Outsourcing Game Development Challenges And Opportunities

Many game development/publishing organizations are growing rapidly as "games" become the app of choice for entertainment, branding and engagement. This is driving the cost of game development up and the demand for more games. This pressure is forcing game developers to consider out-sourced game development to fill the demand.

 For a number of reasons game(Apps, Facebook, Video, Web, etc.) development  is unique relative to other domains. Building games is very different from developing banking applications, health care apps, manufacturing systems etc. The "creative" aspect of gaming is a primary differentiator requiring a close knit collaborative effort with development team members including project managers, program managers, artist, illustrators, etc. to create a compelling market relevant game.

 Games usually address a specific demographic that may have cultural  bias.  To address these preferences a game  development team must address those prejudices to assure the game  satisfies the intended target audience. Games have also become a major  form of entertainment  and game publishing can be very lucrative if executed properly.

 Game development can be challenging and expensive. The demand for new, creative, cultural relevant,  engaging game content drives development costs up resulting in organizations seeking  "outsourced" development resources. In discussions with several game development and publishing companies the outsourced solutions is a potential panacea for increasing the output of the native game development team.  

 Some game companies have been encouraged to outsource their game development to locations that are outside their geographic and "cultural" spheres.  Many countries and regions in the world have focused on  providing "outsourced" game development teams. Historically, these regions started development teams addressing "traditional" business domains and have begun to move into "game development" based on demand for this form of content.  This trend has intensified and it is also caused some outsourced shops to claim that they understand the game development process but really do not requiring game publishers to carefully scrutinize these organizations before committing to outsourced deal.

So how do you qualify an organization to determine if they can really do game development?

Meet and Greet - Despite the propensity for all of us to engage virtually as opposed to physically there is no substitute for actually visiting an organization and getting to know all of the players that will be engaged in the development effort. Granted the cost of visiting an organization halfway around the world is prohibitive. However, pressing the flesh is a good way to understand the organization and to make the organization know that you are "watching". Things to look for while you are there is the number of team members, their qualifications, their commitment to the organization and if the are actually part time  workers on contract themselves or actual employees. 

Staff Interviews - Everyone that will work on your project needs to be interviewed and introduced to your team.  If staff changes occur be introduced to the new members.

Architect - Who is the architect of the game? Ideally the architect still resides in your organization and not the outsourced group.  The architect establishes overall design, coding standards, etc. The host company should still have people on staff to guide and drive the external development team.

Start Small - The game that is intended to be developed may be complicated and a large project. However, the initial project or tasks given to the outsourced provider should be either limited or the project should be segmented into smaller executable segments to test the external team with a manageable task.  

Code Reviews - Regular code reviews are mandatory with members of the remote team participating in the code reviews. Code standards should be set by the host team.

Coding Standards And Code Documentation -  There will be a point where the code and game will be turned back over to the host development organization. To ensure a useful transition the host organization should set the standards for how the code will be documented and what the coding standard should be.

Source Control and Bug Tracking - Ideally, the contracting company should host the sources control system and  bug tracking system standardizing release management, bug prioritization, etc. This way the company has access to all the code and can take over the project if necessary.

    

Financial Penalties - Enforcing financial penalties with entities across the world and in different legal jurisdictions  is difficult if not impossible in some cases. However, having a contract that explicitly indicates the consequences for failure to deliver on time,  having xx amount of performance or code failures, etc, at least establishes a precedence and could encourage the outsourced company to adhere to best practices. 

Testing And Sign-Off - The host organization should conduct testing and final sign-off of all production committed code.  Do not depend on the  remote development company for final sign-off.

Copy Cat Risk - Inevitably, a third party develop organization will gain knowledge about your game and the way it was built. There is little protection from having that game copied in some format for another organization. If that organization  is in the same legal jurisdiction there could be recourse. Also,  the third party developer  client  is in the same legal jurisdiction you are in they could be sued leading to some resolution of the dispute.

In conclusion, outsourced, theoretically inexpensive game development, is very tempting and has been successful in some cases. However, without proper controls, expectations and processes in place to assure success issues have and will occur. Best practices are always a way to mitigate risk for both the contracting and contracted organization.

Kevin Flood is the CEO of Gameinlane, Inc. Kevin writes  about online games and their impact and integration into iGaming and E-commerce environments. Kevin is a frequent speaker at online game events and conferences in Asia, Europe and the US. Kevin and his Gameinlane team are currently working with online gambling, social gaming and e-commerce companies integrating social gaming with online gaming operations and integrate game mechanics into e-commerce applications.

