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Video-Game Publishers Outsource Development
randomErr writes "According to a San Jose Mercury News article reprinted at the Miami Herald: 'Mark Vange is in the vanguard of globalizing the video-game industry. He employs 30 game developers in St. Petersburg, Russia, who have worked on everything from flight simulators to dragon-fighting games. 'We can get the work done for half the cost that it takes in the U.S.,' said Vange, president of Ketsujin Studios. Similar outsourcing of video-game production is being done in places like China, India, Vietnam and parts of Eastern Europe. California game developers, who are the creative force behind a $10 billion industry in the U.S. market, view the trend with a combination of fear and anticipation'."
<Sarcasm>This is great! No really -- now my video games won't cost $50+ each.
What? You mean the price won't go down? But we are saving so much money on the labor -- where is all that extra cash going?</Sarcasm>
Sarcasm aside I think those three sentences pretty much sum up my feelings (and most other /.'ers?) on all types of outsourcing (techie or otherwise). It's an excuse to pad the pockets of the fat shareholders at the expense of the middle class.
Too bad smarter people then me have looked at it and can't come up with a solution. I've said this before but I'll say it again: If this trend towards globalization continues I fear we may wind up proving poor old Karl Marx correct. It's really a crying shame too because capitalism actually does drive innovation. Too bad it also drives greed.
I want peace on earth and goodwill toward man.
We are the United States Government! We don't do that sort of thing.
This will probably just be labelled as flamebait or trolling, but whatever.
The fact of the matter is, outsourcing is the end result of the bloated salaries of programmers and designers in the US (among others.) The fact that they can make it for HALF as much in St. Petersburg just goes to show the problem. If someone is willing to do the same job, just as well, for half the price, why would a company NOT do so?
People bitch about this, and that's fine. But at the same time, those people claim to be for free-market economy. But of course, only when it supports THEIR cause.
Such is life, I suppose.
Moderate this! *finger*
The problem with such an approach is that cultural differences will likely cause numerous rifts between the marketability of a game and its ultimate appeal. Not only is guy outsourcing game programmers, but he's also outsourcing game designers, which usually has disastrous results. Games are highly subjective, and you can't have one part of the world design a game for another part of the world and expect it do well with no exceptions. Examples abound. At least 80% of all Japanese video games never make it stateside. Most every FPS in existence has little to no appeal in any part of Asia. The most popular MMO in the world, Lineage (soon to be surpassed by its sequel), is virtually unknown in the western hemisphere. Ad infinitum. These methods to save a quick buck rarely pan out in the end, though they look good on paper.
~Tirinal
Well, like the article says, they only pay them half as much as they would Americans, so there might be the "getting what you pay for" factor, not saying American devs write better code; far from it. But when you pay half has much, you can't always expect the same quality.
Buckethead
When a company has 50% or more of its "high pay" employees outside of the US, kick them the fuck out - they're not a US company anymore.
At the least, put a HIGH tariff on thier products - the same way we currently do with imported steel.
If the company isn't willing to give back to the country that allows it's existence, the country should cease to allow it's existence.
Unfortunately, this'll never happen with our current gov't.
Well, let's just hope that Vange gets paid half of what is normal in the U.S. and the price for the games are half as much so that the unemployed, underemployed, and those working a minimum wage to compete with Russia can afford the games.
Unless, of course, the primary market for these games is Russia.
I don't really see outsourcing as such a big deal. I just don't understand why some CEOs get paid so much money to supervise a workforce halfway across the world for a company that is officially located in a third world country. It really seems the company could increase shareholder values by moving the CxO to those cheaper countries as well.
"She's a scientist and a lesbian. She's not going to let it slide." Orphan Black
Actually art is one of the few things that can't really be outsourced well. Cultural differences affect things like style and color selection. I remember reading a while back about problems US companies were having outsourcing art to India.
What? You mean the price won't go down? But we are saving so much money on the labor -- where is all that extra cash going?
Unfortunately, that isn't how the economy works.
When you are producing a commodity product, like lumber, coal, or oil, then competition drives the price of your product down to the average total cost of producing that product. In theory, in a commodity market the profit margins are enough by the end of the year to leave each firm in the industry with exactly zero profit. If games were a commodity, reducing either the variable costs or the fixed costs would result in a reduction in price.
Games, however, are not commodities. In fact, they are much closer to a monopoly market. When a company makes a game, no other company can produce that same game. If I want to purchase Diablo II, I have to pay Blizzard exactly how much they are asking - no one else can provide that product.
