Next time you eat lunch with coworkers, ask them, apropos of nothing, “What do you think of outsourcing?” Watch what happens.
Some people hear “outsourcing” and go completely nonlinear. Often, these folks feel personally threatened that someone in India or China will take over their own job. We’re just starting to hear that note of fear in the electronic gaming industry, where “offshoring” (subcontracting production work to overseas studios) is quietly becoming standard practice – fostered, in great part, by Ubisoft.
For years to come, we’ll undoubtedly read lots of passionate arguments about game outsourcing, but an early spat appeared last year on the IGDA Forums. “McMillanDaniel” wrote, “We don’t believe it is good to be a company showing a profit, but seeing your neighbor out of work. Therefore, we don’t hire, support, or purchase any products from publishers using offshore resources for development. Do you think graduates from all of the new schools around America for game design and art are going to relocate to offshore facilities to get jobs?”
Whatever your own position, you’ll probably agree the International Game Developers Association isn’t the best venue to call for America-first boycotts. “Whether you’re American, Japanese or Pakistani, the best qualified people should get the job,” said poster “KennethN.” “If you think all the best-qualified people are American, you’re pretty naive. The fact that the gaming industry pretty much spans across the entire globe is something we should be very glad about.”
Forum moderator David Weinstein pointed out North America itself is an offshore destination: “So, you want Ubisoft, Vivendi and Atari to shut down all of their North American studios?”
Game publishers keep moving offshore due to high financial pressure. The cost to develop a next-gen console game is well over US$10 million, pushing fast toward $20 million, with two- to three-year development cycles. Companies are cutting corners where they can, and offshoring promises faster production at savings as high as 25 to 50 percent. Business intelligence analyst Screen Digest estimates 60 percent of all games produced today use outsourcing, and projects that the figure will rise to 90 percent by 2008.
In America, a senior game programmer might earn $85-100,000 plus benefits; a senior artist or programmer in Communist China, the workers’ paradise, gets below $20,000 and no benefits whatsoever. Of course, the Chinese programmer can’t make good games – yet. To date, Western developers have offshored technical and minimally creative jobs: audio, music, art assets and animation, as well as localization of Java-based mobile games across 130 phones. But as they learn the industry and hire Western consultants, offshore companies are gradually taking over more and more aspects of game production: multiplayer modes, sequels and (increasingly) full games.
And the publisher leading the way overseas is Ubisoft.
Ubisoft and the World
Ubisoft, based in Paris, has expanded its game production more broadly and aggressively than any other major game publisher. “The company’s 12 in-house production studios are located in nine countries,” says Ubisoft’s corporate site. “The choice of China, Canada and Romania as host countries for its major studios offers Ubisoft competent, trained people as well as tax benefits or a lower cost structure.”
For instance, Ubisoft Shanghai, established in 1996, was the first major mainland Chinese game studio operated by a Western publisher. It claims to be the largest game studio in China and one of the world’s largest. Starting with F1 Racing Championship, Ubisoft Shanghai has graduated to more ambitious projects, such as the well-received Pandora Tomorrow expansion for Tom Clancy’s Splinter Cell. The studio currently employs about 500 people and is growing fast. In late 2005, Ubisoft posted a five-minute recruiting video that boasted Shanghai’s virtues: night life, sports, food and ubiquitous English. “Ubisoft Shanghai is a team with a purpose,” says the video, “to break boundaries and to take gaming beyond its limits.”
Gaming is breaking past limits all over, not just in China. Currently, most outsourcing/offshoring game jobs go to Russia, Eastern Europe, India, Israel and Vietnam. But as Outsourcing.org and Games Outsourcer prove, wannabes are popping up anywhere they can scrounge copies of Maya3D and Teach Yourself C++ in 21 Days: Thailand, the Philippines, Egypt and more. The widespread popularity of Korean MMOGs has spawned many new companies across Southeast Asia; some of them start as Korean games licensees, such as Indonesia’s Lyto and Boleh.
Right now, these offshore studios are writing music and making low-poly objects. Will they be happy doing that forever?
An excellent September 2005 Hollywood Reporter article by Paul Hyman quotes Dustin Clingman, professor of game design and development at the Full Sail school: “What I’m most concerned about is what I call the ‘ambition gap’ … the people who we outsource to – in India and China and such – they’re not going to stop at just doing menial tasks. As we ship them more and more to do, they’re training themselves to take over the more important game development jobs. We’re just laying the groundwork for our competition.”
