We're here at the MIT Business in Gaming conference this afternoon to watch Ken Levine – who holds the title trifecta of "co-founder, "president" and "Creative Director" at 2K Boston (née Irrational) – take the hotseat in a Q&A format (that, for some reason, is being billed as a "keynote"). No bother – given an opportunity to hear the BioShock developer discuss the current state of the industry (not to mention regaling us backstage with amusing yarns about Strauss Zelnick's protein-centric diet), we took our spot in the front row, laptops at the ready.

After an introduction by one of the show's sponsors (get off the stage, bub!) the Q&A was handed over to MIT graduate student Dennis Fu, who peppered Levine with a series of questions inspired by the day's panel topics: digital distribution; in-game advertising; MMO business models; and serious games. Fu stepped right into the deep end, asking Levine "What can you tell us about BioShock 2?" As he's said before, he's keeping himself intentionally in the dark so that he can play it "as a fan." "We're sort of keeping ourselves at a distance," he explained.

"We made System Shock 2 and nobody bought it. And that was heartbreaking."

Not talking BioShock 2, eh Levine? How about this: "What made BioShock so successful?" Levine self-effacingly responded, "I'm probably the worst person in the world to answer that." He points to his major influences: notably Ultima Underworld and System Shock. "Games that are first-person shooters but also really put you in a space." BioShock was able to "for the first time popularize that gameplay in a commercial space." Not so popular? "We made System Shock 2 and nobody bought it. And that was heartbreaking." Fu conveys our sentiments exactly: We bought it Ken. We bought it. Levine hopes that, now that the "basic concept has been proven from a commercial standpoint" other developers will "pick up the mantle and create more complex games" in the vein of BioShock.

So, what else deserves some of the credit for BioShock's success? The world of Rapture, not to put too fine a point on it. A world that 2K Boston invested a "huge amount of energy and loving detail." Levine says, "We try to tell stories in every nook and cranny of the space." The end result – a game his parents can better relate to. Citing Freedom Force, he explained his parents would say, "'Great dude, that's awesome.' But they're in their seventies. They don't relate to that experience." Fair enough – and he's evidently got awesome parents, dude! However, with Rapture, "that barrier was dissolved." It's not "popping caps in people's asses in Counterstrike" or generic "orcs and aliens" but something unique and immersive.

"The days of new people getting piles of money to make games are pretty much gone, and the mid-range doesn't exist anymore."

Next on Fu's punchlist: Levine's beginning in the gaming industry at Looking Glass Studios. Levine recalls the developer as being like a "game design university," a compliment that communicated the best, and worst, elements of the company. As a university, Levine insisted it was unparalleled. If you had a time machine, he insisted, "go back to 1995 and beg for a job at Looking Glass." However, it also had to be a business. "The thing that made Looking Glass great was also the thing" that affected its ability to be a viable business. It "didn't anticipate some of the changes coming in the industry," Levine laments. So after just a year and a half at the studio spent working on Thief – which was originally going to be a game about a Cold War spy fighting zombies or as protagonists Mordred and Morgana doing battle with the villainous King Arthur and Merlin – a far less sophisticated (his word!) Levine left to form Irrational Games ...

And its first project was canceled after just 30 days. Sure, not a great start, but consider its followup project, built for former employer Looking Glass: System Shock 2.

Moving on, Fu asked Levine about his feeling regarding PC gaming versus console gaming, and the future of PC gaming. "I think it's very common in any industry to overcorrect," Levine said. "There is a whole segment of PC gaming that is pretty much in danger of going extinct." What kind specifically? "The kind of games I came up making," he admits. He calls it the "barbell" model where on one end, you have expensive juggernauts like Call of Duty or World of Warcraft and all the way on the other you have Xbox Live Arcade games, or the stuff you'd find on Newgrounds or Kongregate. But that mid-range game, he fears, is gone. "The days of new people getting piles of money to make games are pretty much gone, and the mid-range doesn't exist anymore."

In regards to console gaming, he gives credit to Nintendo for taking the risk of not following the pack with the Wii and "trying something new and "being ahead of the curve." "Any business model that's already successful means you're already too late. You've missed the boat," he says. "Any moron can get on a boat, but not any moron can make the Wii."

"I got into the industry as an independent developer because the timing was right. I got out because I thought the timing was right."

With the final question, like one last lunge for the potential gold sitting right in front of him, Fu asks, "What are you working on right now?" "X-COM," Levine says.

... did you guys really fall for that? Levine actually said, "Uh. Uh uh. Something. Awesome. Something mysterious and awesome. But that's about all I can say." And with that, we're onto the audience questions. The first one again tiptoed around his latest project, asking what kind of development trade-offs are involved with post-release DLC. Levine admits that 2K Boston "didn't pay that much attention to that process, because we were sort of working on the next thing." He feels it's "not something that can be ignored or should be ignored" and though he "didn't think much about it on BioShock" he says that's different for its next project. "I can't go into specifics about how we think about it" he explained – that would reveal details about its latest project – but "we think about it a lot."

Asked about the BioShock movie, Levine said he was happy to give director Gore Verbinski and writer John Logan the freedom to make it their own. "At the end of the day, if it's something I run, I have to run it completely." He cites a similar working relationship with BioShock 2 developers 2K Marin. He's also not worried about the movie industry's history of poor video game adaptations. "Look at comic books," he says. They suffered decades of poor adaptations until movies like Spider-Man 2 and X-Men 2 came along. As for Gore and John? "They think [BioShock] is relevant. They think it matters."

His take on being an entrepreneur: "You have to not have a choice." Some people need to branch out on their own. "I got into the industry as an independent developer because the timing was right. I got out because I thought the timing was right." He admits that a "publisher isn't going to invest $15m" into a developer they don't own.

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This article was originally published on Joystiq.