EiG 2011 Milan Gaming Conference: What A Difference A Year Makes!

I attended and chaired a two day session on game development at the 2011 European Internet Gambling (EiG) conference and was surprised at how the European online gambling business community had  changed its positions and attitudes on a number of different topics from the year before.

So what was the catalyst  for this change and what changes are occurring ?

Social Networks - For years the I-gaming industry has dismissed or only partially entertained a relationship with social networks seeing the networks as at best, distantly related to their business and not a significant source of gaming revenue or player acquisition. The argument being that "gambling" was not allowed in Facebook, the potential players were to young, the players would not transact for "real" money, etc. 

Well that has changed evidenced by the opening CEO panel direct acknowledgment that they see social networks as one of the most important initiatives over the next year. More importantly they are actually executing on this plan now by launching exclusive social games and closer integration of their gambling games with their social game offerings.

 Despite all the attempts by gambling operators to dismiss Zynga and other successful social network game companies as low revenue, not real gambling, and not a source of quality gambling leads the numbers are so overwhelming that gambling operators have to take notice. Zynga has a predicted 2011 revenue on the low end of 600 million USD.  Social games in aggregate are now producing more revenue then advertising for Facebook. It is estimated that 1 billion USD and 60% of Facebook's revenue is coming from social games. If you are a CEO of a gambling company and especially a public company you have to have an answer for the social gaming phenomena.  To give the gambling business credit they are actually doing more then talking about their position relative to social networks and games they are  actively engaged in a number of social network and game initiatives.

US Online Gambling - The potential that the US market might open up to online gambling is also driving more awareness of the role of social networks and social games in the US market. The fact that the US market has banned online gambling has resulted in US players seeking a proxy for gambling within social networks and casual games. Zynga poker is the obvious corollary and the most visible one. However, fantasy sports is big in the US with a number of sites launched in Facebook and in standalone web sites. These gambling models may actually remain popular even after online gambling is legalized in the US. The gambling companies will have to launch similar sites or engage in business deals to up sell players to traditional gambling propositions.

Social Networks As A Player Acquisition And Retention Tool - With so many people active in social networks  many of them playing games in social networks the operators are realizing that there is a potential up sell opportunity. Also, the appetite for gambling style social games has been proven (Zynga). If you can publish a game in Facebook that is like a gambling game and you have good profiling business intelligence to profile players you are going to get conversion.

Retention is also very much an issue with gambling operators. There focus on acquiring, monetizing and not retaining players with alternative lower cost or alternate game play results in very high fall off of players. Social games could be an answer to this problem.

Virtual Currency/Goods - The social games that European gambling companies are building are taking advantage of virtual currency/goods transactions. Virtual currency is a proxy for traditional gaming money transactions and is legal because the prize payout is in a virtual format and not a "cash" payout. The gambling companies are starting to realize that this is a better business model then their cash business because players do not get paid for their winnings and their is no concept of a traditional wallet. All of the money stays with the operator.   A previous barrier to gambling companies taking virtual currency transactions seriously was the low individual transaction amounts. The gambling operators, based on the Zynga model, realize that if a game becomes truly social the amount of transactions can be very high resulting in good revenue per game. The other phenomena that gambling operators may be aware of is the social game "whale" phenomena. At the GDC conference in San Francisco this year a speaker identified a class of social gamers  as whales (sound familiar). These social gamers are transacting up to $150,00 USD a year in virtual currency/goods transactions! Granted the number of players in this classification are small relative to the overall social gamer numbers. However, their profiles and gaming behavior is very similar to the high rollers at land based casinos.  These players are getting VIP treatment from the social game operators for obvious reasons.

Social  Gambling Games - The majority of the games being developed by the gambling operators are social games that mimic real gambling games or could potentially have up sell potential into traditional gambling games. Bingo or bingo derivations  are the obvious choice because they are inherently social games and they have gambling cross over potential.

 Social Game Mechanics In Gambling Games - More interesting is the development of traditional casino games injected into a social network context. Clearly standalone casino games have very little chance of being successful in the  context of the social web. Games have to have social components to encourage communication, rivalries, status among peers, etc. to grow a large enough communities to make the economics of social games work.   The components being added to traditional casino games are leader boards,  competitions around the leader boards to encourage players to invite others to the competitions and to provide visibility  and status recognition of players. Essentially, gambling operators are learning how to create communities of gamers. According to one operator the addition of "game mechanics" have proven to be very successful.