I can purchase Fallout 2 instead, and there is some price sensitivity there. However, I would not necessarily purchase Fallout 2 over Diablo if Fallout was $10 less. Game companies run the demand curve, and price their games accordingly - $50.
In general, when you are the sole provider of a product you should charge as much as necessary to maximize the equation:
Profit = (Price - Variable Cost) * Quantity.
Quantity = Func(Price)
Changing the cost of producing the game has no effect on the Variable Cost or the Quantity, and therefore should have no effect on the price you pay for the game.
Thank you Mario! But our princess is in another castle!
Just because the US middle class hasn't been fully impoverished YET (and we're NOT better off than we were ten years ago!) doesn't mean that continuing outsourcing WON'T do it. Why should one expect a relatively highly-paid workforce with political rights and high expectations to be able to compete with much-lower-paid folk who can't unionize and don't get health insurance or retirement benefits, and will work for peanuts even by local standards 'cause any job is better than none?
With outsourcing trends as they are, we are rather likely to get what Neal Stephenson describes in Snow Crash as an globally-distributed layer of what a Pakistani bricklayer would call prosperity. Unfortunately for us in the US, *we* will call it "abject poverty".
"My strength is as the strength of ten men, for I am wired to the eyeballs on espresso."
You've (typically, I must add) confused cause and effect.
Greed is the thing that drives both capitalism and innovation, not the other way around.
The reason centrally planned economies don't work is because, at the heart of it, they tell people not to be greedy. And people don't listen.
Greed is the thing that causes companies to form to make games. Greed is the thing that causes programmers (fresh off a hit game) to demand the big bucks. Greed is the thing that then drives the _people with the money_ to go elsewhere to hire the programmers.
It's their money.
Saying they can do what they like with it is capitalism. Saying they can't pad their pockets is, my friend, central planning.
So far from "proving Carl Marx right" what you're actually doing is making the case for why he is still wrong.
What a great way to argue. I'm glad you backed up your argument with a statistically significant sample of *ONE* game.
Although the education system in Russia may be getting a little bit worse, they (and eastern europe) still create exceptional students that are quite capable.
Remember, Sergei Brin (founder of google) is a first-generation Russian. His father is also a pretty smart guy.
Also, I would like to point out an the 'Serious Sam' series, made in _Croatia_ of all places, that is quite good and entertaining.
Here's the moderately simple and brief explanation for outsourcing: Inflation in this country is really out of control, in things we can't trade like health care, tuition, real estate, and things we can't control like gasoline and metals. That's because the government has been pumping so much money into the economy to try to get it to go somewhere via lower interest rates and increased government spending. With all this money flying around it would have already have caused a ton of inflation, and wages would be very high in world wide terms, except people have been able to send the work overseas. That was less possible 20 years ago and almost totally impossible 30 years ago so we have this weird kind of recession where we are losing jobs in anything importable put a lot of people are doing really well in anything we can't export like real estate. The main export of the United States now is inflation. Here's the slightly longer explanation.
The trend of closing down game companies in the United States and having the work outsourced to Russia is new.
The old trend was for game companies to simply go out of business.
I'm an independent video game developer and I'd like to point out that the indy scene has been international for quite a very long while.
Does anybody have a fucking clue about what country the words 'Nintendo' or 'Sega' comes from? Can you guess where the international headquarters for Sony is located?
Truth is that the video game industry has never been primarily American. It's always been international.
Everyone needs to quit bitching. Nothing to see here, move along, goddammit.
Yeah, it's a notorious fact that Russians suck in the art of making PC games
Your can't ban outsourcing, that would mean every company in the US would have to close their offices around the world. It wouldn't happen, incentives are more likely to work.
"Let's see how much money they make when they wipe out the American middle class. How many games are the CEOs going to buy? There's also a wonderful concept to business called: Not shooting yourself in the foot for the sake of a temporary increase in profits."
Population of China - 1.4 Billion
Population of India - 1.0 Billion
Population of America - 0.3 Billion
"Not only are such global imbalances unsustainable but in the US, a lasting recovery cannot be built on a foundation of ever-falling saving rates, ever-widening current-account and trade deficits, and ever-rising debt burdens."
Morgan Stanley global economist Stephen Roach
America has an old population compared to India. Our Baby Boomers are retiring and asking for handouts and we won't have enough people working to fill the jobs of the impending wave of retirees or to pay for all of the medicine they're going to need.
