'It was the hardest time we've ever gone through': How Fishlabs came back from the brink

'It was the hardest time we've ever gone through': How Fishlabs came back from the brink
Craig Chapple

By Craig Chapple

May 14th 2014 at 11:10AM

Executive producer Michael Krach tells us how the developer survived financial meltdown and what's changed since Koch Media's acquisition

In October last year, Galaxy on Fire developer Fishlabs was facing what appeared to be serious financial difficulties as it laid off 25 staff and also went into self-administration.

At the time CEO Michael Schade called the moment he was forced to make redundancies as "the most difficult day for me and Fishlabs co-founder Christian Lohr in the history of our studio".

The Developer had admittedly struggled to adapt to the free-to-play market, and was struggling to keep up with a changing industry and consumer expectations.

Come December though, Koch Media stepped in to acquire the studio as it looked to make moves in the mobile gaming market, and promised to safeguard jobs of the 52 staff still employed at the studio.

Fast-forward to May 2014, Develop asks Fishlabs executive producer Michael Krach just how the developer is faring now after surviving financial turmoil, and what, if anything, has changed.

What problems did Fishlabs run into before Koch Media’s acquisition?
Actually, nothing out of the ordinary for smaller independent studios these days. About midway through 2013, it became obvious that our monthly revenues were no longer high enough to fully cover our expenses. After an initial financing round in 2004, we had been able to pay all bills and cover all costs directly out of the cashflow of our live games for almost nine years. After we missed the opportunity to adapt to the free-to-play boom early on, however, the situation changed rather quickly and drastically. And ultimately we had to file for insolvency.

The following months marked by far the hardest time that our team had ever gone through, with layoffs, salary cuts, crunch times and the Damocles sword of not finding a new investor in time always hanging right above our heads.

Yet, in the end it all came to a positive conclusion, when Koch Media stepped in and acquired the studio, thus enabling us to continue as the dedicated mobile studio of Koch Media’s premium publishing label Deep Silver.

What has changed, if anything, following Koch Media’s takeover of Fishlabs?
Following the acquisition, we’ve been rebranded – and reborn, so to say – as Deep Silver Fishlabs. While not much seems to have changed on the outside, joining the Deep Silver roster did indeed bring forth quite a few changes for us, all of which are improvements.

Being part of a big, established company that operates on an international scale gives us the financial security and resources we need to plan ahead, set up differing teams and work on various projects simultaneously.

And, of course, being connected to a name as big as Deep Silver also helps a lot in the recruiting of new talent, because everybody in the industry is familiar with the brand and its respective IPs, such as Dead Island, Saints Row or Metro.

Furthermore, we are in the process of entering the publishing business. That’s something we’re really excited about as well, because it’s a fantastic opportunity to collaborate with very talented people and put our expertise and experience on the mobile platform into practice in a fresh context.

There are a lot of vacancies at the studio currently, does this mean you’re looking to significantly expand?
Yes, we’re hiring again! In the long run, we want to have several project teams working parallel on differing titles, spanning across a variety of genres, platforms and IPs. All in all, we want the studio to grow to a total of about 90 people. We believe that this is a good size, because on the one hand it leaves us with enough in-house talent to put our ambitious plans into practice, but on the other hand it also leaves the studio small enough to keep a friendly, familial atmosphere.

The following months marked by far the hardest time that our team had ever gone through, with layoffs, salary cuts, crunch times and the Damocles sword of not finding a new investor in time always hanging right above our heads.

Michael Krach, Fishlabs

Is there enough talent in Hamburg to support the number of studios in the area? Or do you have to look abroad?
Hamburg has a very vivid gaming scene and we have already recruited a lot of local talent in the past that has either worked for another games studio and then moved on to look for a new challenge, or came straight from one of the city’s varying schools or universities.

However, with so many quality developers being located in one and the same city, there is also quite a bit of competition and consequently not all applicants will end up signing contracts with your company – even if you’d loved for them to join your ranks.

Hence, we do not limit ourselves to a certain region in our recruiting endeavors. Instead, we’re looking for amazing new colleagues everywhere, be it regional, national or international. If you want to be – and stay – on top of your game, you have to leverage every resource you've got to its full extent, and not just some of them.

Are you fully focused on free-to-play offerings on mobile now? Is there room anymore for premium games?
There’s no denying that free-to-play is currently the business model that works best for most kinds of mobile games. So it shouldn’t come as a surprise that a fair share of the titles we already have in live operation or in the production pipeline will leverage free-to-play mechanisms in one way or another.

But there are also still a couple of genres for which the premium model works mighty fine as well, so I think it would be a bit hasty to proclaim that we’ll never tackle a full-fledged paid title again. Instead, we’ll keep a watchful eye on the market’s upcoming trends, shifts and developments, and pick whatever solution fits our needs and current situation best. At the end of the day, the monetisation model has to fit with the game, and not the other way round.

Just how difficult is it to make it in mobile now, even with an established IP?
The market’s incredibly crowded and though it still bears enormous potential, it gets harder and harder for the individual studios to get their products seen. Unless you either have millions of active players at your disposal, to whom you can cross-promote your new titles, or unless you've got millions of dollars in the bank, which you could use to buy traffic from ad networks, you’ll have a very hard time getting your servers filled and your game positioned in the top region of the download charts.

If you look at the top grossing apps in any major territory, nine out of ten of them will be games by the same five or six major studios that keep occupying these spots for most of the year. These studios have positioned themselves so well over the past one or two years, that it seems next to impossible now for someone from the 'outside' to challenge their supremacy.

But on the other hand, the growth of the audience is still enourmous, so you have to give it a shot anyway and keep your ambitions up. In the long run, we want to establish Deep Silver Fishlabs as an international Top ten developer of high-end 3D games for smartphones and tablets. And given our expertise and experience in that field, I’m really positive that we can indeed pull it off and achieve that goal.  

An established IP with a loyal fan base and a lot of recognition value definitely helps to do the trick here, but it’s no free ticket to overwhelming success. In an industry as fast-moving and unpredictable as ours, you can never rest on your laurels too long. Instead, you have to release kick-ass content and high-quality products on a regular basis in order to keep your audience hooked, engaged and growing.

Another challenge that mobile developers have to deal with is the unpredictability of a market constantly in motion. On an almost daily basis, new standards are being set, new devices introduced and new channels opened. Therefore, you have to stay on your toes, listen to the news and adapt to new realities literally on the fly. As soon as you stop looking ahead, you will be outstripped by a more attentive and ambitious competitor.

What are you working on now?
Our biggest project at the moment is Galaxy on Fire - Alliances, our first multiplayer strategy game, which went live on the App Store in late 2013. Besides the daily routines such as backend improvements and maintenance operations, we’re currently particularly busy with the incorporation of additional localisations and the porting of the app to additional mobile platforms.

Parallel to the works on GOFA, another project team is also working on a brand-new, hitherto unannounced game in the Galaxy on Fire universe, and we’ve also started recruiting talent for our first mobile adaption of a popular Deep Silver IP.