Sunday, March 12, 2006

Outsourcing has become a key instrument for developers in the gaming industry for maintaining profitability in the wake of the rising costs of games development.

The size of the games outsourcing market is expected to reach USD 1.1 billion by the end of 2006 and further increase to USD 2.5 billion level by 2010. As a result, outsourcing will command 40 percent of the total games development spend. The projected growth will be realized due to the arrival of new games consoles, which demand higher resolution and better art, produced by major players, such as Sony, Microsoft, and Nintendo.

Consequently, the productions costs rise. The rise in production costs can be checked by adopting the outsourcing to as low as 20 percent from a projected figure of 50 percent. Already, it is estimated that 60 percent of the major games studios make use of it in their development strategies. However, the report reveals that the downside of outsourcing can be seen in the quality of output and communication gaps between the clients and the vendors.

The report's author, 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:
1. 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
2. Outsourcing is already common – it is estimated that 60% of games studios outsource today, with this figure projected to rise to 90% by 2008
3. If left unchecked, production for games developed for the new generation of games consoles will increase by 50%
4. Demand for quality art and animation will soon outstrip supply by experienced outsourcing providers
5. Undersupply of skills will result in rising prices and the continued suppression of the number of new titles in development.

TOP Indian vendors: Dhruva Interactive, Applied Gravity, Satellier India, Toonz Animation and many many more

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