If the American middle class evaporated it wouldn't be the end of the world for multinational corporations, including those based in the US. Most of our tax dollars are going to go old people who want expensive pills for free.
Education will suffer because kids can't vote and your average retiree is worried about immediate needs not the long term health of this country. I love democracy but America is headed down the crapper because of it.
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When you stop looking for work, you're no longer counted as 'unemployed'.
I love it when people claim 'The US has an unemployment rate that's the envy of the world.' No we don't. The rest of the world just reports it in an honest manner.
Why do Americans think they're the only ones who deserve decent jobs? Is the rest of the world supposed to sit in poverty forever while America maintains its enormous salaries? I don't think so. The rest of the world is becoming educated, becoming skilled, and deserves good jobs just as much as America. And another hint - there are a lot of gamers in foreign countries too.
Geeks in Russia are more like Americans than American geeks are to other Americans. People are people, and there's no sense in this mindless nationalism and xenophobia.
This is a common misconception. As the American Middle Class suffers and becomes poor the growing Middle Class in India and China provide all the markets capitalists need. They're abandoning the American middle class. Americans want too high a standard of living for their (capitalists) liking. We expect 40 hour work weeks, Unions, job security and maybe even a little real Democracy (very little of that, but it's still a nusance when you're building a new call center and the locals won't let you because it's a death trap, and they passed an ordinance against death traps in the last election). China and India are ideal. They have so many people that it's physically impossible for enough of them to join the middle class and stem off the supply of cheap, desparte labor.
The idea that capitalists can't abandon America is actually part of their rhetoric. It's one of the arguments they like to bring up whenever anyone talks about nasty stuff like tariffs and maybe baning some of those Walmart imports from some of the more brutal regimes. "We can't leave, we need America, we need it's people". Don't be fooled. They can leave and they don't need you.
Hi! I make Firefox Plug-ins. Check 'em out @ https://addons.mozilla.org/en-US/firefox/addon/youtube-mp3-podcaster/
Wish I had mod points right now. Most corporatism- and globalization-related problems would go away if companies couldn't hide behind the argument that shareholder dividends are priority #1. I think it would be better if it were enshrined that every company's priorities were:
1) To better the living conditions and well-being of society and mankind as a whole;
2) To ensure that current and future employees cannot be 'let go' unless there is *no* other way to reduce costs for the company (ie., senior execs ' pay is based upon company performance -- they lose first, then employees).
3) Maximize shareholder value.
Of course no one will ever let this happen, as it means the end of the golden parachute/handshake/Enron behaviour/etc.
ERROR 144 - REBOOT ?
It's not altruistic if someone outcompetes you for a job.
Then why don't they make games for themselves? Why does everyone want in on the American economy?
First, many great games are created by foreign developers. Second, there is no such thing as an "American" economy. There is only a world economy.
That's why this "chicken little" crap doesn't make sense. People predicted that Japan would kill us back in the 60's. They didn't. The fact is, that as a foreign economy steals jobs, it also adds consumers. This is an overall GOOD THING for the total world economy. And it's mainly the shittiest jobs getting outsourced anyway.
I've said this many times on slashdot, but as long as America innovates and steals talent from overseas through our university system, we'll be fine. If not, we'll fail.
People used your same arguments in the 50's to argue that textiles and manufacturing jobs needed to stay in America. Today, if our economy was based on that, we'd be decadeds behind Asia and Europe.
America's economy is a constant process of innovating new high-paying jobs and exporting of old, no longer "cool" jobs. Anyone who can't see this has neither a historical perspective nor grasp of basic macroeconomics.
"I also anticipate that the federal, state and local government will want to tax me at a total rate of:
2004 - 50%
2010 - 60%
2015 - 85%
2020 - 90%
2050 - 90%"
Yeah, I play Master of Orion too. Seriously this will never fly. Despite the USA's firepower, 300 million pissed off people is way too many to handle.
"Derp de derp."
so could someone please explain this parnkster first post stuff? I can see a troll doing this once in a while, but there is an all out campaign of profane, idiotic, and just incomprehensable stuff...in every single article. It seems like an inordinate amount of work to do in order to have a few jollies. I want to know if it is a bot or if someone really dislikes slashdot or what. Think about what you are doing.. if you are doing this. You are wasting your time and energy to make Linux users (generalizing) look like kids. There's got to be something else out there you'ld like to effect. That kind of communication campaign could make a difference in a political issue you care about. Anyway, outsourcing seems like a fine thing to do to improve a world where people are starving. I don't see america as suffering that badly. I only hope social reforms accompany the outsourcing. Sometimes it does, sometimes it doesn't.