Branding/Monetization/Upsell - In the game development sessions I chaired participants where keen on making money in social games that deviated from gambling transaction revenue.   In the ICE Game Monetization sessions this year this topic was discussed with little enthusiasm from the traditional gambling community. That positioned has changed. I am not sure exactly  why. This new position could be influenced by the developers study of social games where branding is one of the most lucrative ways to monetize games. Branding is such a good revenue source for social games because of the "engagement" time of social games. Real gambling games have  the same engagement characteristics. 

Game Development And Mobile Game Influence - The rise of multi platform game deployment and the increased importance of mobile gaming has changing the way gambling game operators are approaching game development. Traditionally games have been developed for the native platform(PC, Web, Phone, etc) to extract as much functionality from the platform to create an optimal game experience. This approach has been challenged by two developments. The market requirement to launch games simultaneously on Android, Apple, Facebook and web is making this approach expensive and increasing the amount of time it takes to realize the full potential for a game.   HTML5 is now seriously being considered as the game development environment of choice to allow for cross platform  near simultaneous  game deployment. It is also being employed to decrease the cost of development. In the CEO panel one of the CEO's  specifically stated that their future games would be developed in HTML5.

Sophistication Of Games -  The area of game development that really impressed me at the conference was the level of sophistication of casino style games. The multi-level and multi-dimensional games being developed are fascinating and speaks to the study of player behaviour invested in these games. The sophistication is not necessarily expressed by increasing complexity. In some cases the game itself is very simple with added emphasis on key aspect of the game that increase game play time and of course revenue.

.Com Versus .Country - Europe has decided it is going to create a country by country regulatory regime forcing gambling operators to offer games only to their residence and excluding gambling operators that do not have licenses within a particular country.   The motivation for this is well understood as each country struggles though the current economic environment looking for revenue anywhere a government can find it.     However, the impact on Internet gambling in Europe will be profound.   Essentially, the cost of doing business will go up, innovation will be constrained and over all gambling revenue will decrease especially for social games that require large communities to keep the games interesting.  This model may also  break down and not be viable in  countries with smaller populations. What will be the options and approach in this situation?

This trend may also be one of the reasons why European gambling operators are going social. They realize that they have to find other less costly. accessible  and lucrative markets to survive and to grow.

Overall, this conference was the first European Internet Gambling conference where I got the sense that the European gambling community understands that it is part of a much larger online gaming community. This realization has given new life to an industry that traditionally defined itself as an isolated online gaming island. The conference was refreshing, with high energy exhibited by the people actually building the games. They where excited about the social gaming opportunity, mobile game development, cross platform development, etc.

 The new and emerging European gambling regulatory model will be challenging resulting in a consolidation in the industry and fewer competitors. US legislators will no doubt be looking at the new European regulatory model and decide if the would work in the US(.state versus .com).

Kevin Flood is the CEO of Gameinlane, Inc. Kevin writes extensively about online games and their impact and integration into iGaming and E-commerce environments. Kevin is a frequent speaker at online game events and conferences in Asia, Europe and the US. Kevin and his Gameinlane team are currently working with online gambling, social gaming and e-commerce companies integrating social gaming with online gaming operations and integrate game mechanics into e-commerce applications.   

  

HTML5 Versus Flash, Objective C(Apple) , And Java App(Google) Game Development Debate

Many game developers have decided to build their games in HTML 5 moving away from native platform development on Android,  Apple O/S and in Flash(Microsoft native app.) development. I have been encouraging my clients and  game developers to do the same.  My advice has generated a fair amount of controversy and  in some cases outright hostility or all out endorsement. The variability of the responses indicates that not everyone sees HTML5 game development  from the same perspective.

 Reasons For Endorsing HTML5 Game Development 

Build Once For Deployment On Multiple Platforms(Web, IPhone, IPad, Android, Facebook, etc.) - The world is no longer one dimensional allowing developers to only deploy a game in Facebook, on mobile devices or on the web. A game should be manifest in all of these environments and in many cases tied together to encourage people to play against each other on different devices and environments. HTML5 gives you some leverage to achieve this goal by decoupling game development form the operating system (OS). 

