Outsourcing. To many game publishers it means a chance to cut production costs by utilising foreign workers. Even as Asian development studios seek to overcome their image as being useful only for outsourcing, the CEO of Deadline Games thinks that western companies are being shortsighted. He spent some time with GamesIndustry.biz and outlined his position.
Q: It seems that a lot of companies we talk to in Asia are trying to change their image from being useful only for outsourcing. What is your take on that?
That seems to be the reigning opinionâ¦that these are more outsourcing houses best suited for particular skillset areas, or to do particular small projects.
I believe that, not all clearly, but some companies are more advanced than that. The company we are working with, GameBrains, has successfully developed a lot of titles from A to Z, for example.
We feel that there is definitely the potential to grow them into full production houses. As with any area, it requires time and investment and so on. My philosophy on outsourcing in general is a little different than others in that, in our experience at least, particular if we are looking for cost savings in outsourcing, it is very difficult to ensure that the quality you are going to get through the whole production is going to be consistent.
So, the way I would like to approach it is to partner, or even have some sort of ownership of, the companies down there - because with the right set-up they can be nurtured to become full production houses.
But in terms of outsourcing, I believe it is more longsighted to work with "insourcing" where you can actually control the quality level of the productionâ¦of the work that you are going to get by having a stake in that company. But you can also do something which is more important - you can invest in the employees.
If you are working with a pure outsourcing company, you have no idea how they are treating their employees, you have no idea how they are motivating their employees, and you have no influence on that. And that also means that they are motivated to think very short-term with their staff. They don't invest in them. They don't try to develop them as artisans, as artists, and that also means you limit the possibility for quality growth or improvement which is essential to creating a long term growth in the quality and standard of the products you are getting out of there.
I believe in order to do that, you need to be able to invest in the staff and help them create a work environment which is conducive to personal growth and career growth that you don't get with a normal outsourcing partner whose primary aim is to, in a very short time, get as much out of people as they can.
There are a lot of aspects in outsourcing that need to change. So the way we are approaching it is partnering up with a team like GameBrains, by being more involved in the actual production, seeing the potential in what they have, and helping them nurture that. At the same time, working with them because we know they really care for their staff and they care for the product.
If the staff is just being whipped through to produce assets at as high a rate as possible, then they don't really put their soul into what they are doing, and that is never going to give you a good result on any product anyway. Clearly, it is a mixture of commercial and social interests that I feel go hand-in-hand.
Q: But how will it be possible for such development houses to improve conditions for their workers without increasing their costs, especially as cheaper costs is what makes them attractive to western publishers in the first place?
I believe that what you lose on the costs going up, you gain on efficiencies and qualities and standards, which means a reduction in the number of times that things have to be re-done. The quality bar is raised. The efficiency of the production system is increased dramatically by that.
If you are looking purely at what a company costs per man-month, and you're not looking at the increase in quality, at the reduction in the number of times you have to do things over again and so on, then I would agree it doesn't sound like a good proposition.
The costs there will, at some point in the future, reach the costs we have here. At the same time, our costs will not have fallen. Our costs will also be going up. At that point, they might be competing directly with companies in the west. But then there will be other countries that will be in the same place that Malaysia is now, and that cycle will keep going.
It can't be an aim of the business to keep part of the world in poverty at the end of the day.
Q: If you start supporting an outsourcing company financially, with the aim of improving their work force, will they cease to be external at some point? How are you going to be able to help companies without eventually owning them or becoming their lifeline? Is it a matter of being more selective in who you work with?
Definitely. You need to really think about who you are working with.
You have two possibilities. One is to do a joint venture, a partnership with them where you have a stake in it somehow, and the other one is to buy them outright, as you are saying.
My approach is that [either] is the right way to go. I am not a huge believer in piecemeal outsourcing, because I just don't believe that you get the same quality as you would if you own them. Yes, that means you will be stuck with those costs, but if you are an efficient company and you are good at what you are doing, then you should have enough business to sustain that anyway.
