Tom’s Sperry is CEO of Vyk Games. You can find out more at www.vykgames.com.
As industry analysts predict the worldwide videogame market will grow to over $63.2 billion in total sales by 2013, more and more companies are specializing to play certain roles within a development project to help bring great games to the market.
Expanding budgets, simultaneous platform launches, global MMOs, bonded financing, casual games, bigger teams, venture capital, movie deals, tighter deadlines; these are commonplace phrases in the games industry. Yet the goal of publishers and developers is still the same – put out great games that meet consumer demand – from simple casual games played on mobile platforms, to deeper, higher-fidelity games played on today’s increasingly better-performing hardware platforms.
The industry reality is that publishers and developers must lower costs to increase profit-margins without compromising the quality of the game and the end user experience. The financial insecurity in the global capital markets highlights this point.
Video game design and production “outsourcing” is a common term used when allocating work to third-party party companies, most notably to those located in lower-cost countries. There isn’t a single videogame developer that has not taken a look at hiring a third party to help produce large-scale game projects. Yet the topic continues to be at the center of heated debates as arguments surface for and against outsourcing. In a world of multi-million dollar projects that match – and sometimes even exceed – the scale of Hollywood blockbusters, it is unavoidable that the industry will increasingly rely on hiring trusted partners to handle specific components of the development cycle, especially as professional vendors surface to fulfill these needs worldwide.
Let’s be clear - there are many companies worldwide that can be labeled as an “outsourcing” company within the video game industry. Many have made a bad name for themselves with false promises. The reality is that the fault frequently belongs to the outsourcing company and the developer/publisher, a fact that has hurt the entire videogame industry, not just the outsourcers or the companies that hire them.
I have been in the games industry for 15 years in nearly every aspect: working for large, public publishers, independent developers and VC-backed startups. I have been a tester, program manager, development director, CEO, and I have built mobile, PC and console games. I now run a video game outsourcing company and cringe at the general attitude from developers and publishers toward outsourcing as something that is useful solely for cost-reduction purposes. As I’ve witnessed so far, there seems to be very little willingness from the publishing side to foster long-term partnerships beyond the weekly “bid on this asset for this price” mentality.
This attitude has to change if our industry is to progress and successfully continue making great games. The leading outsourcing companies perform incredible work and help make incredible games, utilizing their strengths to meet the partner’s needs. “Partner” – that’s the key word here. The outsourcing partner should be viewed as an extension of the product team, regardless of where they are located.
It all comes down to finding the right long-term partner to help you scale components of your project, whether with short-term commitments or projects that are years in the making.
The aim is to successfully manage the “team” to deliver quality products on time and on budget. Today, globalization has allowed us to connect with teams located around the world, some of which happen to be located in a country where lower-costs prevail (in China cost savings are 10x that in the US!). However, in many cases costs are not saved, as a result of the working relationship not being properly managed. The ultimate result is that the project does not meet expectations and game quality usually suffers.
There are several main challenges with finding, selecting and working with a partner company in the co-development of a great video game. Here are some keys to success:
1) Build the Relationship: You’ll interact with the executives, but get to know the team who will actually be doing the work. If possible, do an on-site visit and meet everyone in person. If you centralize outsourcing, make sure that the team who actually builds the product has a direct relationship with the outsourcing partner. Get references on their other projects, and get in touch with the local liaison to learn more of their experience working with the overseas producers and project managers. If you know that you will be outsourcing to this company in the long term, try to have the same team work on all of your projects. Be willing to sign a long-term contract with your partner and set clear expectations. This fosters the team relationship, enhances communication and consistency, and therefore improves the quality of the work.
2) Financial stability: Due diligence is absolutely required before you hand over work to your partner. Much like you would quiz a new interviewee about their qualifications, or a publisher would scrutinize a developer about their background and talent, you’ll need to dig into several different specialized companies to find the one that will deliver results and has the financial resources to survive.
3) Communication: Communicate more! Why is it that developers and publishers have weekly internal meetings but don’t have them with their partners? Understand and use communication tools effectively: anything from instant messenger and e-mail to Skype Video. Treat the counterpart as if they were in the same room as you. Also, take advantage of time differences if your partner happens to be in another time zone by setting clear duties and goals on a daily basis. Communicate this effectively by setting daily goals and assignments, and asking for daily reports so that the team can accomplish the tasks during your downtime.
4) Goals: Set clear expectations in the request-for-quotation (RFQ) process and the statement of work (SOW) to ensure that you have established benchmarks to receive feedback on all aspects of the project. Always set clear expectations right from the beginning – otherwise you’ll be fighting over the small stuff. Be prepared to have flexibility in the contract and be willing to pay for these changes if needed. We all know that unexpected changes happen – it is the video games industry after all.
5) Quality: Understand your budget and the tradeoff between quality vs. price. Sure, price is important, but there’s a trade-off. Quality work, on-time with limited or no re-work, comes at a premium price. Set a clear, realistic budget that matches the quality you want. If you’re not sure where to start, talk to several different companies and they’ll be more than happy to give you a quote while clearly laying out the deliverables.
6) Culture: Lastly, perform due diligence on the country where the company will perform the bulk of its work. Take advantage of the opportunity to learn about your counterpart’s history – even their holidays – and understand the local business nuances. Establish friendly dialogue with your counterpart so that there is an equal understanding about your work culture and methods. This will allow you to communicate more effectively with each other in an honest and mutual way, ensuring that no misunderstandings occur that might be detrimental to the project’s goals. You’ll find the working relationship much more enjoyable as a mutually beneficial two-way exchange of successful work communication.
There are, of course, many factors that contribute to a successful working relationship with a third-party partner. It cannot just be about cost savings because if you chose the wrong partner you will not save anything as a result of fixes and a lower quality product. It’s about building a great game with the right partners.
If managed correctly, hiring a third-party company to help with components of the development process can be a cost-effective solution, while allowing you to scale your team to meet project demands and accomplish your sales goals on a tighter timeline and budget.
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Tom Sperry is the CEO for Vyk Games.