How Big Can It Get?
Offshoring has many pitfalls. Annoyances include currency fluctuations, language barriers and gaps in intellectual property laws. Logistics can be expensive, given time zone differences and the need for time-consuming supervisory visits overseas. (One startup, SeaCode, plans to overcome logistical obstacles by refitting a retired cruise ship as a “sweat-ship” of coders anchored in international waters off Los Angeles. A hundred Indian and Eastern European programmers would work long shifts, seven days a week, for $1,800 a month. SeaCode, which hopes to drop anchor later this year, pitches this as “keeping jobs in the US.”)
And offshoring won’t necessarily help you meet a schedule. THQ’s much-delayed S.T.A.L.K.E.R.: Shadow Over Chernobyl, being made entirely by GSC Game World in Kiev, was originally announced in November 2001 and is now scheduled for Q1 2007. (Offshored Ukrainian programmers also created 2003’s notorious Big Rigs: Over the Road Racing, one of the worst-reviewed computer games in history.)
The greatest perceived danger in offshoring is quality control, owing to cultural differences. Many take as an article of faith that “you can’t outsource creativity.” Overseas game creators, they argue, just won’t ever, ever be as good as our great native sons in the English-speaking world. And Japan, of course. And, oh yeah, Korea, if you play Lineage. Well, also Croatia, assuming you like Serious Sam, and Poland if you like Painkiller. But the rest of the world, forget it!
Intellectual property lawyer Ross Dannenberg, partner at law firm Banner & Witcoff, said in a May 2005 interview with IT Business Edge, “[T]he video game industry has built-in defenses against outsourcing: creativity and nationalism. … What one culture finds humorous or entertaining, another culture might find lackluster, dull, or even worse, offensive. Thus, it is difficult to outsource creative aspects of video game development.”
What do these commentators overlook? Offshore companies can hire Western designers to visit and teach them design. In 2005, Ubisoft Shanghai offered American developers US$12,000 signing bonuses. From September 2004 until this month, the studio’s team of 27 to 30 Chinese designers was managed by American Erick Wujcik, and he aggressively recruited North American designers. Tutored by experienced Western professionals, how long will it take Chinese developers to learn what Westerners find fun? Ten years? Five?
Then, too, there is precedent for Western pop culture adopting other nations’ entertainment icons whole-cloth. A Google search for “anime” brings 169 million hits.
Try to Enjoy It
Once cost-cutting publishers can outsource design as well as everything else, will the entire business of game production follow so many other American industries overseas?
“The trend in game development seems to be away from a model that separates design from execution,” says producer Warren Spector. “We’re moving toward a low-document, you-conceive-it-you-build-it model. I can see a time when U.S. development becomes so expensive it’s tough to justify hiring a U.S. company to [design] a game. System specs generated in a vacuum are worthless. If the talent’s over there, the game should be made over there. Splitting off the design part of it, the way you’d split off modeling a chair, doesn’t make sense.”
But Spector believes game production will never be entirely offshored. “There are thousands and thousands of people in the U.S. who love making games and want to continue. Most of the big publishers are based in the U.S., have offices here or want to have offices here. And, with some notable exceptions, the top creative talent is here. I honestly think salaries overseas will go up, and that’s how the playing field will be leveled. The offshore guys will have to pay more as their employees realize they can’t afford the stuff they’re making!”
Remember that IGDA Forum debate? Consultant Maximillian Meltzer wrote there, “[Offshoring] won’t go away, so prepare for the future. It’s not all about outsourcing, it never was, but the maturing of a technology-driven industry. As a US developer you just have more competition. Sounds like an industry about the survival of the fittest. Sounds like business as usual to me.”
The new globalization of game production offers opportunities for a savvy developer. There are few barriers to entry, so anyone with net connectivity – you yourself – could outsource your own workload for a fraction of your current salary. Call it “pointsourcing.” Do what Ubisoft’s own Worldwide Managing Director Gilles Langourieux did: Formerly a manager at Ubisoft Shanghai, he left in 2004 to start his own offshoring operation, Virtuos. Virtuos now employs 120 people and recently closed Series A financing with Legend Capital.
Why not you, too?