Updated: March 10, 2006

PS3 And Next-Gen Development Costs Lead To Developer Outsourcing

With the next-generation of systems releasing, development costs for games is at an all time high. A new report published by Screen Digest reveals that game development is currently being outsourced to low-cost specialists in Europe and Asia. The report gives out a scary estimation that 60% of game developers outsource some of their projects. These companies are estimated to spend $1.1 billion on outsourcing this year, with that figure rising to $2.5 billion by 2010.

Outsourcing has been brought mainstream over the years as companies are constantly getting their work done overseas because the labor is far cheaper. This could spell bad news for the game developers here in the United States though. According to the study, within the next few years, demand will exceed quality resources, forcing higher costs and fewer games. However, as new media companies gradually enter the market, the games industry will ultimately benefit.