After developing Alice: Madness Returns in 2011, game designer American McGee shifted focus from console development to free-to-play gaming. His Shanghai-based independent video game studio, Spicy Horse, is currently working on three titles: Bighead Bash, Crazy Fairies, and Akaneiro: Demon Hunters.

We spoke to McGee about his company's transition to free-to-play, what next-generation consoles need, and his thoughts on the Ouya craze.

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Game Informer: How big is Spicy Horse now and how many projects do you have in development?

McGee: 50 people with 3 original games in development. Many in the company have been with the Spicy Horse since we started back in 2006. It’s a solid group of developers, these days mostly made up of local Chinese with a handful of foreign expats. In the past we relied on external outsourcing for the production of our 3D assets but these days all production is handled internally. It’s a very agile team inside a development environment where an individual artist or programmer might jump between all three projects over the course of one week.

Through adherence to process we’ve managed to keep our projects on schedule while maintaining high quality of life for everyone; that translates to almost no crunch, worked weekends or other ‘schedule failures’ in 6 years of development across multiple titles.

We’re seeing some big names shift focus to free-to-play gaming, like Crytek and David Jaffe. Does that speak to the opportunity free-to-play gaming has or the struggles of the current console market?

The struggles and opportunities are two sides to the same coin. The shift isn’t just among the developers but is also being witnessed within the audience. Though the console market extracted two decades of profit and mindshare from Western developers and consumers, it was unsustainable from inception. Looked at from the perspective of external markets where consoles aren’t the foundation of the gaming ecosystem, the idea of physical media (discs) and fixed location gaming (consoles) now seems anachronistic.

But it’s worth examining where the money flowed in a market where consoles dominated and how they helped consolidate power among a handful of publishers. The transition we’re now seeing is a revolution of the model that will lead to greater freedom for future publishers, developers and consumers. 

How much more profitable have your free-to-play games been compared to your past console releases? Can you give any context?

Earning out on a console title is like digging out from under an avalanche. If you don’t get out from under the advances within a very short period of time it’s all over. F2P offers an opportunity to release something into the wild and improve it continually until it returns a profit. Making good on the opportunity is in no way guaranteed, but the option is there. This all being the case, we’ve already seen our online F2P games generate more profit and a better ROI (return on investment) than our console title (Alice: Madness Returns) ever did (or likely will). And we expect to continue making improvements to the game which will increase the gap between the two types of products. 

Ultimately, is free-to-play the future of gaming? Or do you imagine we’ll still have $60+ games and other business models, too?

I think cloud gaming is the future – that being play anywhere on anything with client-server backend to support social, multiplayer, updated content, consumer-developer connectedness, the possibility of in-game purchases, etc. Static games locked on physical media without the ability for those things will be unable to compete effectively in the future. Whether or not consumers are willing to pay $60 up-front for such a game without a demo or free taste of some sort – hard to say. That’s more about consumer-developer trust and relationship than a particular business model or platform.

What was your experience like working with EA Partners for Alice: Madness Returns? Do you feel the game was marketed as well as it could have been?

My theory is that large, box product publishers tend to pre-select the titles they feel will benefit most from massive marketing campaigns and then push mountains of marketing dollars towards them regardless of the quality of the end product. Other titles are assigned fixed marketing budgets at amounts that look good to shareholders but effectively guarantee minimal return for the product except in the rare instance of a breakaway hit. This sort of model is the logical result of a market in which shelf space is limited both physically and temporally. It’s also a self-perpetuating model which punishes publishers and developers (not to mention media) who try break-out strategies.

My point in explaining all this is to say as nicely as possible that I feel EA marketing did all they could within the broken system that is wrapped around the marketing and distribution of box product games. Working with EA Partners was, on average, acceptable. 

What do you think Sony and Microsoft should focus on changing the most with the next-generation consoles? It seems like console gamers today want more than just better-looking graphics.

I’ve said all along and was reinforced in my convictions at this year’s E3: Input-output (I/O) peripherals are the future. Wii proved that an ‘underpowered’ console could be in (win?) the race during the last cycle because it radically altered the way we interface with our games and media. I firmly believe that the next contest will be decided by who can push the I/O boundaries again.

If I were a console maker I’d be knocking down the door at id Software to make a deal with Carmack for his head-mounted, 3D, motion tracking display. Better yet, if I were Apple I’d buy the whole company (and publisher; why not?) outright for access to the tech. That sort of tech is going to be a game-changer.

Do you ever envision returning to console development, or are the costs and risks simply too high?

Our studio wouldn’t consider going back to traditional console development but I do think we’ll end up being in the right place when consoles come back to us. By that I mean we fully expect the definition of ‘console’ to shift radically over the next two years. Our consoles will become our mobile devices (or if you prefer: our mobile devices will become our consoles). We’re seeing the shift taking place already and the development pipeline and technology we’ve built at Spicy is ready to ride the new wave. 

What are your thoughts on Ouya? Will you consider supporting the platform? Can it change the console market at all?

Being based on the same chipset the major tablet/phone makers are cramming into their lineup of existing/future mobile devices it would seem the major benefit is the included console controller. But device makers are ramping-up production on “console” controllers for iOS and Android (with OS support for both coming soon). This brings me back to my original question about the long-term viability of traditional consoles – why would I want my gaming content tethered to a TV and stuck in my living room?

Current-gen Tegra-powered tablets can be plugged into a big-screen display/7.1 audio setup via HDMI (and connected to a 360-style bluetooth gaming controller). The difference with Ouya is what? That it doesn’t have a built-in display and can’t be taken on the bus? Not sure I get it, but then again I might be missing something. 

What excites you the most about the games industry right now?

It feels to me that with the rise of mobile gaming and ubiquitous networking (social, multiplayer, cloud) alongside pure digital distribution we’re seeing significant change for the first time in 20 years. I look back to the era of online, multiplayer PC gaming (DOOM, Command & Conquer, Ultima Online days) and see an absolute fork in the road with the rise of console gaming – a wrong turn, in my opinion. We’re now back on the right path with developers being able to create and distribute directly to their audiences, with console development (in the current mode) having reached a critical peak and the traditional publishing model making way for a multitude of new paths.