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Deepak · 23-Mar-2004, 04:42

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Video-game work moves offshore
Mon Mar 22, 9:17 AM ET

By Dean Takahashi, Mercury News

Mark Vange is in the vanguard of globalizing the video-game industry. He employs 30 game developers in St. Petersburg, Russia, who have worked on everything from flight simulators to dragon-fighting games.

From his office in Toronto, Vange hires the Russians out to North American game publishers. As the cost of making a video game approaches that of producing a feature film, game publishers are looking to shave their production costs.

"We can get the work done for half the cost that it takes in the U.S.," said Vange, president of Ketsujin Studios.

Similar outsourcing of video-game production is being done in places like China, India, Vietnam and parts of Eastern Europe. California game developers, who are the creative force behind a $10 billion industry in the U.S. market, view the trend with a combination of fear and anticipation.

"It's happening more and more," says Lorne Lanning, president of game developer Oddworld Inhabitants in San Luis Obispo.

As Vange can attest, the offshoring trend that is sending so many high-tech jobs overseas has come to the video-game industry, resulting in a shake-up in the way that local publishers and developers do business.

For now the impact isn't nearly as devastating to the domestic workforce, thanks to the unique creative process behind video games.

Creating a game isn't like making a soul-less electronic widget. It is a craft that combines rote technical know-how as well as creative artistry, which is born from experience and a familiarity with the cultural tastes of a specific audience that plays the games.

Creative teams • Domestic talent has important role Game developers have been willing to farm out some tasks, but they say they don't want to separate the tightly knit teams of creative talent whose input is vital to making a game fun. It's hard, for instance, for a Russian developer to know what will entertain Americans.

"Game development is uniquely different from other types of software development because of the creative process," said Michael Kim, an analyst at Roth Capital Partners in Newport Beach. "It is very difficult to communicate exactly what changes in a game need to be made because of cultural and linguistic differences. Development costs might be lower overseas, but product quality would probably suffer."

The part of a video game that is easiest to outsource is the art, which is what gamers see when they fire up the game on their consoles or computers.

Gamers would never know, or probably even care, that the Orcs in the upcoming "Middle Earth Online" game from Turbine Entertainment were created in Russia. And it likely matters little to them that Electronic Arts didn't construct all the furniture for "The Sims" game and that most of it was done by artists at a company called New Pencil in Sausalito.

New Pencil's team of 12 artists is taking note of the overseas outsourcing trend. Adam Murguia, the company's art director and co-founder, says his shop has proved that outsourcing can work well in cutting costs, obtaining high-quality results and meeting deadlines. For now, New Pencil does its work in Sausalito. But if push came to shove, it could also take on project-management duties to help a publisher deal with an overseas art team.

"If that is the way the trend goes, we aren't in fear of it," Murguia said. "We can find our role in it."

By contrast, it is the programming and design of the interaction and characters in the game that must be performed in-house because it takes a process of trial and error to get it right, says Jeffrey Tseng, creative director at San Francisco game developer Secret Level.

As a result, the offshore companies that are chasing the game business find themselves at the low end of the food chain, taking small art jobs at first and working their way up.

So far, the game industry's version of offshoring is following the Hollywood model rather than the technology industry's trend of sending big programming projects to India and elsewhere.

Much of the creative process and management of filmmaking is rooted in Hollywood, but the industry lowers its costs by filming overseas and creating animations for shows like "The Simpsons" in Asia.

"If you look at other entertainment and not technology, the development of entertainment doesn't travel well," says Bing Gordon, chief creative officer of Electronic Arts, the Redwood Shores game publisher that has 1,400 of its 4,700 employees in the Bay Area.

"We'll do development in low-cost places. But there is some magic in working face to face, and it's hard to do development in places where people don't grow up playing games."

Overseas • Low-priority work being sent abroad EA itself hasn't embraced offshore outsourcing yet. But even as game-industry executives assert the heart of game development will stay in the Bay Area, Los Angeles, London and Tokyo, they acknowledge that the talent for making games is spreading worldwide.

For instance, French publisher Ubisoft has opened two studios for developing games in China. That makes some wonder if the same sweeping changes buffeting the software industry will hit games in due time.

Overseas developers are establishing beach heads by taking over low-priority tasks, like translating a game for a local market or animating the demons that fill out the army in a fantasy game. They build up their skills and then bid on more complex jobs.

Where once there was no talent overseas, now there is plenty.

The International Game Developers Association has chapters in areas that were once nowhere on the map of the games industry: India, Pakistan, China, the Philippines and Taiwan. There are chapters in Slovakia and Lithuania as well as five South American outposts

"If I were an artist, I'd take notice," said Jason Robar, a games veteran in Issaquah, Wash., who has brokered outsourcing deals between game publishers and offshore developers. Robar has teams in China, South Korea (news - web sites), the Czech Republic and Poland working on game art.

