Report: 40-60% Savings For Chinese Game Outsourcing

Niko Partners, a market research and consulting firm for the Chinese videogame industry, today announced results from its latest report concerning outsourced game development in China, timed to coincide with the recent ChinaJoy Summit. According to Niko, the cost savings and need to augment development staff is what drives most publishers or developers to outsource some of their work. The Niko survey of 20 outsourced game development studios in Shanghai and Beijing identified the cost savings to be in the range of 40-60% lower than development costs in the US or Europe. The results also indicate that the market for outsourced game development is growing rapidly thanks to publishers and developers increasingly turning to China for help with mostly artwork-related projects, which currently puts demand for outsourcing studios in excess of supply. “With the high production costs of current and next generation titles in 2006, outsourced development of videogames is seen as a strategic way to offset high costs and large scale labor requirements,” said Lisa Cosmas Hanson, managing partner of Niko Partners. “As Chinese developers continue to improve their skills across all game platforms, the country has become the primary center for outsourced game development globally.” The Niko report noted that fierce competition for talent and good projects will soon lead to consolidation and will allow true leaders to emerge among the developers. The report also stated that there has been little design and complete development done in China so far, however, with talented professionals and a game centric culture that is expected to change over time. Hanson continued: “Understanding how to identify and work with a good studio can be the difference between a completed job and a job well done. China is an emerging market, with many talented development studios. In time, this market will evolve even further, moving beyond artwork and programming to encompass all aspects of outsourced international game development.”