketers, and our business development, finance, accounting and HR folks. It’s also all about developer teams that we partner with. Making games is super hard, so when you have a team that you work with, and you feel really good about it in a commercial context, jump on that opportunity to see if you can take the partnership to the next level.”
As it moves into its next phase, Private Division has also realised that it needs to diversify the way it supports developers in the industry even more. Enter the Private Division Development Fund.
“Competition in the independent space has exploded, says Private Division’s head of business development, Blake Rochkind. “There’s increased competition with other publishers. We’ve seen equity financing become a bigger and bigger part of this industry, especially in the past two years. We’ve seen other financing vehicles and project financing become viable and attractive. Frankly, more and more developers, especially on the smaller scale, are choosing to go the alternate paths and self publish. That’s one of the reasons why we’re super excited about the Private Division Development Fund. It’s really important to us to not be in any sort of position where we’re turning down great opportunities and great games. Over the past few years, we’ve seen a number of smaller games that we thought had tremendous potential, but were just frankly, too small for our model.
“We have a 70 person team here, and we often compare it to a bear hug. If you’re a promising five person developer that has a small game with tremendous potential, the machine that we previously had before this new option may have been overwhelming to you. That’s why we’re really excited about the Private Division Development Fund, where we are financing smaller titles with that promise, but we are not publishing them.”
It’s also been about building up the strength and dexterity of the brand, a bit like levelling up a character in an RPG.
“Having a differentiated value proposition has been really valuable and key to our strategy,” says Worosz. “It’s been the differentiator in winning deals. We can work with the best developers because they see what our team has produced, what we’ve shipped, what we’ve marketed, the awards we’ve won in marketing, the quantity of games that we’ve shipped. There’s a real value-add with Private Division, and we’re able to prove that.
“We know that our model is working. I think we’ve been in competitive situations consistently, to work with some of the world’s best developers and we won deals to work with people because they look at that record.”
The simplest way to describe the Private Division Development Fund, according to Worosz, is with what essentially amounts to a quick slogan:
“Informed venture capital. A lot of times VC is making 100 bets in the hopes that one might pay out. We’re not venture capitalists. When a shareholder buys Take-Two stock, they’re not looking to buy an option or a piece of ownership in a VC fund. They’re looking to own a piece of a publisher that’s making and shipping games. What we’re doing here is we’re investing in opportunities, but with an informed view, because we ourselves have made games, we’ve shipped games and we’ve marketed games. I think that that’s a differentiator in comparison to other types of investments.
“It’s also important to note,” adds Rochkind, “that we are not investing in companies with this fund, we’re investing in games. They are completely independent. It’s not like we get a share of their company or a board seat. We are there to support them, to advise them, or give them our guidance on what we think might be best for the game if they want that. We are investing in these titles and taking a return on our investment in the success, but not investing in the company.”
“I’ve always found it pretty curious,” Worosz explains after a pause, “that there’s been such an influx of private equity into game studios, because a studio needs a ten year arc – at least – to actually exit properly. It’s very rare you’ll see a team exit in a shorter timeframe than that because within ten years, they’ve maybe got two different games to market and are at work on a third. That team will need to have had extraordinary success to break through an exit in a ten year timeframe. The studios that are selling now, have been in business for 15, 20, 25 years. Gearbox went to Embracer after being in business for over 20 years. With project financing, we’re actually putting our money behind the game. Do we make a one or a zero on that outcome? I think that that leads to better results and better investment choices.”
“To use a US sports analogy,” adds Rochkind, “I’d say VCs are really looking for home runs. We would love to have home runs within the fund, no doubt. But we’re also happy to have doubles and triples along the way as well.”
When it comes to what the Private Division Development Fund is looking to establish, the answer is equally clear.
“First and foremost,” says Rochkind, “we’re looking for great games with breakout potential. One thing that I think is different from our publishing label is that generally for the fund, given the fact that we’re so hands off and that we are looking for things that have that tremendous potential, I would say a playable build is fairly important to us in evaluating the [potential of a] game.