Cost difference • Overseas labor is much cheaper He is bidding on more and more outsourcing projects as publishers see the numbers offshoring produces. A veteran game programmer earns anywhere from $85,000 to $110,000 a year in salary, according to a survey by Game Developer magazine. At a place like Microsoft, added benefits and stock options increase the cost to the company to about $165,000 a year. By comparison, Robar says a senior artist or programmer in China takes home $15,000 a year.

For a project that costs $1 million in the United States, Robar estimates outsourcing art will bring the cost down to $750,000. Such savings will often determine whether a development house will make or lose money on a game.

"The economic pressures are there as a game's budget heads to $5 million or $10 million," said Jason Della Rocca, program director for the International Game Developers Association.

Some game companies have experienced nightmares with outsourcing. Of four recent outsourcing jobs, Argonaut, a developer in the United Kingdom, had trouble with three of them, said Joss Ellis, the company's chief operating officer. He subcontracted art work to a Russian company and found that because of missed deadlines, management travel and attention and communications costs, it wasn't worth it.

"We calculated that it would have been cheaper to do it internally," he said.

But as software-industry veterans can attest, the game industry shouldn't be overly confident about its superiority. A case in point: one anticipated PC game coming this year is "Stalker: Shadow of Chernobyl," a shooting game with elaborate art from Calabasas-based THQ.

The entire game is being created by GSC Game World, based in Kiev, Ukraine, where there are an estimated 100 game-development companies that didn't exist a decade ago.

Said Dan Kelly, THQ's vice president of development: "We're getting a very high-quality game from a territory known for cheap labor."

************************************************** **********

So do you see outsourcing increasing in coming years???

wco81 · 23-Mar-2004, 05:10

Well animation has been offshored for years. As the old Disney animators retire or are laid off, it seems that particular metier is disappearing for good from our shores.

EA is financially booming right now, with huge market share in many key genres. But maybe if there's a lull in sales or if some key franchises suffer some market share losses, they will push to cut costs (i.e. look for lower-wage employees).

EA also announced today an endowment at USC to form a masters degree program in game design. Again, EA can afford to be a benefactor now.

cthellis42 · 23-Mar-2004, 05:34

I am officially going to stop posting myself, as there is a guy who will do it twice as much for half the cost. Say hello to "Krstvn" everyone!

hello people i glad to be happying here post post!

(Don't worry about the whole "language" thing--you'll get used to it.)

Ty · 23-Mar-2004, 06:57

Quote:

Originally Posted by cthellis42

I am officially going to stop posting myself, as there is a guy who will do it twice as much for half the cost. Say hello to "Krstvn" everyone!

hello people i glad to be happying here post post!

(Don't worry about the whole "language" thing--you'll get used to it.)

Hmm, twice as much? And that's a good thing?

cthellis42 · 23-Mar-2004, 07:53

yes i am assured you for with my posting to be twice good as normal. many happy thing talked to you in fun and serious, possible! i know you to enjoy my sharing in the wit and opinion on many happy topic.

london-boy · 23-Mar-2004, 09:58

Quote:

Originally Posted by cthellis42

yes i am assured you for with my posting to be twice good as normal. many happy thing talked to you in fun and serious, possible! i know you to enjoy my sharing in the wit and opinion on many happy topic.

AAAARRRRRRRRGGGGGGGHHHHH!!!!!!!!!

(Still, i must say it's more comprehensible than most of Chap's posts, may he rest in peace...)

Qroach · 23-Mar-2004, 13:04

WTF, Mark is my old my old boss!!!

Anyway, after working with the guys in russia for a few years, this doesn't come as a suprise to me. Even blizzard has done this in the past by outsourcing all the art for diablo to Russia.

Sonic · 23-Mar-2004, 14:14

I really don't see this as a big deal. There will always be games developed in a specific country that all the work is done in that specific country. The videogames industry is growing and that means other countries/areas will be getting in on it. I wouldn't be surprise if there were dev teams popping up all over the place in India or China or elsewhere. It's not really going to effect the way things are done simply because this type of thing has been happening for more than a decade now.

zurich · 23-Mar-2004, 22:52

Here's to hoping that none of our resident developers here will be training H1B's to do their jobs for them as part of their severance package.

Jabjabs · 24-Mar-2004, 04:33

I live in Australia and intend to get a job in the industry here, this kind of thing could be useful to me to help me get a job.

I wouldn't worry though as there will always be a need for home grown developers as you can't out source every task of every project and get away with it.

