Blackley and three other game industry veterans are forming the Capital Entertainment Group, which will fund and supervise development of games and then sell the finished products to publishers. The approach is similar to a technique used in the movie business, where a production company gets the film made and the studio is responsible for promotion and distribution.
Most game development is handled by publishers who work through development studios that they own or fund. Kevin Bachus, another member of Microsoft's original Xbox team and one of Blackley's partners in the new venture, said that arrangement limits a publisher's access to the best talent and encourages a publisher to invest in safe properties rather than potential groundbreakers.
With access to a full range of independent developers, Capital can come up with the right mix of talent and business sense, Bachus said.
"We scour the planet and we turn up the most exciting, innovative ideas," Bachus said. "We fund the process of developing those games; we manage the process of producing those games."
Capital will start out with a production fund of $40 million to $50 million, Bachus said.
The group already has a deal to deliver two games to Japanese games publisher Sega, Blackley said.
Blackley said histo pursue a new segment of the game industry was born partly from his experience with the Xbox, which wasn't generating the kind of creative, breakthrough game concepts he had envisioned.
"When we developed the Xbox, we thought we were providing this powerful platform for people to create cool games," Blackley said. "Turns out that's not all you need. You need to look at the business side, too, because developing games is a crappy business."
While the money side is important, Blackley said, Capital's main advantage will be the expertise of its partners in production issues such as getting games finished on time and on budget and knowing when to pull the plug on a bad idea.
"The thing that will allow our games to be more successful than the industry average is the production side," Blackley said. "The most important thing for me is creating this little space where there's creativity and freedom combined with enough discipline for a good idea to grow into a great product."
Besides Blackley and Bachus, the Capital group consists of Eugene Mauro, one of the game industry's first developer agents, and Mark Hood, a former executive with game publisher Sierra Interactive.