“Second to that, a desire and plan to self-publish. As we stated, we are not publishing these titles. We’re really looking for entrepreneurial developers who not only can self publish, but are excited about it. We’ve already passed on some great games that we thought would have been a good fit for the fund, but when we spoke to the developers more, it was very clear that they were just not interested in self publishing. We are looking for people who are going down that path, and doing whatever it takes to have a successful game in that model.”
One of the reasons for the fund is to encourage self-publishing on the basis that it relieves some of the pressure on Private Division publishing resources. It’s about accepting the world as it is and not trying to do everything all at once.
“We have passed on some great games in the past because of our bandwidth,” says Rochkind ruefully. “Bandwidth is a real concern here. One of the reasons why we have such a great reputation is that we really do the work here for the games we publish. In order to do the work, we can only do so many games. Our bandwidth is absolutely a factor. But I would also say it’s a recognition of being nimble. Private Division is part of a $20 billion dollar company.
“It was no small feat to get everyone on board with a new sort of business avenue like this. But we thought it was important to recognise the reality of the situation, which is that there are great, smaller developers who have tremendous success self-publishing, and we could ignore that, and pretend that that’s not the reality, and not participate in that sort of space … or we could acknowledge reality and do this. It’s exciting, and hopefully will have great returns for us and developers.” The Private Division Development Fund comes in instalments, although the company isn’t checking on the projects it is funding as regularly as those it has a traditional publishing relationship with.
“There are milestones,” says Rochkind, “but I would say they’re objective. If you are making the game that you told us you would make, you continue to get the money. It’s very hands off, but it is not one lump sum.” Private Division also isn’t afraid to make changes to grants based on the size and scope of the project. “The business terms are one size fits all and are the same for every deal,” explains Rochkind, “but the cheque size and the milestone sizes depend on the game and what’s been pitched.”
Games that are given money by the Private Division Development Fund won’t have to carry the company logo, and will likely feel more indie than the independent games mentioned back at the start of the feature. That doesn’t mean that Private Division and Take-Two don’t believe in their potential for growth, however.
“I think the games are smaller in budget,” explains Michael Worosz. “We don’t want our relatively small, but larger team, when it comes to independent games, to swamp an opportunity. We want to deploy capital for things that we think will be big hits, and or that will potentially be a new IP that, maybe with a sequel, leads to a publishing deal.”
Games that receive funds also still have the chance to take advantage of Take-Two’s years of combined industry expertise, however, and when it comes to the logistics around something like that, Worosz doesn’t think it will be much of a problem at all.
“Well, that’s easy. I mean, they’re basically asking questions that get to ‘Hey, does this deal that’s been put in front of us make sense for the opportunity?’ That is our game. We have that knowledge, because we’re part of the 11,000 person company that is Take-Two. It has done partnerships with Epic, Sony, Microsoft, Humble Bundle, with other places that make offers. We have that repository of knowledge to be able to size up the deal.”
That doesn’t mean funded developers have the same sort of relationship as with a publisher, however. “When we’re publishing a game,” says Rochkind, “there’s a whole team assigned to that game. There’s a marketing lead. There’s probably multiple production people on that game. They’re exposed to the broader team at Private Division. For the games in the fund, generally speaking, they’re mostly only exposed to leadership. That’s something we did very deliberately, because of bandwidth concerns. If they need to, the leadership can go to the broader team and get their takes. But that’s a key distinction.”
So what happens if a studio gets an offer that’s simply too good to refuse in the middle of working with the Private Division Development Fund? Well it hasn’t happened yet – and the publisher is hoping things stay that way because of the people it’s choosing to work with.
“We’re hoping that these people are committed to self publishing. I would say if they want a publisher, we’re here to have that conversation with them first,” says Rochkind. “We are a publisher, right? So we never want to wake up one day and find out that somebody that we’re backing financially is in bed with one of our competitors, unless we have indicated that we’re not interested in publishing. I’ll leave it at that. It’s not impossible that they would work with a publisher once they’ve signed with us. That’s certainly not the intent, but they’re not legally prohibited from doing that.”
With their publishing successes obvious to all who look at the company, and at least seven games in active development at the moment, Private Division seems poised to only go on to bigger and better things. Let’s hope it keeps on being our cool uncle along the way, taking chances on showing us games that we might never otherwise see.