Is traditional game outsourcing on its death bed?

Streamline Studios has worked on big games such as Street Fighter V, BioShock Infinite, Killer Instinct, Final Fantasy XV, and Pillars of Eternity.

But chances are you’ve never heard of Streamline, which is based in Kuala Lumpur, Malaysia, because it is an outsourcing company, developing technology or parts of games for other developers and publishers. I met with Stefan Baier, the chief product officer at Streamline, at the MIGS 2016 event in Montreal. He gave a talk on “Why outsourcing doesn’t work.” That seemed contradictory for a guy who works at an outsourcing company, but Baier believes there’s a shift happening in the industry that means traditional game outsourcing is on its way out.

Baier believes that games will go the way of other big industries like autos, where game companies will rely on major partners for a lot of their expertise in specialized services as well as flexible development work, while “transactional” outsourcing is likely to suffer. Transactional outsourcing is where the main objective is to do a simpler task without expertise, where the main benefit of outsourcing is lower costs.

Here’s an edited transcript of our conversation.

Above: Stefan Baier, chief product officer at Streamline Studiso, at MIGS 2016.

Image Credit: Dean Takahashi

GamesBeat: Your topic was interesting. Outsourcing isn’t an easy thing to do.

Stefan Baier: No. Part of it is because the majority of the industry—it’s still a place with a lot of room for improvement. The talk had kind of a provocative title in “Why Outsourcing Doesn’t Work.” What I mean is that a particular kind of outsourcing doesn’t work, and it’s going away at some point in the near future. It’s this transactional outsourcing, throw it over to someone in a short-term relationship. Games are becoming so complex that you want to retain that knowledge in your company and in the relationships you have.

This like what you see in other industries. If you look at manufacturing a car, a car has maybe 30,000 parts, but you don’t have 30,000 outsourcers. Large companies find three, four, five trusted companies to work with for 10, 20, 30 years. That’s where the industry is going. It’ll be more about expert partners, relationships that go deep and are deeply integrated. You’ll have trusted relationships with people who have engine access. You’ll strategize together. You’ll talk about where to take the technology together. You’ll talk about where the partnership goes.

With our company, we have 200 people. We’ve expanded very rapidly, especially selecting our own partners, our own clients based on this idea. If people are interested in building these kinds of long-term company partnerships, that’s our model in the future.

GamesBeat: What’s your own company’s history and experience with outsourcing?

Baier: We’ve been around for 15 years. We started out in Amsterdam, then established ourselves in Malaysia in 2010. Our headquarters are still in Malaysia, but we also have people in Las Vegas, Tokyo, Frankfurt.

We’re at the model we wanted to have from the beginning. When we started in 2001, it was more of a transactional relationship. We were modeling, texturing, doing services for other companies. Then, over time, we began to retain more expertise from the partners we worked with.

That’s one reason we were able to build long-term relationships with Epic Games. We worked with them on Gears of War, Unreal Tournament, those kinds of games. We worked on Terminator Salvation, on James Cameron’s Avatar, on those productions. We’re doing a lot of work with Capcom now. We had a joint press conference with Square Enix in Malaysia together with the Malaysian government a couple of weeks ago, discussing some of the partnerships we’re having.

A lot companies out there — big companies, ambitious companies – recognize for their own future that they need to identify other companies that think like them, that are philosophically aligned with them, that think about value-based relationships and not so much transactional relationships. That’s where we’re coming in.

We’re based in Malaysia, but it’s a very international crowd. We have about 25 nationalities from all around the world, attracting the kind of senior talent we can bring together. We’re focusing specifically on triple-A game productions. That’s always been our specialty.

Above: The Porsche expansion offers 20 new cars for Forza Motorsport 6.

Image Credit: Microsoft

GamesBeat: Some of the companies I’ve written about in the space do seem like they have very transactional businesses. Dhruva Interactive out of India, they made a lot of the cars for Forza, a lot of Microsoft games. That seems to make sense as a transactional thing. But a lot of games aren’t like that.

Baier: When you’re looking at why certain things are outsourced, something like cars makes sense, because with a few simple instructions you can say, “Make me 50 of these.” The plans are very straightforward. But when you look at the games it leads to—the games that embrace outsourcing the most are sequels, like the Call of Duty games, games that come out every year. For that the transactional model is very successful, because you don’t need to reinvent the wheel every time.

For products that have more of a creative angle, that are more ambitious or try to do things differently, things get more complicated. As any developer knows, that’s why you use a scrum methodology internally. You try something, it doesn’t quite work, and you iterate on it to try it again. Development is difficult.

The scrum method is very different from the transactional model. It’s almost like a waterfall method, following a linear plan. It’s not very compatible with scrum methodology. What that means for us is that the projects we see are more integrated across all the different departments between the two companies. We’ll have the preproduction team on our side talk to the art directors and concept team on their side. At the same time, we’ll be working on prototypes, level design, things like that.

As you do that, you build knowledge in both companies, both partners, about what it’s going to be like once production begins. You’re part of preproduction, the conceptual aspects of the game. You’re part of full production. You’re part of finishing the game, and even DLC, entire aspects of the game afterward. It’s possible to do that transactionally, but honestly, games are getting more and more complex. As a company you need to decide where you want to stand in the value chain. It’s not easy to do this work, but that’s been the trend in the industry, the demand.

When you talk to developers, nobody wants to deal with micromanaging other companies or dealing with 10 or 20 different vendors. They’d prefer to have trusted partners they can always work with. That’s one of the key reasons we’ve seen so much response to our model. A few companies working together for the long run.

It takes time, because you get to know each other on a different level. There are more conversations between different departments. Generally, we want to have the right people talking to each other – art directors, technology directors, all these guys have to talk to each other between the two companies. It can’t be funneled just through one outsource manager. One person can’t handle the interactions between three to five departments.

Above: Streamline Studios worked on Street Fighter V.

Image Credit: Capcom

GamesBeat: A lot of people believe that outsourcing is inevitable, regardless of the form it takes. Do you agree with that? Or do you think a certain kind of outsourcing shouldn’t exist?

Baier: Well, what does outsourcing really mean for most people? It’s this idea of sending something to some unknown overseas location, taking away jobs, this otherness. It’s strange for us to think of it that way, though, because our company—we’re based in Kuala Lumpur, but we have many nationalities working together, and we’re just making games for the global market.

The whole is more than the sum of the parts. If you have companies that are experts in certain fields collaborating together, they’ll achieve more than a single company trying to do everything by itself. I don’t know if you want to call it outsourcing, or if you just want to call it focusing on core strengths and leveraging other companies that think like you and complement your strengths. I don’t know if that’s inevitably, but I do think it’s good business to invest in that. But it requires a business strategy to say, “I’m going to invest as a company in long-term relationships with other companies.”

GamesBeat: For some companies, it makes sense that some jobs are temporary, right? Does a main developer really need a motion-capture stage, say, for the lifetime of their studio?

Baier: Exactly. Looking around here, for example, there are some other companies that no one knows about, but they’ve been in the business for five or 10 years and become experts at something. A group over there is very good at backend architecture for games. They’ve built for very large companies. It’s another example where someone has become experts in their field, and every time they do this for a company, they get better at it. That’s who you want to work with, who you want to have a relationship with extending over years. You want them to be successful, because you’ll benefit as well.

To me that’s different from ordering a couple of props. This is working with experts in their field. It’s similar for us. We often educate or collaborate with our partners now and they’ll ask us, “How would you do this? Have you seen this done? How have you solved this problem before?” That comes about because you can’t be an expert at anything. You don’t need the hardware for everything. You need to focus in on where you feel your strengths are as a company.