COVID-19 has launched an unexpected turn of events for many people across the globe that has ravaged some industries and exploded growth in others. The Center for Disease Control's (CDC) social distancing regulations have been a catalyst for growth in both the game development space and the overall gaming industry because of the ban in large gatherings and the closing of brick and mortar entertainment venues. Gaming is also providing a sense of community during quarantine and is a way for people to connect through interest areas that they love.
VanEck Vectors Video Gaming and eSports ETF (ESPO) is the perfect example of the colossal growth that the gaming industry has recently experienced as a result of the pandemic. The company hit a 52-week high as of April 28, 2020, and is showing no signs of stopping. The gaming industry boom impacts many other industries, such as leaders in the console and chip-making sectors like Nintendo and Advanced Micro Devices.
Software Engineers and Game Designers across the globe have the opportunity to make their mark in large companies or with independent pursuits and free games. Gamers are on the hunt for new and fresh experiences that delight global audiences, and gaming engines are firing on all cylinders to meet market demand.
The Outsourcing Takeover of the Gaming Industry
It's important to note that outsourcing entire game design squadrons to remote-based teams or on-site contractors is a massive entertainment industry trend that is similar to what happened in the movie industry. What has curbed the acceleration of a mass exodus of internal game designers is the sheer complexity of developing games and the need for committed, and in-person collaboration to move the needle in game development phases from concept to deployment. Even with the complexity, companies are outsourcing at least 70% to 80% of their back of office staffing needs.
The areas in game development that are most likely to be outsourced are pre-production, production, testing, and distribution. IT outsourcing in the testing and production areas is a new dynamic for companies because they are more structured roles that can function with constant collaboration. Gaming companies are finding that establishing a common vision with external partners can be a difficult task.
There are both pros and cons to using outsourced development teams that gaming companies are currently navigating. Ultimately outsourcing cuts costs, and this is a heavily weighted piece that is hard for businesses to ignore.
- Working with contractors can reduce costs if well managed because companies are not forced to compensate employees in-between projects.
- Being able to shuffle teams around and add fresh talent or remove team members quickly that aren't a good cultural fit provides agility in gaming development teams.
- The coronavirus pandemic is creating a window of opportunity for gaming companies to make a lasting impression on consumers, and hiring contractors is a safer way to beef up the gaming workforce on a short-term basis.
- Creative teams and artists often require more flexibility that a full-time position may not have, and many artists, animators, and illustrators prefer to take off time in-between projects. More and more engineers are following suit and are finding that the gig economy has more flexibility.
- Having a dedicated team of talent in place that are ready to tackle incoming challenges is an ideal scenario. Keeping top-tier talent happy allows for high-performing teams to be available when you need them.
- Finding quality contractors, or reliable outsourcing partners can leave gaming companies in a bind.
- Managers may not particularly enjoy working with a team of contractors, and switching to a high-percentage outsourcing model may cause turnover within core internal teams.
- Gaming enthusiasts have strong opinions when it comes to the makers of the games they love. This is pushing game makers to be more transparent regarding their hiring practices, and consumers will be watching along the way.
How Games-as-a-Service (GaaS) is Impacting Outsourcing Demand
The Games-as-a-Service (GaaS) space will play a significant role in boosting the global market in the coming years, and companies such as Amazon, Microsoft, Sony, Google, and EA are poised to accelerate hyper-growth in this space. Some of the prime hot spots for GaaS across the globe include Europe, Asia-Pacific, theMiddle East & Africa, North America, and Latin America.
GaaS is growing the demand for outsourcing because of its straight forward design and development workflow. Luckily the gig economy evolution is also raising the bar, and the freelance profession is becoming far more buttoned-up. More competition is forcing software developers to rise to the challenge, and exercise client relationship management skills.
Gaming Companies are Reshaping the Narrative Around Outsourcing
Gaming companies are pushing back and changing the narrative around outsourcing by abandoning stereotypical industry terminology and calling the partnership between their business and other companies simply a transfer of ownership.
Another safer description companies are adopting is Extended Game Development teams. They describe the movement to external partnerships as a completely different business model that allows them to meet the surging demand of players.
Electronic Arts (EA) has led the charge in the movement to put a stop to outsourcing bias. Their most convincing value proposition explains that strategic alliances and gaming partnerships are vastly different from run-of-the-mill game development outsourcing models. EA paints a vivid picture of the mass complexity within game creation and points out that the only viable solution is bringing in partners to support efforts, and game development teams.
Jason Harris, who is the Head of Corporate Strategy and Global Market Intelligence Senior Director for EA Games, argues that it's about so much more than just saving cash. Working with gaming partners provides companies with a strategic advantage that brings about a wide variety of features such as:
- The ability to increase production and scale the business with less risk.
- Staffing flexibility that provides access to specialists and niche game creatives.
- The ability to run 24/7 gaming development teams and accelerate production time.
- A pool of extended talent that would normally be difficult to procure.
- Diversified teams with local knowledge that will go the extra mile in creating culturally sensitive content.
- Although this is far from the only deciding factor, strategic external gaming partnerships do help to cut massive costs. More content, features, and consoles is what gamers want, and being able to provide more gaming experiences to people across the world is what companies such as EA live for.
The increased flexibility has awakened a new era of creativity within gaming houses that now have the freedom to launch multiple gaming initiatives to hungry audiences that are waiting to be amazed.