VIDEO GAME ART IS INCREASINGLY "TO GO"

But times change, says Craig Rundels, who has occupied that slot for six months now. He admits he's learning how to best meet his employer's growing needs by keeping an eye on what's happening at the industry's biggest publishers.

Indeed, publishers like Electronic Arts, THQ, and Vivendi are no longer burdening their development teams with the outsourcing of their game artwork. They are, instead, setting up separate, centralized groups to manage that outsourcing, in effect creating traffic control centers to maximize the outward and inward flows of assets.

Just recently, Midway Games announced the opening of its Central Outsourcing Group in Austin "to provide expertise in outsourcing management and development pipelines across all of our internal studios," according to Matt Booty, senior VP, worldwide studios.

Foundation 9 Entertainment has 11 separate studios throughout the U.S. and Canada -- including the recently acquired Shiny Entertainment and Amaze Entertainment -- which means that the company as a whole is usually working on 22 or more games simultaneously. If ever there was a need for "traffic control," the Emeryville, CA-based developer has got it.

Even more significantly, the latest, or so-called "next-gen," console games -- for the Xbox 360, PlayStation 3, and Wii systems -- are all touting their hi-res graphics. That translates to an average 50% more art per game, making them significantly more expensive to build. For instance, says Rundels, today's next-gen games can cost $15-20 million each, way up from $5-7 million just a few years ago. While studios traditionally created much of their art in-house, or outsourced just a small portion of it, they now understand that employing "outsourcers" more frequently affords significant benefits, cost savings being not the least of them.

As a result, publishers have jacked up the percentage of artwork they outsource. For example, THQ outsourced about 20% of the artwork in its recent action-adventure game "Saint's Row." THQ intends to expand that in future games to maybe 40%, perhaps 50% in the next few years.

Industry observers note that what the video games industry is doing is mimicking what the film industry learned to do so well many years ago -- use teams of skilled craftspeople for as long as it takes to create a product, and not keep them on the payroll a second longer. It’s taken game publishers a while to catch on; traditionally designers would sit around after a game was completed waiting for the next project to begin. But game development has become too expensive to let that continue for long. The number of artists necessary for next-gen games is beyond what most companies can afford to keep on staff. And so, current buzzwords like “flexible” and “scaleable” resources reflect the direction the game industry is headed.

“I like to call it ‘right sourcing’ or getting the right work done at the right time at the right place for the right cost,” says Shiraz Akmal, VP of operations and product development at Calabasas Hills, CA-based THQ.

He explains that he launched THQ’s XDG unit -- which stands for “External Development Group” -- last March to better manage that ‘right sourcing.’

“XDG is sort of like a business development group,” he says. “We keep an eye on product development needs and the requirements of our games, we do all sorts of due diligence, and we basically save our studios -- which have grown in number from three just five years ago to 16-plus -- the time and hassle of determining where the work should go. We make sure that the outsourcers actually exist, that they have the resources and the quality they claim to have, and that they are financially stable.”

According to Akmal, THQ gains three advantages from XDG’s efforts: “First, we are able to extend our resources almost instantly without having to create new specially-skilled teams along with the necessary buildings to house them. Secondly, because we need to spec out the art so that someone 5,000 miles away can understand our needs, we force ourselves to become experts at improving our internal design and specification processes. And, lastly, on a long-term strategic basis, we intend to establish new studios in places like China, India, and Eastern Europe. By outsourcing art to those countries now, we are identifying who the really good teams are and are developing relationships with them with an eye toward bringing them into our studio system in the future.”

Determining how many and which outsourcers to use is an art in itself. THQ’s Akmal admits to having talked to almost a thousand with various specialties -- from those who are good at making vehicles to those who create realistic organic shapes to those who draw cartoon-like characters.

“Our goal is to narrow those down to just three or four primary studios,” he says. “At the end of the day, the last thing I want to do is work with hundreds.”

A big question for outsource managers is whether to deal with foreign studios or remain closer to home. That decision often rests on two issues -- price and what sort of communication is required.

If price is the biggest concern, notes Foundation 9’s Rundels, China is the place to go since the savings can be more than a third over a domestic studio.

