As former members of the team that made Microsoft’s Flight Simulator and Train Simulator, the people at Seattle startup Cascade Game Foundry understand the disappointment felt by many fans after the Redmond company disbanded the internal group last year, leaving the future of the franchises in doubt.

Their new, independent company is not reviving those projects, at least not in the same forms. But it is hoping to appeal to many of the same fans. And more than that, it's aiming to expand the market for advanced PC-based simulations, making them accessible to more people.

Cascade, based in Seattle’s Belltown neighborhood, is developing a suite of virtual travel games that will let people explore locations around the world from their homes.

“We want to build upon the core of what makes simulations attractive -- so build upon that past -- but let a much broader audience participate,” said Kathie Flood, one of Cascade’s founders, former Train Simulator lead program manager.

The story behind the startup’s formation provides new insights into one of the more startling decisions made by Microsoft during the recession last year. But it’s also an example of people in Seattle’s tech community rebounding from the recession by trying a new approach, in a different setting -- using the downturn as a chance to create something that otherwise wouldn’t have materialized.

Cascade was formed by a small group of veterans of Microsoft’s Aces Studio after that team was closed by the Redmond company in early 2009, eliminating their jobs. At the time, Microsoft was grasping for ways to cut back, to show Wall Street it was serious about keeping its profits up in the face of the tough economy.

The decision to shutter Aces surprised its customers and veterans of the industry because of Flight Simulator’s long and profitable history, dating back to the creation of an early flight simulation program by independent developer Bruce Artwick in the 1970s. Microsoft obtained a license to port the game to IBM-compatible PCs in the early 1980s.

A divided customer base

As the modern-day Flight Sim development studio, Aces was part of Microsoft’s Entertainment & Devices Division — the company’s video-game unit — but its business was also driven by the underlying “ESP” simulation engine, marketed to defense contractors and business customers. Coupled with Flight Sim and Train Sim, that gave Aces a divided base of consumer and commercial customers, not fitting neatly into any one area where it might have been better protected from Microsoft’s broader corporate cuts.

Lockheed Martin has since licensed ESP from Microsoft, with rights to develop the platform, solely for commercial purposes. But that’s no solace to traditional Flight Sim fans hoping for new retail versions.

“You can imagine I was pretty devasted by their decision,” said François Dumas of FSAddon Publishing in the Netherlands, which markets add-on technologies and content for Microsoft Flight Simulator. There were rumblings of potential changes in advance of the cuts, Dumas said, but “when it happened in the end it was a pretty big blow to all of the flight simmers in the world.”

Apart from frustrating one of Microsoft’s most loyal communities of customers, the closure of Aces seemed inexplicable from the outside because Flight Sim was literally a showcase for Windows, Microsoft’s biggest business -- showing the benefits of upgrading to the latest Windows PCs, with high-end processors and graphics chips to show off the details of the virtual world and the complexities of the simulated aircraft.

Microsoft touted Flight Simulator X as the "graphical benchmark" for games on Windows Vista.

There are recent signs that Microsoft itself may be revisiting the Flight Sim franchise -- but in a different form. A job posting on the Microsoft careers site seeks a testing engineer for a “new project” identified as “Flight Sim LIVE,” a “unique experience in the video game industry.” The listing describes the project as a PC title that would be playable on Microsoft’s online gaming system.

Microsoft declined to offer any further details, but it said in a statement this week that last year’s closure of the Aces Studio was “part of a strategic decision to focus resources on the development of new entertainment experiences.”

Until details of any new game are announced, it’s not clear if it would satisfy the hard-core Flight Sim fans looking for a proper update to the traditional franchise.

The flight simulator market now

In the meantime, many Flight Sim fans are looking elsewhere.

“We were shocked when Microsoft closed Aces,” said Randy Witt, who works in sales, marketing and customer service for Laminar Research of Columbia, S.C., which develops and markets the competing X-Plane flight simulator.

At the time Microsoft made the decision, the X-Plane business was experiencing its best year ever, despite the recession. Flight simulators “seem like a very viable market to us,” Witt said. And business has picked up further since Flight Sim development stopped. Laminar has also expanded beyond PCs with mobile versions of its flight simulator for devices including iPad, iPhone and Palm Pre.

Although several members of the Cascade team have experience working on Flight Sim, the Seattle startup appears to be headed in a different direction. Cascade hasn’t formally unveiled its games, or a release schedule, but early indications suggest its initial travel games won’t focus on aviation simulation.

Instead, the snippets that the company has shown behind closed doors at game conventions include an interactive trip down a realistic train corridor, from Seattle’s Carkeek Park to an area near the Ballard Locks, and an immersive underwater diving experience in Micronesia, as small examples of what’s to come. Flood and Cascade co-founder Rick Selby were both on the Train Simulator team, Selby as the lead designer.

In that way, some hard-core Flight Sim fans haven't been encouraged by what they've picked up about Cascade's plans. "What we really need would be a successor to the flight simulator that we have today," with a new underlying engine updated for the modern era of computing, said Dumas, of FSAddon Publishing.

Plans include in-game social networking, marketplace

Train Simulator fans are a smaller group but in many ways just as passionate. For them, the closure of the Aces Studio last year was particularly frustrating, because the team had been in the midst of work on Train Simulator 2, the first major update to the franchise since the original Train Simulator release in 2001.

Cascade's games will seek to appeal to casual gamers and hard-core simulation users by using “sliders on reality” to let people adjust the complexity of the controls, Flood said. The games will also include social networking elements and an in-game marketplace that third-party software developers will be able to use to sell add-on digital content and technologies to users of the games.

The marketplace would be particularly interesting in the context of a modern PC train simulation, because model train enthusiasts were very early adopters of the whole “microtransaction” concept -- buying new trains and accessories for their sets.

The startup, self-funded thus far, has been talking to publishers about ultimately bringing its games to market, most recently at the E3 video-game convention and in follow-up discussions. Cascade has four full-time employees, but fifteen people overall working on its projects in various capacities. Almost all of them have some sort of past connection to Aces.

One concern after the closure of Aces was the loss of the “tribal knowledge” among the people there, said Hal Bryan, who worked previously at Microsoft with the job titles of Flight Simulator "community evangelist, supergenius and notary public." He is now an online community manager for the Experimental Aircraft Association in Oshkosh, Wis.

Based on that concern, he said, it’s encouraging that some of the former Aces members have come back together in the form of Cascade Game Foundry.

“Just seeing some key people there, friends and former colleagues that have a lot of momentum behind them, it gives me hope for the genre as a whole,” he said, “whether it’s involving aviation or just simulations across the board.”

Flight Simulator X cockpit image via Microsoft. Cascade Game Foundry images courtesy the company.