Video games have had an incredible year as we’ve been holed up for the pandemic. Animal Crossing offered a safe island of escape from COVID-19. Cyberpunk 2077 built a sci-fi city of the future to explore. And Fortnite continued its onslaught of Hollywood extravaganza events, now with Marvel heroes.
But the biggest surprise of the year came in September, when Nintendo revealed a totally unexpected game: Mario Kart Live. We’d all seen Mario Kart, sure. But this Live version put you in the driver’s seat of a real remote-controlled car, speeding through your living room, which was transformed into a zany racecourse through mixed reality.
While the game is published by Nintendo, the core technology behind it was built by New York-based Velan Studios, which worked hand in hand with Nintendo to bring the game to market. We’d never heard of Velan before Mario Kart, and for good reason: It was a startup working for four years in stealth. But how did Velan land Nintendo as its first client? It’s a partnership over 20 years in the making.
A startup 20 years in the making
Velan Studios was cofounded by Karthik Bala and Guha Bala, two brothers and industry veterans who first started designing games in high school for MS-DOS. They founded Vicarious Visions in 1991, a game studio that quickly found a niche in official licensing by remaking big console franchises—such as Tony Hawk’s Pro Skater, Crash Bandicoot, Star Wars, and Spider-Man—for lower-powered portable systems such as the Gameboy Color and Nintendo DS.
The megapublisher Activision acquired Vicarious Visions in 2005, which only helped the developer scale its ambition. Karthik and Guha began to consider how new hardware accessories could make their way into games. In 2008, with Guitar Hero mania in full swing, the company released special fret buttons complete with a pick that you could attach to a Gameboy and strum to your favorite songs. In 2011, the studio launched the first Skylanders game. Its premise involves in-game characters you could only unlock by collecting real toy figurines. Skylanders went nuts, generating $3 billion in revenue by 2015.
In 2016, Karthik and Guha walked away from the company they founded. From the outside, it was a surprising move. Vicarious Visions was successful. But the brothers wanted a place to experiment and think outside the successful rubrics that video game companies go back to again and again.
“Leaving Vicarious Visions was one of the hardest things I’ve ever done. That’s all I’ve known since I was a kid,” says Karthik. “But really, the reason was very simple: to create something new. We could have certainly continued on the path we were going on, but we didn’t want to repeat ourselves. That really requires a startup environment.”
“You’re thinking within a box,” recalls Guha. “You have a library of franchises, and it’s really hard to break it down and go back to basics and do something fresh. We said, ‘Let’s start from scratch and see where new experiences would take us.'”
Starting from scratch meant founding Velan in 2016, a studio designed specifically to discover new ways to play. The duo started with $7 million in Series A funding, most of it raised from their own investment company. “Our business plan was simple. Step one, build an awesome team. Step two, find magic in something new the team was super passionate about. Step three, find go-to-market strategy and who partners might be. Step four, build and ship it,” says Karthik. “We wrote it on an index card, and that’s all we wrote.”
Velan started with four people in 2016. By the end of the first year, the staff had grown to around 25.
Building from scratch
“Year one was all about experiments. We were looking at lots of different techs and seeing, ‘Huh, is there something here?'” says Karthik, noting that they were looking at how hardware in particular could change video games. “It was mid-2017 when we put together an RC car with drone parts and drove it around.” The video feed looked like an old VHS tape, but that was okay.
“The simplicity of that speed racer fantasy in first person was really compelling,” says Karthik.
The brothers had built video game racers before. But it was a new challenge to figure out how to get a mechanical vehicle, operating on the real physics of floors, to feel like it was driving as a video game car would. They also noted a big problem of digital latency. Drone racing as it stands today uses specialized, low-resolution analog video transmission for the sake of speed. That’s why their first prototype looked like it was streaming in VHS quality. But if you could control a vehicle digitally, instead, you could suddenly connect it to any device on Wi-Fi with a crisp image. And with that digital signal, it opened up the doors for the possibility of computer vision and mixed-reality overlays.
“We said, okay, those are hard problems, let’s go after those,” recalls Guha.
The duo insists that when they’d first been playing with remote control cars in the studio, they didn’t know what would come next. But as they began to polish their wheeled drone, they knew just where they wanted to take it.
“We had a relationship with Nintendo for about 20 years from working on Gameboy Color in 1999,” says Karthik. “It was the obvious first choice in talking to Nintendo and saying, ‘What the heck, let’s see if we can do Mario Kart.'”
So the brothers flew to Japan with their prototype to meet with a team from Nintendo. At that time, it was mostly just the vehicle, driving with a first-person perspective with that sensation of a video game. There was very little in terms of mixed reality.
“Whenever showing something the team has created for the first time outside the studio, there’s a level of nervousness. This was no exception. You just don’t know what the response is going to be like,” recalls Karthik, adding that as the demo continued, Nintendo’s own team didn’t want to put the controller down. “That was a very special moment.”
The two companies struck up a deal. And even Velan isn’t at liberty to discuss a lot of the development. But as Velan fixed core technology issues, Nintendo pushed the company to ensure it felt like a zany Mario Kart game.
“Nintendo in particular is super curious about new play patterns, so as we were looking at new things, they could help us further think about it,” says Guha. “We’ve learned so much more now that Mario Kart Live is out than we could have theorized.”
Nintendo hasn’t published the sales figures of Mario Kart Live. First-week estimates reported 73,918 unit sales across Japan—a sizable, trend-setting market for the industry—making it the country’s top-selling game at launch. The game has also sold out on Amazon’s U.S. site into the holidays. Since the release, Velan has teased a new game coming sometime in the future with EA. It’s built atop Velan’s same Mario Kart Live engine but is completely different from Mario Kart Live. There’s no mixed reality. There’s no hardware. All the studio will say is that it’s an extremely accessible online game with a new play style.
So far, so good for Velan Studios. It’s turned two experiments into products with two giant game publishers.
But the real challenge ahead seems to be whether or not Velan can continue its culture of experimentation while also shipping big franchises. As for whether the brothers will decide to raise more money for expansion and cushioning for long-term R&D, they’re currently still deciding. “We’ve got a long-term outlook on things, but we are coming to an inflection point. With our first [two products underway], we have some big choices in front of us,” says Karthik.