“That’s where everyone is going,” he says, “which is why large publishers like Ubisoft have opened studios there. It can cost me maybe 7,000 to get a high-end character created domestically or $5,500 in Russia. But, if I go to China, it runs me closer to $4,000 without sacrificing quality. That’s per character. And many video games have lots of characters in them.”

But, in order to realize those savings, you need to do your homework.

“If you can specify the art precisely, if you can get things really locked down to where the artist knows exactly what you want, you can get the work done for half the cost in Eastern Europe compared to North America without compromising quality,” says THQ’s Akmal. “But if there’s still some fuzziness with the design, if you need a very quick iteration and want to discuss it with the artist beforehand, you probably want someone who is locally accessible.”

Fort Lauderdale, FL-based Shadows in Darkness is one of those outsourcers that is locally accessible and president Hugh Falk considers that one of the company’s strengths. He observes that we opened the company’s doors at just the right time, citing tremendous growth in his sector. Falk quotes figures from a recent report from UK-based “Screen Digest” that predicts that the global business for video game art outsourcing is expected to more than double from $1.1 billion in 2006 to $2.5 billion by 2010. Outsourcing will then represent over 40% of the total cost of creating a video game. The report notes that 60% of game studios outsource today with that number expected to soar to 90% by next year.

Riding the coattails of the outsourcing boom, Shadows in Darkness has grown from a staff of three in 2002 to 20, with a client list that includes such major publishers as Electronic Arts, Activision, Midway, and THQ. Falk expects to triple his work in the next two years, and he’s preparing by seeking investors “who will look at the figures and realize that this thing is going to explode,” he says. He hopes to be a company of 50-plus designers by 2011.

While Falk claims that there are just three or four sizeable domestic art outsourcers like his -- companies like Altamonte Springs, FL-based Pixel Revolution and Austin, TX-based Red Fly Studio -- he expects to see more pop up, which is why he is expanding in order to be able to handle bigger jobs that others can’t touch.

Attracting the attention of people like Foundation 9’s Rundels and THQ’s Akmal depends on having the leading-edge technology that today’s next-gen games demand.

“Our specialty isn’t just creating great-looking art,” explains Falk, “because any skilled artist can do that if they’re allowed to use, say, five million polygons. What we do is make something that looks like it’s five million polygons but we do it in five thousand. You see, when you’re making an animated film, there are no limitations because the film doesn’t have to run on a PlayStation 3 or an Xbox 360 which have very real limits to their memory and graphics. What makes game artists so special is that we can take the same quality art and scale it down -- using a process called ‘normal mapping’ -- to fit within the constraints of a console.”

Foundation 9’s Rundels cautions that getting quality work from an outsourcer depends on two things -- choosing the right outsourcer, of course, and having a core in-house team that knows how to assign out the art correctly.

“When the art comes back and the quality isn’t good, when there are technical issues as well as aesthetic issues, it’s usually because the outsourcer didn’t interpret the concept correctly. But that’s not always the outsourcer’s fault,” he says. “Today’s publishers have learned through trial-and-error that they need to provide an accurate blueprint that says explicitly what they need and eliminates any misinterpretation.”

At THQ, Akmal says that the responsibility for the quality of the art lies squarely with the in-house core team -- the lead programmer, the lead art director, perhaps the lead artists -- which must create the game’s vision, its design, its characters, and the look-and-feel of the game prior to sending it out.

Shadows in Darkness’s Falk concurs: “When I used to work at Midway where we outsourced a large majority of the art, one of the hard lessons we learned was that when we tried to outsource all the art, we ran into trouble. You need at least a core internal group to deal with things on a moment’s notice and to make sure everything is consistent, especially if you are using multiple art outsourcers.”

And, says Falk, publishers who have not yet outsourced need to be realistic in their expectations -- especially when it comes to cost savings. Specifically, he says, don’t expect any.

“Instead,” he explains, “what publishers will save is overhead and down time. I mean, there are people who outsource offshore trying to save money, but you usually get what you pay for. The real savings is in between projects. Once we’ve done our work for you, you don’t owe us a thing. You don’t have to let us go, you don’t have to give us a severance package, there are no bad feelings, no bad press, no further expense. We were hired to do a job and, well, it’s kind of like at the movie studios. People come together for a project and, when they’re done, they go off and do another one somewhere else. Why would you want to keep us on your payroll if the work is done?”