Keep The Cost Of Development Down - Clearly developing the same game on many devices can be costly from a variety of viewpoints. Development platform expertise, unique user interface design, connection to server methods, moneitzation mechanics, payment processing. etc. HTML5 does not solve all of these issues but it will solve many of them. Developers and web designers have become very efficient and cleaver developing a game first for a mobile device using HTML and then moving the game to other platforms. This allows the interface to undergo few changes as it moves up the user interface ladder.

Get To Market Faster - From a marketing perspective its makes sense to get your game on as many platforms as possible as soon as possible to capture market share in all of the environments and to build brand awareness for the game across platforms. There is a very short period of time to get a game recognized and growing. The more places it appears simultaneously the more likely that a referral buzz will be created to propel the game up to the charts in the mobile and Facebook environments.

Get On Multiple Platforms Faster - I have yet to find a game development organization that has not been asked to get the game on mobile, on MS, Apple, Facebook, etc. as soon as possible. To a large degree the developers are the ones pushing the HTML5 button to relieve development load on their organizations and to get the game to market.

Game Download Speed - It still amazes me that client side games exists and are still being developed. The download for these things is obnoxious if you do not have any of the game assets per-loaded even with broadband connects. They are also error prone given the constant updates that MS and Apple drop on your device. HTML5 goes a long way in eliminating this issue.

Objections For Developing HTML5 Games

The Games Do Not Look As Good - A product manager came up to me one day waving his Apple laptop at me with mock ups for the user interface of a new game on the screen. He asked me if I could make an HTML5 game with the rich graphic content of the example he showed me. I indicated probably not. First of all the quality of the graphic content spelled heavy download to me. Sure caching would help after the initial download. However, the game mechanics in a browser with all of these graphics moving in and out of the game did not encourage me to be positive. I told him we could build the game in HTML5 with some UI compromises to make the game more accessible and easier to access. He walked away fuming insisting that we have the rich graphic content and he wanted the game interface on mobile and the Facebook platform. I said sure  but you might regret that decision. I am sure this interchange occurs often and requires a producer or product manager to make some very difficult decisions about appearance versus user experience.

The Game Mechanics Are Not Sophisticated Enough On HTML5 - Well certainly native application development will give you a richer library of functions to make more sophisticated games.  In certain cases there may be good reason for this and HTML5 is not the answer. However, the question should always be asked are these functions really necessary and where else do you intend to post or display the game.

HTML5 Is Immature And Not Ready For "Serious" Game Development - I am not entirely sure what "immature" means in all cases. However, HTML5 is new, it is designed to be generic addressing a number of web development interests. This mean that there will be things that can not be done with HTML5 at this time. However, abandoning HTML5 because it does not support a function today may not be the best decision. HTML5 will evolve based on input from the user community. I suspect that if enough developers speak-up about a missing feature in HTML5 it will eventually show up in the specification. The last thing you want to do is to stay on a fading platform and miss a wave. If you do you it will be very hard to get back on the wave as it gets stronger and starts to move faster.

Game Development Expertise - Some game development shops are heavy staffed with with C, C++, Java and less with "web development" resources like Python, PHP, etc. talent. Certainly this does have an impact on a shops ability to build web based games and may require a team to start thinking about other resources to complement their teams to produce HTML5 games.  I would suggest that a game development team start investing in resources that can develop HTML5 games to build the skill set and expertise in their organization.

In conclusion, many game developers are now building games in HTML5 for the reason I have identified. Yes, HTML5 has it limitations. However, the multi-platform deployment ability should be taken into consideration when deciding on the game development platform. There are certainly times when HTML5 is not the answer. Certain sophisticated games in terms of animation, game logic, taking advantage of low level O/S functions and connection speed may discount the benefits of HTML5 and require a different approach. However HTML5 will evolve quickly for the simple reason that game developers would prefer to build once and deploy on multiple platforms. Socket connections are an obvious area that HTML5 and browsers will begin to do a better job at to allow for better communication between server and web client. I am sure their will be many more on the pure graphic creation and rendering side.

Kevin Flood is the CEO of Gameinlane, Inc. Kevin writes extensively about online games and their impact and integration into iGaming and E-commerce environments. Kevin is a frequent speaker at online game events and conferences in Asia, Europe and the US. Kevin and his Gameinlane team are currently working with online gambling, social gaming and e-commerce companies integrating social gaming with online gaming operations and integrate game mechanics into e-commerce applications.