The cost base for these countries is not going to match the cost base in the western world for a long time.
Q: Recently, we've seen companies such as EA and Ubisoft establish a presence in Asia. Do you think this is something we are going to continue to see, at least until the costs rise?
Yes, I do. But, to be honest, I think that the competitive advantage that companies in the west are always going to have is the cultural relevance of the design of the product.
One thing that makes Hollywood what it is, despite the fact that you could probably make all those same movies somewhere else, is that you are producing products for the western market, therefore you need to have people who have an understanding of the cultural background of the western market.
I don't believe that it is sustainable in the long term to have all production and all development here in the west. But on the other hand, I do believe that the industry is going to grow to a level where what we today have as a normal production staff, or as what is sometimes referred to as "grunt" staff...I don't believe that the number of people working in that is going to fall significantly if we become a design centre, because enough product has to be developed and the complexity of the design work and so on is going to increase to compensate for that.
Also, in order to create that design centre, you need to have a constant stream of people who are starting from scratch, who are newly-educated. One of the other things that is going to give us a competitive advantage for a long time is that academically we are still way ahead of the third-world countries and will be for a while. We have to keep investing in that, and that means aiming for higher educational standards for our employees all the time to keep ahead of the game in that way.
Those sort of mechanisms are the same mechanisms that you can point to in just about any industry that is more established than ours that is already working with third world countries. In the same way that the IT industries have a lot of work going on in India, there is still a lot of work for IT workers in the west because educationally and culturally and being closer to the client is still an important factor.
Q: Do you really think that the western cultural understanding is that much of an advantage, or can third-world production houses work on game properties without needing to understand western culture?
Well, the design and technology and so on is still happening in the west.
Q: But, for example, there are overseas animation houses producing The Simpsons, which is a quintessential piece of American pop culture...
I think also you have to differentiate between the quality of the product. You mentioned The Simpsons...and no offense to the people who are producing that, but there are two ways of approaching The Simpsons. One is to make a generic rip-off of something else in a Simpsons' skin, which means that you're not designing anything new or creating any huge genre-defining product, you are exploiting a license where people are buying the product because of the Simpsons name rather than the quality of the game, right?
Those products will be farmed out no matter what we do to wherever they can be done cheapest, and we're not going to be able to stop that. We need to start asking, as developers, what are we offering that is compelling to publishers and consumers? And I believe that original IP and innovation...that is what our competitive advantage is and will continue to be.
Nike today cannot offer their product based upon sweatshop workers labouring in Hong Kong and so on...which they could twenty years ago...because the public now has an awareness of their moral obligations, if you like, as consumers.
That is equally going to happen to our industry. If there is a sweatshop mentality just to do the cheapest possible product, that is going to boomerang and hit us in the back of the neck eventually.
You can either say 'Well, let's just wait until that happens'...that's a pretty cynical approach, and in the meantime we'll burnout as many Chinese people as we can...or you can say 'Let's take this head on so that we don't put our industry into disrepute and have to repair that.'
Q: In your outsourcing work, how do you deal with the challenges of working across different time zones and languages?
One of the advantages of Malaysia in particular is that English is the language they are all working in, same as India. I think that companies such as Ubisoft have shown that language does not have to be a barrier.
I think the world is globalising so fast, and English is used as an international business language de facto already. Just about anybody in the third world who has ambitions of working in an industry like ours will have learned English at school...if he hasn't grown up in an ex-French colony, in which case he will have learned to speak French.
It's not a hugely problematic thing. In fact, the time zones can work to our advantage. Design can be made here in our time zone, and when we leave work we put up a lot of things on the server, where somebody else wakes up in their time zone and works on, and when they're finished, we get it back here in time to QA it, check the quality, comment on it...we're actually reducing the production cycle by having continuous work on a project rather than it only being worked on 8 hours out of 24.
Chris Mottes is CEO of Deadline Games. Interview by Mark Androvich.