The game industry of Argentina

Daniel Benmergui was the first to arrive. At the time, he was studying computer science and wanted to make video games for a living. He brought a game development book to mark the meeting point for the group in a fast food restaurant in Buenos Aires. Soon, the others arrived: Javier Otaegui and Andrés Chilkowski, two men in their late teens who had already been making games for some years and who saw a big opportunity in the industry. At that time, the local game development scene was just starting, but almost 20 years later it would become a high-potential economic activity for the country.

In 2016, the Argentinian game industry is one of the largest in Latin America. After Mexico and Brazil, it has the largest consumer market, and according to Miguel Martín, spokesman for the Argentine Game Developers Association, there are 50 studios around the country with more than 30 million dollars in revenue and 2,000 people making games. Most of the activity happens in Buenos Aires, the capital, but there are game communities growing on every province.

The history of game development in Argentina has suffered ups and downs in the past 20 years, and it has been shaped by the economic crisis of 2001 and a perpetually changing political landscape. Benmergui, Otaegui, Chilkowski and their newly formed friendship would be crucial to the future of the game industry in Argentina. That meeting was the start of the three dreaming together.

The first years

One summer morning of 1996, Javier Otaegui opened a newspaper and saw an article about a group of teenagers who won an international prize for making a game in Argentina.

The group was Conde Entertainment Software, a company that, a year before had published Regnum, a real-time strategy game that was the first title released on CD in the country. The game got a wide distribution in retail stores and sold more than 10,000 copies.

Conde Software made a couple more games before shutting down because of economic problems with a game they cancelled called Crisis. But that newspaper article gave Otaegui the motivation he needed. "If someone has already made a game in Argentina, maybe I can do the same," he remembers saying. When he returned home to Buenos Aires that summer, he started his first game: Malvinas 2032, inspired by the conflict between Britain and Argentina for the Falkland Islands in 1982. Malvinas 2032 got released three years later and was an excuse for Otaegui to start his own company: Sabarasa. The timing turned out to be perfect.

In 2001 Argentina suffered an economic depression that caused a political crisis, riots and the end of the peso-dollar exchange rate parity. Until that year, one Argentine peso was equal to a U.S. dollar, so it was difficult for local studios to compete in international markets on equal ground because of their lack of experience.

"The devaluation was kind of a new beginning for the industry," says Otaegui. From that moment, game studios started offering services and pitching projects for a lot less than their foreign competitors, and a very productive era of game development of the Argentinian game industry started. Companies like Three Melons, QB9 and Globant appeared, starting new business models for Argentinian companies.

Three Melons took a more commercial approach and worked specially on advertising games. QB9 focused on the local market through the use of popular brands. And Globant started working as an outsourcing company for Electronic Arts. Since then, most companies in Argentina have tried to make their own games while offering their services externally to pay the bills and gain experience.

Sabarasa was a central player of that success era, working on more than 40 game projects. It hired almost a hundred employees, working on console projects and expanding its business with a satellite studio in Mexico City. But nothing lasts forever.

On December 10th of 2010, the same day of the biggest game development conference in Argentina, Otaegui called everyone in the studio for an announcement: The client they had been working with on three projects hadn't paid. The company had run out of money.

"It was a very sad day for the company and the industry," says Otaegui, who admits his responsibility for having only one client at that time. The studio had been working exclusively for a Latin publisher named Slang on three games and it agreed on receiving full payment and other commitments once Nintendo approved its submissions. However, when the time came, Slang didn't pay, although it released both games in Mexico. One source who was close to the issue at that time and who asked to remain anonymous, says that Slang argued of excessive delays and problems during development, which made it impossible to obtain good commercial figures once the game was out since people were not interested in it anymore.

Some employees decided to stay while others filed lawsuits for unpaid salaries against Sabarasa and Otaegui. Otaegui also looked into a lawsuit against Slang but ran into problems. He needed to pay a percentage of the total amount of the contracts to start the judicial proceedings — that meant he had had to go through the slow lane of Argentine justice. Today his lawsuit against Slang is still running. Former Slang CEO Abraham Bautista declined to comment for this story, citing potential legal implications.

Although Sabarasa tried to continue, the company stopped working on games in 2013. "It was one of the greatest blows to the game industry in Argentina," says Otaegui. It also became a lasting scar for the industry as many former employees of Sabarasa went on to form new companies or join other studios, and they all remember the hard times they went through.

The indies

Ten years after the meeting at the fast food restaurant with Otaegui and Chilkowski, Daniel Benmergui was a full-time game developer. After the 2001 economic crisis, some international companies arrived in Buenos Aires, like the French mobile studio Gameloft. Benmergui was one of its first employees and soon became one of the development leads of the company. However, he was not satisfied with his career.

