Client News

Game development industry “arrives” at e-Services Philippines 2007

Industry association representatives present bright prospects in game development outsourcing

(Manila, Philippines) – The game development industry is one of the brightest spots in the Philippine outsourcing industry according to Ranulf Goss and Niel Dagondon, president and vice president of the Game Developers Association of the Philippines (GDAP), respectively. Goss and Dagondon were presenters at the recent e-Services Philippines (ESP) 2007 Global Sourcing Conference and Exhibition.

GDAP is an association of game developers formed late last year to elevate the local game development industry through educational opportunities and business alliances. The group is composed of eight companies employing approximately 200 developers. As part of its mandate to forge strategic partnerships and promote the local game developing industry, GDAP’s participation in ESP 2007 served to formally announce the “arrival” of game development to IT and IT-enabled services players and stakeholders, said Goss and Dagondon.

According to Goss, who is also a producer at Matahari Studios (Philippines), the Philippines currently has approximately 15 to 20 game development companies, most of which employ less than 10 game developers. From over 300 game developers in the Philippines, GDAP projects an increase in the number of companies engaged in game development to 450 next year as studios upgrade from garage entrepreneurships to established businesses and new players enter the industry.

That projection is based on increasing demand for outsourced game development services. This trend was reported by Screen Digest in its 2006 game development outsourcing industry report. According to the report: “A quiet revolution is transforming the games industry as developers turn to outsourcing to control spiraling next generation costs. Outsourcing in Next Generation Games (titles aimed at bigger audiences and of higher standards) Development reveals a sea change in games development that is resulting in significant expenditure being shifted to outsourced services providers, many located in Eastern Europe and South Asia.”

This “quiet revolution” is reflected in industry statistics. Unofficially, the industry generated revenues of $7.4 billion in 2006 in the U.S. alone, with an annual growth of 11 percent over the last decade. Dagondon said that research into the performance of the outsourcing industry suggests a global market for game development outsourcing of $1.1 billion in 2006. Revenues are anticipated to grow to $2.5 billion by 2010, or 40 percent of total game development spend.

The Philippines is a relatively new player in the game development outsourcing industry. A seven-man team at Anino Entertainment, Inc. is credited with pioneering the industry. Dagondon is president of Anino. The company is responsible for independently producing the adventure role-playing game “Anito: Defend a Land Enraged” in 1993.

But there are challenges, developers warn. Scalability is a significant challenge. “Studios in China typically employ at least 100 to over 500 game developers while Philippine studios average five to 40 developers.” According to Dagondon, size is an issue because most large vendors require teams of up to 50 people. That makes scalability a major GDAP issue.

Dagondon said outsourcing opportunities available to local game development studios cover a wide range of needs, from low- to high-value development work ranging from object modeling and character animation to full-motion videos and game design and pre-production. These services are offered across all platforms, including mobile phones; handhelds; casual such PC and Xbox Arcade; online multiplayer environments; and multiplatforms, such as Xbox 360 and Playstation 3.

Compared to rivals China and India, however, Goss said the Philippines enjoys several competitive advantages, including proficiency in the English language; ability to adapt to new technologies; and an affinity to U.S. culture in terms of education, media and sports; and to Japanese culture in terms of animation and video entertainment. These strengths are being capitalized on by new local players.

Ultimately, however, Goss said the growth of the industry is hinged on how well GDAP and individual players address challenges to growth. Goss said there is an urgent need to market local studios globally to potential clients and game publishers. Second, recent increases in demand means greater pressure to find and recruit qualified graduates. Finally, continuous investment in technology that increases productivity and efficiency is crucial.