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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'."
Standby for a flood of "In Soviet Russia" jokes in 3....2....1....
<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.
I seem to recall that Sim City was ported to the Macintosh by a group in Russia and that a significant amount of the original programming was outsourced to Russia as well? Given that the sim was incredibly slow on a Pentium 3 I had and not that much faster on an old G4, I wondered about the "cleanliness" of the code that went into the sim. There certainly is a huge pool of programming talent in Russia (at least in Kiev that I know of where estimates range from 10-16% of the populace having CS skills), so perhaps the sim code was simply so big that it resulted in the slow performance?
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Games outsourced to Russia are known for their quality
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Yeah because it has nothing at all to do with cost of living (why don't you try living in Southern California on the salary that these folks in Russia are getting) or corporate greed. No it's all the fault of those fat overpaid American bastards.
Hey, see my other post. If this is going to save the industry so much money when is the price of my games going to drop?
I want peace on earth and goodwill toward man.
We are the United States Government! We don't do that sort of thing.
Yup... the Simpson's - perhaps the most biting commentary on American life - now has credits for offshore production. From the name of the manager it's likely India or Malaysia. The voices are still American but the graphics are probably done in a country where the sarcasm will not likely be noticed as sarcasm. Nothing is sacred and I'm seriously reconsidering my Simpson's habit.
No one ever had to evacuate a city because the solar panels broke!
What we need is a constitutional amendment defining economic treason as a high crime. Economic treason might be defined as sending "high value" work to a location where wages are substantially lower than Americans would earn.
eat shiat and bark at the moon
I suppose it can be good and bad. One of the good things would be cutting development costs, and maybe lower prices. But with the high piracy rates of Asia/Eastern Europe, I'm not sure I'd trust anyone with a large chunk of the code. And I'd say its a lot less likely than it happening here merely because of the legal reprocussions. Going half way around the world to a different legal system to try and apprehend and punish the guy/gal who did it is far more difficult, when compared to staying in your own backyard (USA/Canada) where you know the law.
The Doormat
If you're not outraged, then you're not paying attention.
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
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!
This is an outrage! Next thing you know, Nintendo will outsource to some obscure place, like Japan!
---
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Not too long after the EA takeover of Westwood studios, some of the work was contracted out to a group in Germany, keep in mind they did very good work.... but still
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."
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.
Today, video game enthusiasts throughout the country announced that they are outsourcing their playing to countries like Burma, Zaire, and Elbonia, where people can be found to play video games much cheaper than in the USA.
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.
Don't some people do it because they enjoy it?
American Jobs belong to YOU.
"Hi. This is my friend, Jack Shit, and you don't know him." - Lord Kano
Nonsense. You need to read some first year economics. Just to help you, try the sections on Comparative and Absolute Advantages.
Also, read the section on Protectionism. Why, because the next logical step in your statement is to propose subsidies to American developers and restrict imports from overseas (through quotas, traiffs and embargoes), read up on them. You'll learn that protectionism increases the cost of living while preventing a short term increase in unemployment or a financial loss to some of the less efficient producers.
If anything is "economic treason", surely increasing the cost of living so that more people live under the poverty line (ie don't earn enough to live in the most basic of conditions) is.
Before you argue, read up on the topic. Also don't forget that unemployed people must get retrained or get left behind. We've been through this all before (check out the automobile industry prior to Ford's Mass Production). How many farriers are around today? Do they meet demand?
Western cultures are moving into more service based industries. This includes research and development all the way down to tourism. Why? Because we are good at it, can often provide excellent quality at a low cost. Don't be close minded and freak out because some code monkey jobs were lost to overseas, learn extra skills (project management, a language other than english, teaching etc) so that you can enter industries that your economy excels at. We are still designing, specifying and developing new products, we just get them made OS.
"The big question in our lives is how to be at the same time a hedonist and in a hurry" - Alain Ducasse (?)
...is that just a generation ago, it was computer technicians and programmers who put millions of Americans out of work by replacing their positions with machinery. ...just sayin'....
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.
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- mritunjai
yeahhhh, I'm gonna have to ask you to move your desk again. why don't you move it to india!
They're using their grammar skills there.
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]