A New Front in the Console Wars

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And though still an independent company, the group of eight young designers and programmers (average age: 24) is currently housed within the gaming giant's glitzy Santa Monica (Calif.) headquarters as part of a deal to allow them to focus on their creative output and ease the pressures of starting a new business.

"No publisher would give two recent students the millions [of dollars] required to make a typical $60 game," says Santiago, the company president, of the hookup with Sony. "But digital distribution is allowing different kinds of games to get out there and attract new audiences." She adds, "Many games on the market right now offer experiences only teen males can really enjoy. We are trying to saturate the spectrum of the video game medium with titles that make you feel, think, meditate, or relax."

In other words, they aim to create games that elicit complex emotional responses from players rather than simply challenging them to rack up points or advance to higher and higher stages. Santiago and Chen call their brand of game design "core gaming," creating titles that overlap in appeal to both hard-core and casual gamers but are also targeted at so-called "dormant" gamers, players who prefer to play less time-consuming but nonetheless compelling interactive games. A 2006 study released by research firm Parks Associates estimates that about 26% of gamers in the U.S. fall into the category, yet it's an area that's still relatively untapped by developers, publishers, or designers.

Praise From Industry Insiders

Thatgamecompany's first title for Sony PlayStation 3, its first commercial release, was published in February, 2007. In flOw, players guide an amoeba-like creature through a soup of gauzy colors as it grows in size and changes shape to pulsing mood music. Eschewing game clichés for a simple premise and artistic framing, flOw soothes the senses rather than electrifying them, and earned numerous best-of-the-year nominations, including a British Academy of Film and Television Arts innovation award. A free, flash-based version of the game has been played some 3 million times online, a whopping audience for an unadvertised piece of freeware. (Thatgamecompany won't reveal the number of PlayStation downloads.)

In attitude at least, flOw follows on from a 2005 title, Cloud, designed by Chen and supported by a $20,000 innovation grant from USC, which became a viral hit, generating some 300,000 downloads in three months and repeatedly crashing the university servers hosting it. Both games scrambled traditional play, and earned effusive praise from industry insiders. "This type of play is very different from the norm," says Chen, now creative director of thatgamecompany. "It has nothing to do with violence or conflict but is purely intended to evoke positive feelings and imagination."

A New Way of Thinking

The approach also echoes broader design trends within the gaming industry that are enabling companies to set themselves apart from competitors while attracting new gamers. Nintendo's Wii console has been hailed for its use of motion sensors to forge new gameplay frontiers (BusinessWeek.com, 11/27/07). Some of 2007's holiday top sellers, such as the Harmonix guitar and drum set-equipped music simulator Rock Band (BusinessWeek.com, 10/10/07) or the literature-influenced BioShock shooter by 2K Games also emphasize more creative elements.

Already, thatgamecompany is sharing the spotlight with a number of other small outfits such as The Behemoth, developers of the Xbox Live hit Alien Hominid, and Queasy Games' Everyday Shooter for PlayStation 3. All seem well placed to take advantage of the growing interest in the market and the new genre. "More and more, people are thinking about how games are made, putting more thought into the design up front," concludes 1Up.com's Leone. "Lots of developers are stopping to ask: Why are we making people progress through levels in the first place?"

View a slide show of thatgamecompany co-founders' favorite titles.

Matt Vella is a writer for BusinessWeek.com in New York.