23-Mar-2004, 04:42	#1
Deepak B3D Yoddha Join Date: Jan 2003 Location: Nai Dilli (New Delhi), Bharat (India) Posts: 2,687	Videogame outsourcing Link Video-game work moves offshore Mon Mar 22, 9:17 AM ET By Dean Takahashi, Mercury News Mark Vange is in the vanguard of globalizing the video-game industry. He employs 30 game developers in St. Petersburg, Russia, who have worked on everything from flight simulators to dragon-fighting games. From his office in Toronto, Vange hires the Russians out to North American game publishers. As the cost of making a video game approaches that of producing a feature film, game publishers are looking to shave their production costs. "We can get the work done for half the cost that it takes in the U.S.," said Vange, president of Ketsujin Studios. Similar outsourcing of video-game production is being done in places like China, India, Vietnam and parts of Eastern Europe. California game developers, who are the creative force behind a $10 billion industry in the U.S. market, view the trend with a combination of fear and anticipation. "It's happening more and more," says Lorne Lanning, president of game developer Oddworld Inhabitants in San Luis Obispo. As Vange can attest, the offshoring trend that is sending so many high-tech jobs overseas has come to the video-game industry, resulting in a shake-up in the way that local publishers and developers do business. For now the impact isn't nearly as devastating to the domestic workforce, thanks to the unique creative process behind video games. Creating a game isn't like making a soul-less electronic widget. It is a craft that combines rote technical know-how as well as creative artistry, which is born from experience and a familiarity with the cultural tastes of a specific audience that plays the games. Creative teams • Domestic talent has important role Game developers have been willing to farm out some tasks, but they say they don't want to separate the tightly knit teams of creative talent whose input is vital to making a game fun. It's hard, for instance, for a Russian developer to know what will entertain Americans. "Game development is uniquely different from other types of software development because of the creative process," said Michael Kim, an analyst at Roth Capital Partners in Newport Beach. "It is very difficult to communicate exactly what changes in a game need to be made because of cultural and linguistic differences. Development costs might be lower overseas, but product quality would probably suffer." The part of a video game that is easiest to outsource is the art, which is what gamers see when they fire up the game on their consoles or computers. Gamers would never know, or probably even care, that the Orcs in the upcoming "Middle Earth Online" game from Turbine Entertainment were created in Russia. And it likely matters little to them that Electronic Arts didn't construct all the furniture for "The Sims" game and that most of it was done by artists at a company called New Pencil in Sausalito. New Pencil's team of 12 artists is taking note of the overseas outsourcing trend. Adam Murguia, the company's art director and co-founder, says his shop has proved that outsourcing can work well in cutting costs, obtaining high-quality results and meeting deadlines. For now, New Pencil does its work in Sausalito. But if push came to shove, it could also take on project-management duties to help a publisher deal with an overseas art team. "If that is the way the trend goes, we aren't in fear of it," Murguia said. "We can find our role in it." By contrast, it is the programming and design of the interaction and characters in the game that must be performed in-house because it takes a process of trial and error to get it right, says Jeffrey Tseng, creative director at San Francisco game developer Secret Level. As a result, the offshore companies that are chasing the game business find themselves at the low end of the food chain, taking small art jobs at first and working their way up. So far, the game industry's version of offshoring is following the Hollywood model rather than the technology industry's trend of sending big programming projects to India and elsewhere. Much of the creative process and management of filmmaking is rooted in Hollywood, but the industry lowers its costs by filming overseas and creating animations for shows like "The Simpsons" in Asia. "If you look at other entertainment and not technology, the development of entertainment doesn't travel well," says Bing Gordon, chief creative officer of Electronic Arts, the Redwood Shores game publisher that has 1,400 of its 4,700 employees in the Bay Area. "We'll do development in low-cost places. But there is some magic in working face to face, and it's hard to do development in places where people don't grow up playing games." Overseas • Low-priority work being sent abroad EA itself hasn't embraced offshore outsourcing yet. But even as game-industry executives assert the heart of game development will stay in the Bay Area, Los Angeles, London and Tokyo, they acknowledge that the talent for making games is spreading worldwide. For instance, French publisher Ubisoft has opened two studios for developing games in China. That makes some wonder if the same sweeping changes buffeting the software industry will hit games in due time. Overseas developers are establishing beach heads by taking over low-priority tasks, like translating a game for a local market or animating the demons that fill out the army in a fantasy game. They build up their skills and then bid on more complex jobs. Where once there was no talent overseas, now there is plenty. The International Game Developers Association has chapters in areas that were once nowhere on the map of the games industry: India, Pakistan, China, the Philippines and Taiwan. There are chapters in Slovakia and Lithuania as well as five South American outposts "If I were an artist, I'd take notice," said Jason Robar, a games veteran in Issaquah, Wash., who has brokered outsourcing deals between game publishers and offshore developers. Robar has teams in China, South Korea (news - web sites), the Czech Republic and Poland working on game art. Cost difference • Overseas labor is much cheaper He is bidding on more and more outsourcing projects as publishers see the numbers offshoring produces. A veteran game programmer earns anywhere from $85,000 to $110,000 a year in salary, according to a survey by Game Developer magazine. At a place like Microsoft, added benefits and stock options increase the cost to the company to about $165,000 a year. By comparison, Robar says a senior artist or programmer in China takes home $15,000 a year. For a project that costs $1 million in the United States, Robar estimates outsourcing art will bring the cost down to $750,000. Such savings will often determine whether a development house will make or lose money on a game. "The economic pressures are there as a game's budget heads to $5 million or $10 million," said Jason Della Rocca, program director for the International Game Developers Association. Some game companies have experienced nightmares with outsourcing. Of four recent outsourcing jobs, Argonaut, a developer in the United Kingdom, had trouble with three of them, said Joss Ellis, the company's chief operating officer. He subcontracted art work to a Russian company and found that because of missed deadlines, management travel and attention and communications costs, it wasn't worth it. "We calculated that it would have been cheaper to do it internally," he said. But as software-industry veterans can attest, the game industry shouldn't be overly confident about its superiority. A case in point: one anticipated PC game coming this year is "Stalker: Shadow of Chernobyl," a shooting game with elaborate art from Calabasas-based THQ. The entire game is being created by GSC Game World, based in Kiev, Ukraine, where there are an estimated 100 game-development companies that didn't exist a decade ago. Said Dan Kelly, THQ's vice president of development: "We're getting a very high-quality game from a territory known for cheap labor." ************************************************ ******** So do you see outsourcing increasing in coming years???

