The“quiet revolution” of Game Industry Outsourcing Enjoys Loud Buzz

Game development outsourcing is expected to grow to 2.5 billion (US) by the year 2010, representing 40% of estimated game developer's budgets.

The Breakdown

ScreenDigest's press release on March 6^th heralded the release of the most thorough study on Game Industry Outsourcing to date. Their charged report of the tremendous pull of development dollars heading external from onshore game developers is firm evidence of the changing development models in our industry.

This dramatic shift in where development dollars are spent is a result of several factors. One, the arrival of new consoles, coupled with the increased ability of those consoles, feed increased consumer expectations. “...games developed for the new generation of consoles will increase by 50% - mostly driven by a rise in art requirements and the requisite support for high definition.”

The report states that most publishers and developers will be able to stem the increased cost to 20% through outsource relationships with specialist studios - able to handle the needed bandwidth at a reduced cost. However, reduced cost introduces additional risks and procedures foreign to developers accustomed to handling everything internally. The report states you still “get what you pay for in the trade-off between price and quality, but the real costs of outsourcing are often below the line. This is forcing the industry to undergo a fundamental shift towards stronger project management skills...”

The report estimates a huge increase in external demand for quality art and animation. Which will outgrow the current supply in the overseas market. The report predicts the result of this increase in demand will result in “rising prices, continued suppression of the number of new titles in development, and increase of financing into the games services sector, and a number of new market entrants.”

This release can be located, purchased, and downloaded at www.screendigest.com.

ScreenDigest's press release can be read at www.screendigest.com/press
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OutsourceReport's Take : What This Report Means For The Gaming Industry

Outsourcing, though currently in wide use throughout the industry, has yet to be deeply discussed by many publishers and developer management. The publishing of this report may help executives and development management to reassess internal development strategies and prepare development models to take advantage of the turning tide. As noted, this fundamental shift in product development will be most widely demonstrated through the creation and maintenance of core product teams, responsible for creative preparation and organization of product, and supported by a large number of educated management overseeing external efforts.

Game publishers with entrenched development procedures may be at largest risk as they struggle to evolve with the industry. Also, developers too tunnel visioned by current projects and the impending bottom line to react to an evolving industry may suffer as well. Others who have recognized the encroaching opportunities will have a strong advantage over their peers.

Related to development procedures is the lack of educated managers in the industry. Developers must commit to improving internal management to build successful development strategies and oversee external initiatives competently. Management must be able to quickly assess outsourcing needs and opportunities, build mutually beneficial relationships with development partners, organize and orchestrate processes, and quickly address problems for success in outsourcing efforts.

In addition, it is expected that there will be an increase in the number of small onshore and offshore service providers who will enter the industry supplying expert services in one particular facet of development; such as a specialist animation shop, or a specialist character modeling facility. One interesting development strategy which may emerge would be realized by directors of development finding a niche in orchestrating a single product's development to many independent outsource providers. Directors would ensure they get specialist expertise in each area of that product's development while maintaining a cohesive end product through proper preproduction and external management; much like film and other entertainment industries.

The other side of the spectrum will be a drive towards more focused creativity within developed games downplaying actual content. I.e. a focus on a contained gameplay experience instead of the sheer amount of original assets. These games' limited assets need not be any less stunning visually (and will probably become quite creative in terms of design) they must simply be more creative about how assets are generated and utilized. Most will likely feature creative gameplay, a voracious reuse of a limited supply of art assets, procedurally generated assets, end-user created art, game design, and gameplay, and the like. It is expected to see an increase in this type of market usually dominated by independent and casual developers.

OutsourceReport Jonathan Hales March, 9, 2006