Games developers turn to outsourcing to save industry

Screen Digest: A quiet revolution is transforming the games industry as developers turn to outsourcing to control spiralling next generation costs. A sea change in games development that is resulting in significant expenditure being shifted to outsourced services providers, many located in Eastern Europe and South Asia. This market growth is being precipitated by the arrival of new games consoles from Sony, Microsoft and Nintendo. Average games development costs have spiralled upwards and threaten to undermine industry profitability. If unchecked, production costs for 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. Every transition to a new generation of consoles is painful, but this one is proving much more difficult and more expensive than before. Outsourcing is one of the few effective strategies in use today by the world's largest games studios to keep costs, particularly resource costs, under control.Publishers, console manufacturers and developers will be able to cap rising costs to 20% by keeping team sizes stable and outsourcing large projects to specialist outsourced studios. Outsourcing is already common – it is estimated that 60% of games studios outsource to some extent today, with this figure rising to 90% by 2008. Outsourcing is in wide use today, but it is not a magic wand. You 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, which have been lacking in many organisations. Outsourcing's common pitfalls include low quality delivery, and lack of due diligence and poor briefing by clients. Benefits include the reduction in development costs, accessing a flexible and temporary resource base, and focusing staffs work on higher value work. Although there are just enough outsourcing providers to supply today's market, demand for quality art and animation will soon outstrip supply by experienced outsourcing providers who can supply the large teams of artists required for next generation development. The majority of these experienced providers are based in Eastern Europe, South Asia and the Far East. The result of this undersupply will be rising prices, continued suppression of the number of new titles in development, an increase of financing into the games services sector, and a number of new market entrants, particularly traditional media companies, whose entrance will be slow, difficult but ultimately beneficial for the games industry as a whole.

Games? Wkipedia Red Viking

Outsourcing in Next Generation Games Development Publ 20060306