Should An Online Game Operator License Or Build Games?

Online game operators frequently have to make a decision to license or to build games. To a certain degree this decision is similar to a buy versus build decision for any software product or service. However, there are some unique characteristics associated with operating online games that make the decision to license versus build more challenging for an online game operator.

Should All Games Look And Play The Same? - Each game development team will have its own way of developing games that impact the look, feel and mechanics of a game. If an operator plans on licensing games from a number of different vendors it is important to understand what the players tolerance is for differences in game interfaces and mechanics. If the operator develops their own games this becomes less of issue because the operator can control and influence the game experience.

Do The Games Have To Be Integrated Into Social Networking And Social Media Properties? - Social mediums such as Facebook, Twitter, Bebo, MySpace and Hi5 are becoming platforms for game delivery. It is no longer adequate to solely have a web site as a landing page and entry point into a game experience. An operator has to have a presence on social media platforms to reach optimal market share. This places a demand on game suppliers and operators to provide games in social media environments and on web sites.

Thin(web 2.0) Versus Thick Game Clients - It used to be conventional wisdom that an operator had to have a downloadable game client to provide a player with the visual and game play mechanics sophisticated enough to address the demands of players. With the proliferation of Web 2.0, advanced graphic develop tools and full featured web browsers the gap between thick and thin game clients is closing making it possible to provide the same graphic and mechanical experience through a browser. The need to support both thick and thin client game clients needs to be taken into consideration when deciding on the platform of chose. Social Networks are especially sensitive to the need to support thin clients and make it difficult to integrate thick clients into their environments.

Game Platform - Games require a platform to operate on. A platform provides payment processing, reporting, interfaces(api's) to internal and external programs, security, data storage, ad serving, age/location/identity, server side processing, community and social networking features.

When an operator licenses or builds a game system the platform is a much larger and more sophisticated then an the individual games that run on the platform. When an operator "buys into" or builds their own games they are committing to a game platform. Supporting a range of games requires a sophisticated and flexible platform to deliver a wide array of game content.

Development Team - Online games are developed by teams of developers, engineers, project manager and product managers. The teams use certain program languages, API standards, databases, architecture and messaging systems.

Building games is non-trivial and requires a sophisticated technical and managerial staff. Despite the expense and sophistication of a development team, having a development provides an operator with the flexibility to build games and a platform that meets the immediate and ever changing needs of the organization. It also allows the operator to be less dependent on outside resources.

IT Infrastructure/Cloud Computing -Game platforms run on hardware that has to be hosted somewhere. The hosting requires a staff to manage the operation regardless of the hosting environment. Cloud computing has become a new option for game operators obviating the need for hardware purchases. However, the move to cloud computing is not necessarily a good fit for game platform hosting. If a game platform has extreme CPU utilization spikes, rapid increase in storage, inter server communication, database architecture issues and API calls to systems outside the cloud it could rule out the cloud. The important point is to recognize that hosting is a large part of game platform operation that either the vendor or the operator will have to tackle and manage.

Time To Market -Operators are frequently under pressure to get a platform and or games up and running quickly. The pressure to accomplish this goal can have a significant impact an operator's decision to license versus build. There is no single path that will optimally get an operator to market faster. However, there are long term implications to either decision that should be taken into consideration in concert with the decision to get to marker quickly. In some cases the short term goal of getting to market quickly could have negative long term consequences for the organization.

Market Differentiation - It is difficult to differentiate a game property if you are licensing games. There is certainly a way to mix and match games or provide different incentives and promotions to set an operator apart. However, in the end the games you are licencing are the same games that are available to other licensees.

Flexibility And Control - There is an operational and philosophical question that an operator needs to answer before embarking on the license versus build decision. How much control and flexibility do you need to have over your game product offering? This decision is not made out of context without consideration of the other items I have mentioned. However, a decision to license versus build has long term implications in respect to the operators ability to react and move quickly to changing market conditions.

Conclusion - The decision to license versus build games is a complex decision requiring an operator to consider many factors and to avoid the temptation to react to a short term objective that may have long term consequences. Once an operator commits to a certain course it is difficult to change. The decision should be well-thought out evaluating the pros and cons of the decision and the impact on the long term health and welfare of the business.