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A quiet revolution is transforming the games industry as
developers turn to outsourcing to control spiraling next generation costs. Outsourcing in Next Generation Games Development – reveals 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 study by Screen Digest is the first detailed study of this increasingly important and rapidly growing market.
The report's author, Games Investor Consulting's Rick Gibson, says: "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."
Key findings:
- The global market for games outsourcing will reach $1.1bn by the end of 2006 and is set to grow to $2.5bn by 2010 – representing 40% of
total games development spend
- Outsourcing is already common – it is estimated that 60% of games studios outsource today, with this figure projected to rise to 90% by
2008
- If left unchecked, production for games developed for the new generation of games consoles will increase by 50%
- Demand for quality art and animation will soon outstrip supply by experienced outsourcing providers
- Undersupply of skills will result in rising prices and the continued suppression of the number of new titles in development
In the report:
- Detailed profiles of the major players in the outsourcing marketplace
- Key lessons for managing outsourcing
- Use of outsourcing by independent and publisher studios
- Market sizing and projections 2005 to 2010
- Detailed breakdown of the outsourcing disciplines
- Analysis of the structure and trends of the outsourcing marketplace
- A history of outsourcing inside and outside the games industry
Table of contents
List of tables and charts
Executive Summary
Introduction
Definitions
Sources of Data
Forecast methodology
Outsourcing inside and outside the games industry
History of outsourcing outside the games sector
The cycle of outsourcing adoption
Stage 1: Cost over quality
Stage 2: Partnership
Stage 3: Value creation
Changing paradigms for games development
History of outsourcing within games development companies
Outsourcing pre-2000
Outsourcing post-2000
Outsourcing in the next generation
Next generation console hardware
Games production in the next generation
Resourcing for the next generation
Lessons for managing outsourcing
Pitfalls for the inexperienced manager of outsourcing
Cost over quality
Poorly defined specifications
Inadequate due diligence
Bait and switch
Low quality output
Poor communication
Poor project and relationship management by the client
Managing change within the client
Poor financial controls
Team integration
Cost overruns
Expected benefits for the experienced manager of outsourcing
Cost savings versus full time staff
Resource flexibility
Focus
Access to skills not in house
Partnerships
Managing the troughs not the peaks
'Tuning up' processes
Skills from outside the industry
Use of outsourcing by independent and publisher studios
Practises and attitudes today
Strategy for outsourcing
Three types of adoption of outsourcing:
Early Adopters
Late adopters
Non adopters
Outsourcing methodologies
Micro-managers – extending core teams
Macro-managers – externalising whole teams
Outsourcing disciplines
The use of art outsourcing today
Art
Art outsourcing in the next
generation
Animation
The use of animation outsourcing
today
Animation outsourcing in the next generation
Audio and Music
The use of audio and music outsourcing today
Audio and Music outsourcing in the next generation
Localisation
The use of localisation outsourcing today
Localisation outsourcing in the next generation
Middleware
The use of middleware today
Middleware in the next generation
Miscellaneous outsourcing
The use of miscellaneous outsourcing today
Miscellaneous outsourcing in the next generation
Motion Capture
The use of motion capture outsourcing today
Motion capture outsourcing in the next generation
Porting
The use of porting outsourcing today
Porting outsourcing in the next generation
Programming
The use of programming outsourcing today
Programming outsourcing in the next generation
QA
The use of QA outsourcing today
QA outsourcing in the next
generation
Script
The use of script outsourcing today
Script outsourcing in the next generation
Market sizing and projections
Total global market size, 2005-1010
Market drivers
Market inhibitors
The structure and trends of the outsourcing marketplace
The structure of the outsourcing marketplace
Boutique providers
Scale providers
Multi-discipline providers
The geography of the outsourcing marketplace
North America
Europe
South Asia and Asia
Australasia
Business model analysis
Risk Profile
Future trends in the market
Major players in the outsourcing marketplace
Alive Interactive Media
Babel Media
Dhruva Interactive
Glass Egg
Interserv
Liquid Development
Nikitova
Tose Software
Additional companies of interest in the market
Sources of additional information
on outsourcing companies
GamesOutsourcer
Gamasutra
Tables and charts
Use of outsourcing by independent and publisher studios
Chart 1: Frequency of outsourcing
Chart 3: Processes outsourced
Chart 2: Causes of outsourcing
Chart 4: Benefits of outsourcing
Chart 5: Pitfalls of outsourcing
Chart 6: Locations of outsourcing contracts
Chart 7: Concerns about offshoring
Chart 8a: Processes to be outsourced in future
Chart 8b: Fastest growing processes to be outsourced in future
Chart 10: How publishers will oversee outsourcing by 3rd party developers
Chart 9: Developers moonlighting outsourcing companies between projects
Chart 11: What processes can be 'safely' outsourced by 3rd party developers
Outsourcing disciplines
Global art outsourcing expenditure
Chart 12: Global art outsourcing expenditure
Chart 13: Global animation outsourcing expenditure
Global animation outsourcingexpenditure
Chart 14: Global audio and music outsourcing expenditure
Global audio and music outsourcing expenditure
Chart 15: Global localisation outsourcing expenditure
Global localisation outsourcing expenditure
Chart 16: Global middleware outsourcing expenditure
Global middleware outsourcing expenditure
Chart 17: Global miscellaneous outsourcing expenditure
Global miscellaneous outsourcing expenditure
Chart 18: Global motion captureoutsourcing expenditure
Global motion capture outsourcing expenditure
Chart 19: Global porting outsourcing expenditure
Global porting outsourcing expenditure
Chart 20: Global programming outsourcing expenditure
Global programming outsourcing expenditure
Chart 21: Global QA testing outsourcing expenditure
Global programming outsourcing expenditure
Chart 22: Global script outsourcing expenditure
Global script outsourcing expenditure expenditure 2005-2010
Market sizing and projections
Global games outsourcing expenditure 2005-2010
Chart 23: Global games outsourcing
Chart 25: Outsourcing as a percentage of total games development expenditure 2005-2010
Outsourcing as a percentage of total games development expenditure 2005-2010
Regional games outsourcing expenditure 2005-2010
Chart 24: Regional games outsourcing expenditure 2005-2010
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