In 2008, Benmergui stopped smoking, quit his job and became an indie. He had savings to live for a year and began making small Flash games. One of them was Today I Die, a small interactive poem that got nominated at the IGF Awards of 2010. Benmergui got the attention of the international indie scene and got the self-confidence he needed. His next game was Storyteller, a puzzle game that allows the player to add characters to a comic strip and thus change the outcome. It was a new experience and it won the Nuovo Award at the IGF Awards of 2012.

The night he received the award, he finished his speech in Spanish: "I'm here so everyone can also be in this place, even us." Benmergui was talking about the Latin American game community, and that was the moment when he became the most recognizable indie in Argentina and in the region.

While there are indies across Latin America, the number is higher in Argentina. There are monthly meetings across the country so everyone can show their games and receive feedback. One of these events is the Game Work Jam, which serves not to create original game concepts, but to advance personal projects with the help of industry mentors. These jams have enlivened a sense of community across the country, and they have been the basis for expanding the scene outside Buenos Aires.

However, for Benmergui, it's not enough. He thinks the industry in Argentina needs a breakthrough, a hit that others can look at and try to replicate. Panoramical, a video game-like interactive experience by Argentinian Fernando Ramallo and David Kanaga, was another Argentinian game that got critical acclaim but wasn’t a global financial success.Ernesto — the game Benmergui is developing now — is not that game either. "It's a small game," he says. Okhlos, an upcoming game being developed by a two-man team in Buenos Aires and that will be published by Devolver Digital, will also continue the current trend of Argentinian indie games that try to address a niche of players by offering new kinds of gameplay, in this case, controlling a mob of pixeled ancient Greeks through mythological Greece.

But these games, as well as others from studios like Okam, Senscape, Red Katana or Heavy Boat are not aimed at a large group of players and do not have AAA production values. And Etermax, a company that makes casual games like Aworded and Trivia Crack and has more than 200 million installs and 20 million daily active users, is usually seen as an outsider of the local game scene. Benmergui thinks Argentina needs a hit that can sell hundreds of thousands of copies and that comes from a studio involved with the local community. For him, that game could be the rebirth of the classical strategy game Master of Orion.

The big leap

After the wave of problems at Sabarasa, Otaegui received a call from his friend Andrés Chilkowski. The two had remained close friends since that 1998 meeting. They were part of the group that founded the Argentine Game Developers Association in 2004 and were always talking about the needs and opportunities of the game industry in Argentina. So when Otaegui lost his chance, Chilkowski offered him a new one.

Chilkowski was one of the teenaged members of Conde Entertainment Software that Otaegui saw the newspaper article about in 1996, and he continued working with that group for some years. He went on to co-found an online game portal and then, just after the 2001 crisis, decided to make an MMO called Regnum Online with a newly formed company: NGD Studios.

"It was crazy — we made a massive multiplayer game with only seven people. Sometimes we had to lie and say that we were 20 and had a budget five times bigger to sound credible," says Chilkowski, who decided to use a free-to-play business model before it became the rule. Regnum Online was successful enough to keep the studio going for the next decade, and it released other mobile and PC games — even using Benmergui as a hostage in a viral video campaign for one of the games.

NGD's current project is Master of Orion, a reebot of the sci-fi strategy game series of the same name that started in the nineties, and that is currently on Early Access in Steam. It’s being published by current industry juggernaut Wargaming. In Argentina there is a common phrase: "Everything is tied with wires." It means people should try to make things with the minimum necessary resources. This is a rare opportunity for a local studio to have the resources it needs to make a big-budget game. It could also be the big leap the Argentinian game industry has been seeking for years after losing that chance with Sabarasa and after the constant struggle of indie game developers to publish their games and have sufficient visibility.

Chilkowski remembers that, after some meetings, Victor Kislyi, CEO of Wargaming, told him that NGD was very similar to his studio before releasing World of Tanks. They both came from unknown countries in the game industry and had the opportunity to elevate the awareness for their local game scenes.

"We Argentinians have a flaw: We talk too much and rarely finish things," says Benmergui, who always gets asked the question of when is he going to release Storyteller, which is currently on hold. Otaegui adds that "The last decade was important to create a community and learn how to make games, but the next 10 years should be focused on creating great IPs." Master of Orion could finally be that finished and polished project that everyone could admire and try to imitate — the same way Otaegui did when he was a kid and looked at that picture of those teenagers showing an Argentinian game.

About the author: Luis Wong is a freelance game journalist and a game developer. He co-founded LEAP Game Studios, based in Lima, Peru, and currently works for NetEase Games in Guangzhou, China.