This talk was interrupted by the fire alarm last year, so it was good to get through it unmolested this time. Again, I’m not sure just how relevant it is to a small developer, but it’s interesting to get a feel for the current climate at the top, as it feeds down the chain a bit in terms of work available for us.
Certainly the last couple of weeks have been bad for the majority of the stock market, and in general terms that means that risky investments are the first to be dropped. Unfortunately, games development is always a risky investment! Even the big players have suffered in the last couple of months, lots of volatility caused by a real lack of predictability. Not so good.
In Ed’s opinion, there were still opportunities, but they are in the low cost markets which are up and coming: mobile, downloadable games, casual titles, etc. Again, showing the risk aversion here – the big budget, big risk titles are not the sort of things investors want to deal with. Small scale, fast turnover games can show predictable results, without the all-or-nothing issue a AAA title might have.
Also covered was the massive growth shown in 2006, certainly a big surprise to me, but good news. Income across the market is up 68% to $995m, of which subscriptions make up a tad more than two thirds. Forecasts for 2008 are for more than $1.3bn, which is optimistic but doesn’t feel like crazy numbers to me.
More interestingly for us, the massive growth of outsourcing we were talking about in 2005 has outstripped even those projections, $1.1bn in 2006 (40% of costs). For a lot of companies it’s still about off-shoring to cheaper countries, but even local outsourcing is shown to keep costs under control, and reduce the risk that the publishers/developers have to take on for any given title. More work for us then.