Games outsourcing in China grows rapidly

It has been the common practice of some developers and publishers to have their products outsourced. This means that certain aspects of production are given to other companies, typically from third-world countries, to have smaller expenses (and therefore more profits). We’re pretty sure we don’t have to reiterate to you how low they sometimes pay third-world workers.

Regardless of your stance on this matter, it seems that it will continue – and continue to boom in the coming years. San Francisco-based firm Pearl Research forecasted the games market in China will exceed US$ 1.3 billion in 2008. The study focuses not on game development outsourcing alone but also on the country’s domestic games market.

In case you’re wondering about the company’s findings, here are the highlights worth mentioning the most:

• Online casual games continue to gain traction and are expected to constitute 30% of the online games market by 2008. MMORPGs still constitute the largest online gaming segment in China. Top MMORPGs can generate US$ 80 million annually in China.
• Compelling and diverse game content, the low cost of playing games at an average of US$ 0.05 per hour, and the lack of entertainment options in China drove growth in the online games market.
• China will continue to flourish as a game development and outsourcing destination due to its low cost structure, large labor force and robust infrastructure. Companies can increase their production capabilities and achieve cost savings of 20% to 40% by outsourcing disciplines such as art creation.
• Outsourcing to China comes with significant challenges. These challenges include concerns over product quality and intellectual property protection, cultural differences and the competition for skilled employees.

It has been the common practice of some developers and publishers to have their products outsourced. This means that certain aspects of production are given to other companies, typically from third-world countries, to have smaller expenses (and therefore more profits). We’re pretty sure we don’t have to reiterate to you how low they sometimes pay third-world workers.

Regardless of your stance on this matter, it seems that it will continue – and continue to boom in the coming years. San Francisco-based firm Pearl Research forecasted the games market in China will exceed US$ 1.3 billion in 2008. The study focuses not on game development outsourcing alone but also on the country’s domestic games market.

In case you’re wondering about the company’s findings, here are the highlights worth mentioning the most:

• Online casual games continue to gain traction and are expected to constitute 30% of the online games market by 2008. MMORPGs still constitute the largest online gaming segment in China. Top MMORPGs can generate US$ 80 million annually in China.
• Compelling and diverse game content, the low cost of playing games at an average of US$ 0.05 per hour, and the lack of entertainment options in China drove growth in the online games market.
• China will continue to flourish as a game development and outsourcing destination due to its low cost structure, large labor force and robust infrastructure. Companies can increase their production capabilities and achieve cost savings of 20% to 40% by outsourcing disciplines such as art creation.
• Outsourcing to China comes with significant challenges. These challenges include concerns over product quality and intellectual property protection, cultural differences and the competition for skilled employees.