Carlos Estigarribia on Why Game Studios Turn to External Development Companies

"We typically work alongside AA and AAA studios and publishers such as EA or Paradox Interactive, covering a broad spectrum of projects from art production to porting and full development, and are currently involved in a number of long-term projects.

In the sales process, we usually have our leads or department heads share their insights on how we approach projects. We feel that it showcases our ability to navigate development challenges that will always come up in a project. Given our experience with various platforms and engines, old spaghetti code, as well as deprecated or unsupported internal engines, we have seen a lot and can explain how we mastered situations where we've had to adjust the original engine for a project."

"We are structured to do full production of art from concept to final asset, applying the desired or applicable art pipeline for 2D or 3D. We have Tech Artists who optimize these pipelines to improve speed and quality and deliver animations on top. Some of our Art projects combine Art with Game Design or Art with Development and we thrive when our teams collaborate and contribute to solutions as partners."

"The primary reason, in my opinion, is the cost of development that has gone up to crazy high numbers. Simply said, it has become too expensive to fully develop a game in the US or Northern Europe. In combination with the increased cost to market and pressure on sales prices, the risk for a lot of game projects is too high. External development can make a difference but not on day one. Any studio like ours needs time to onboard and align with the processes. So a short-term assignment will not drive down the cost as much, as our teams need some onboarding time. On the longer-term projects and collaborations, where the workflows are more and more established - that's where both parties win.

The second reason is the lack of specific skills in-house that are only temporarily needed. We frequently encounter situations, especially with mid-sized publishers, where they have competent art and game design teams but lack expertise in certain areas, such as multiplayer feature development. External Development allows them to fill these gaps efficiently, leveraging some of our specialists.

The third reason revolves around flexibility and the reduction of long-term commitments. Given the unfortunate trend of layoffs in the industry, studios find external development appealing because it eliminates the challenge of reallocating or dismissing staff post-project. It provides a flexible way to scale their team according to project demands without the overhead of long-term responsibilities as an employer."

"Even if a studio can develop a game in-house, they may prefer to assign the ongoing development of DLCs and new content to an external team. This allows their core team to focus on new projects while we ensure the original game remains vibrant and engaging for its audience."

"Bulk art asset production is an area where outsourcing wins over external development. For instance, once a game studio has established the art direction and knows exactly what assets need to be created, it can engage an outsourcing partner to produce additional assets in bulk following the provided style guide. This approach requires very little creativity and is mostly done in India and China since it's cheap and very little collaboration is required.

Sound and audio production is also commonly outsourced. This specialization requires specific equipment and studio space for soundtrack production or voice recording, which not all game studios have in-house. Outsourcing these elements allows for professional-quality audio without the need for significant capital investment in equipment and facilities."

"Our approach to co-development is about integrating closely with the client's team. We aim to establish enduring partnerships, not just transactional relationships. Even in something as specific as art production, we're not just creating assets and moving on. We engage in the entire process, from concept through to 3D creation, and sometimes even contribute to the art direction. It's about offering creative input and suggesting new ideas that align with the game's vision.

For instance, with clients running seasonal games, they rely on us not just for asset creation but also for creative proposals for future content. This level of involvement means we're seen almost as an external arm of their studio - a dedicated team working in unison with their internal staff to overcome challenges and achieve shared goals.

So, while traditional outsourcing is about fulfilling specific tasks, co-development is about solving problems together with the client. This partnership approach aligns more closely with our company's values and the type of relationships we want to build. It's not just about the work we do; it's about how deeply we engage with the game and the client's team."

"One of the most common challenges we face is budget changes from the client's side. Initially, they might have a certain budget allocated for the project, but due to various factors, they may decide to reduce the scope. This scenario is particularly prevalent during the summer months.

Another critical issue arises when there's a change in management on the client's side. Although not inherently problematic, it often leads to changes in the project's creative vision. The new leadership may decide to alter the scope or prioritize different features, impacting the workflow and direction of what we're developing. For instance, if we're focused on creating a set of features, they might shift our focus to another aspect deemed more crucial for the project's prototype stage. Such shifts are especially common in lengthy projects that span over a year. To address these changes, flexibility is essential. We might need to re-allocate our team or even alter its composition based on the new direction. For example, if the project pivots from realistic to stylized art, it necessitates a discussion with the client about adjusting the team to meet these new requirements."

"If we anticipate potential issues with scope changes, it's crucial to discuss them promptly with the client. It's about being prepared to adapt and ensure that we have the right resources aligned with the project's evolving needs. These are the challenges we frequently navigate, but with openness and flexibility, they are surmountable."

"From my perspective, AI is the most significant trend shaping the industry. It's not about AI replacing human tasks entirely, but rather automating more routine, junior-level tasks.

For instance, initial concept art creation can now be expedited with AI tools, suggesting that clients may shift towards assigning us more complex tasks. This transition supports the idea that co-development remains valuable, especially as simple outsourcing tasks like basic asset creation or localization might be more efficiently handled by AI tools. Consequently, studios might allocate saved resources toward more intricate and creative projects.

Another trend I foresee is the rise of AA games. The financial justification for investing millions into Triple-A titles is becoming increasingly challenging unless it's an established IP. We're witnessing many seasoned professionals with AAA background launching their own indie studios, aiming to produce high-quality, AA+ games. This shift is likely to bring a wave of titles that, while not AAA in budget, are nearly comparable in terms of art quality and gameplay. This environment is ripe for companies like ours, ready to efficiently fill in gaps for these emerging studios."