Streamline Studios: betting on Chinese outsourcing will lead to massive game transfers this year

In the second or third quarter, the industry is waiting for the transfer of a large number of releases. The reason is that many companies rely on Chinese outsourcing, which now cannot meet the existing demand due to the coronavirus.

One of the works Streamline Studios

This is the point of view of Alexander Fernandez, CEO of Streamline Studios, which outsources for Microsoft, Sony, Epic Games, Capcom and Square Eni x.

In an interview with GamesIndustry, Fernandez said that today the industry underestimates the impact of the coronavirus. Canceling events is just the tip of the iceberg. In fact, the situation is much much more serious.

Here are the main theses of Alexander:

• Approximately two-thirds of external outsourcing development is located in China;
• China has been the main platform for outsourcing video games for years due to low prices and a large number of available talent;
• such concentration has led to a situation that in the banking sector is called concentration risk;
• concentration risk is the risk of losses when assets are not diversified, but concentrated in one area or market. Metaphorically speaking, this is when all the eggs are stored in one basket;
• due to the fact that many companies did not take this risk into account when choosing partners, they were hit when it turned out that the Chinese gaming industry was completely unsettled by the situation with the coronavirus;
• Fernandes says that in China, without official permission from the government, entire companies cannot now release employees to work (this is true in general for Chinese production, for example, textile enterprises in China have suspended work since the Lunar New Year);
• there are not so many specialists on the market without coronavirus. If in the current situation it is not possible to get them, this can in some cases destroy the project;
• many companies now cannot find resources, free teams to complete projects;
• the situation with the coronavirus affected iron production faster, news reports have long been circulating about problems with the supply of Nintendo Switch and the potential postponement of the launch of next-generation consoles to next year;
• as for the software, problems in its development have been observed for two months;
• the situation will become obvious to everyone during the second or third quarter, when mass postponements of releases will begin;
• the story will hit especially hard on those companies whose projects are currently at the final stage of development: the service model of game support, the need to develop games for several platforms at once require maximum and constant involvement. Any factor that interferes with work immediately affects the timing;
• it is worth waiting for a drop in the value of shares of public gaming companies and, in general, a blow to existing production chains.

Also on the topic:

• Coronavirus and game Dev: how the industry reacted to the epidemicGoogle canceled I/O 2020 due to the threat of coronavirus
• Mail.Ru Group canceled business trips and participation in conferences in countries at risk due to coronavirus
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