23-Mar-2004, 22:52	#9
zurich Kendoka Join Date: Feb 2002 Posts: 2,376	Here's to hoping that none of our resident developers here will be training H1B's to do their jobs for them as part of their severance package. __________________ 12" PowerBook 1.33 Ghz with 20" Cinema Display Athlon XP 2Ghz Windows MCE HTPC flickr me

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23-Mar-2004, 05:10	#2
wco81 Senior Member Join Date: Mar 2004 Location: West Coast Posts: 4,315	Well animation has been offshored for years. As the old Disney animators retire or are laid off, it seems that particular metier is disappearing for good from our shores. EA is financially booming right now, with huge market share in many key genres. But maybe if there's a lull in sales or if some key franchises suffer some market share losses, they will push to cut costs (i.e. look for lower-wage employees). EA also announced today an endowment at USC to form a masters degree program in game design. Again, EA can afford to be a benefactor now.

23-Mar-2004, 05:34	#3
cthellis42 Hoopy Frood Join Date: Jun 2003 Location: Out of my gourd Posts: 5,894	I am officially going to stop posting myself, as there is a guy who will do it twice as much for half the cost. Say hello to "Krstvn" everyone! hello people i glad to be happying here post post! (Don't worry about the whole "language" thing--you'll get used to it.)

23-Mar-2004, 07:53	#5
cthellis42 Hoopy Frood Join Date: Jun 2003 Location: Out of my gourd Posts: 5,894	yes i am assured you for with my posting to be twice good as normal. many happy thing talked to you in fun and serious, possible! i know you to enjoy my sharing in the wit and opinion on many happy topic.

23-Mar-2004, 13:04	#7
Qroach Senior Member Join Date: Feb 2002 Posts: 3,859	WTF, Mark is my old my old boss!!! Anyway, after working with the guys in russia for a few years, this doesn't come as a suprise to me. Even blizzard has done this in the past by outsourcing all the art for diablo to Russia.

23-Mar-2004, 14:14	#8
Sonic Senior Member Join Date: Feb 2002 Location: San Francisco, CA Posts: 1,571	I really don't see this as a big deal. There will always be games developed in a specific country that all the work is done in that specific country. The videogames industry is growing and that means other countries/areas will be getting in on it. I wouldn't be surprise if there were dev teams popping up all over the place in India or China or elsewhere. It's not really going to effect the way things are done simply because this type of thing has been happening for more than a decade now.

24-Mar-2004, 04:33	#10
Jabjabs Member Join Date: Feb 2003 Location: Melbourne, Australia Posts: 395	I live in Australia and intend to get a job in the industry here, this kind of thing could be useful to me to help me get a job. I wouldn't worry though as there will always be a need for home grown developers as you can't out source every task of every project and get away with it.

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