Video gaming industry growing in Eastern Iowa

Eastern Iowa doesn't usually come to mind as the birthplace of video games, but that is changing.

Iowa City is home to Budcat Creations, developer of the wildly popular “Guitar Hero,” “Band Hero” and “DJ Hero” video games for PlayStation 3, Xbox 360 console and Nintendo Wii.

In Cedar Falls, Phantom EFX creates and publishes the “Reel Deal” casino card games for Windows-based and Mac personal computers. And Phantom EFX and 8monkey Labs, an independent game development studio also based in Cedar Falls, developed “Darkest of Days,” a first-person shooter video game for Xbox 360 and Windows-based PCs.

And that means potential job opportunities closer to home for students at the University of Dubuque, which offers undergraduate classes in creating video game software.

“We're seeing a lot of opportunities for video games beyond just entertainment,” said Brad Kaldahl, professor of computer graphics and interactive media at the University of Dubuque. “Children are learning math and other subjects using video games that teach while they entertain.”

Three former University of Iowa students who formed the business moved it to Iowa City from Las Vegas in late 2005. Budcat Creations was already a five-year-old producer of video games.

Isaac Burns, who graduated from the UI College of Engineering, ran into former Iowa City resident Jason Andersen in 1998 when they were working at EA Tiburon in Maitland, Fla.

Burns and Andersen left EA Tiburon in 2000 to start their own gaming company in Las Vegas. They were joined three years later by Andersen's brother, Jeremy.

Burns and Jason Andersen initially became involved with software programming during high school. They picked up valuable industry contacts during their work for West Coast software companies.

Budcat Creations, which has about 50 employees, moved to 332 S. Linn St., Iowa City, in January 2006. The company helped create several popular video games, including “Madden NFL 06”for PCs and “Psychonauts” for PlayStation 2.

“Guitar Hero,” which soared to the top of the video gaming world, was developed by Budcat Creations and led to the company's acquisition by Activision Publishing Inc. in late 2008. Budcat's management team was retained under multiyear employment contracts with Activision.

While Budcat Creations has focused on software for personal computers and game consoles, Phantom EFX in Cedar Falls, until recently, developed casino games for PCs. Today, it develops and publishes interactive card, slot machine and casino entertainment titles for PC, Mac and console games.

Aaron Schurman, CEO of Phantom EFX, founded the company in 1998 with Danny Stokes, whom he has known since they were in kindergarten together in Janesville.

Darin Beck, owner and CEO of Barmuda Companies in Cedar Falls, joined Schurman and Stokes as an investor/owner. Business flourished as Phantom EFX games were carried by Walmart stores and other chains.

The corporate headquarters of Barmuda Cos., a dining and entertainment conglomerate with 18 restaurants, nightclubs and lounges, and Phantom EFX were in a warehouse on the Cedar River. That spelled disaster in June 2008 when the building was flooded, destroying offices, furnishings and more than $1 million of two new game DVDs ready for shipping to retailers.

Housed in temporary quarters and software developers' homes, Phantom EFX had new game DVDs made and covers printed to ship to retailers for the 2008 holiday shopping season. Unfortunately, the recession made it the worst sales season in history.

With corporate offices that had served as collateral destroyed, the company's $4 million in bank loans were technically in default. Lincoln Savings Bank continued to work with Barmuda and Phantom EFX, providing funds to keep them running.

“The bank had never recognized intellectual property as having tangible value,” Beck said. “This kind of forced them to take a look at the real value of the company.”

Local and state financial assistance, coupled with tax-free bonds sponsored by the Black Hawk County Board of Supervisors, provided the land and part of the financing for a new 54,000 square-foot, $5.5 million complex at Technology Parkway and Chancellor Drive in Cedar Falls.

Barmuda and Phantom EFX occupy offices in the building along with 8monkey Labs, an independent game development studio, and T8 Webware, which serves the banking industry and Fortune 500 companies such as John Deere, Adobe and Nike.

As Budcat, Phantom EFX and 8monkey Labs grow, they may provide employment opportunities for Kaldahl's students.

“I have a class this semester where the students are developing games that help children with disabilities, which is an underserved population,” he said.

Kaldahl says his goal is to give students the experiences of developing a game and then having it published. He also is talking with Kirkwood Community College, where he has conducted daylong continuing education exploration classes, to offer video game programming courses for credit.