I couldn't agree with you more (until the last paragraph, but I'll get to that). Ten years ago I was in high school, so I can't exactly say that I'm better off than I was then, because it's almost a given. However, just over 5 years ago I was starting off in the same job I hold now, and today I make almost twice as much as I did when I started (which isn't bad since I was making more than any of my friends or anyone I knew my age when I started), and all of this after having shifted school from a full-time to part-time portion of my life.
Of course, to keep my job without taking another position in the company I had to move across the country, to an area where cost of living is significantly lower (then again, the only way I could've moved to a place that had a higher cost of living would've been a move to Silicon Valley or New York City). It's been a little rough, but overall it's cheaper to live out here and I've seen a significant increase in pay in the last 2 years (part of it an incentive for moving).
Since I moved to the east coast, I've had far more work than I ever had on the west coast. If I had the power to do so, I'd probably hire two more people just to get it finished in a reasonable time frame and to help with maintenance. Unfortunately, they don't want to do that, because they only see the work that's currently slated to be done, not the work that may be coming down the road, or the other work that needs to be done and is being neglected.
As for the US remaining the economic leader or not, I think it depends on where things go from here. Some people think that getting things "back on top" will simply require the "next new thing", but I think the dot.com crap can actually work for the economy if they can use it intelligently. You don't invest millions of dollars into a company with no business plan just because 100 other companies have made money for stock-holders the same way. Inflated stock with no underlying value in the company is exactly what it sounds like, and someone's going to get burned on it somewhere (otherwise, you won't have anyone to sell your stock to and it will be you that gets burned). Now everyone's got a web site and you can do more and more of your business online, or your purchases from home, or anything else you might do that involves business.
As with every new technology, though, we tend to make things easier to the point where low-skilled labor can take over the jobs that used to be high-tech and correspondingly high-paying. Even in the case where truly high-tech jobs are going outside the US, like the story this is all attached to, it's still a very limited export, as there are only so many groups in this world that are well enough known for their capabilities for any publisher to go to them to get work done. id Software has certainly been responsible for development work on more games than these guys in Russia are likely to have put their hands into, but you can't go to id Software and say "build me MS Flight Simulator 2010 and I'll give you $1M". They just won't do it. There are a handful of development companies in the US that work that way, most of them are not well known, and most of them are already owned by one or another of the publishers.
Call-centers in India are outsourcing real jobs from the US, real jobs that pay US employees $5-15/hour, depending on the type of work and the level at which they sit in the call hierarchy. Most of the people I know that have done that kind of work would rather do anything else, and turnover rates are extremely high (meaning most of them do find something else to do). Out-sourced developing is going to remain on a limited basis until development houses are built around the world specifically for this purpose. In order for an American company (or companies) to compete with that, you'd have to have a development house built with a focus on code reuse and willingness to build just about anything for a small price, with reliable schedules (something most developers can't do).
Finally, US unemp
-PainKilleR-[CE]
This is not the last thing to happen in PC gaming.
The gaming industry is one that can get away pretty easyly with a high throughput of titles, because gamers always want the new and shiny with more polygons.
I expect the gaming industry to take a hit as soon as OSS gaming engines and tools like crystal space or Blender get a grip. We'll have games for free, the mod community utilizing them (they work for free allready) and the money will be made in providing not a game but the service around it: Servers, special distributions (just like Linux), gaming leagues, high quality mods, automatic online updates - think 'Loki Linux Installer' which makes maintaining UT under Linux easyer thatn under Windows - and other stuff like that.
Closed Source Games are going to be the last thing to experience the OSS impact, but they're going to feel it nonetheless.
In fact, this outsourcing thing is a shure sigh for a local industry to get moving into service rather than pushing for cheaper production. No way can anyone in Europe or the US outprogramm a slavic, indian or far-east programmer for the same amount of money. As soon as people hereabouts will get that, the pain will stop.
We suffer more in our imagination than in reality. - Seneca
Some of us spent years at university to study for our profession, you know.
I can't keep doing a degree in the latest new trend. I'm just glad I don't live in America - where business and politicians seem intent on sending high-paid jobs abroad.
Why doesn't the government there realise they will have less tax returns and more social costs if this trend continues?
--- "We've always been at war with Eastasia."