LGF: Big changes on the way for developers

LONDON--The opening keynote speech at the Game Developers Conference London, part of the inaugural London Games Festival, set out the position that a change in the working patterns of game developers isn't an issue on the horizon--it's a reality now.

Jamie Macdonald, vice president of Sony Worldwide Studios, began the talk by explaining that the "changing landscape of development resourcing" was under way because of two key issues--the increasing cost of production and the shift from "package-centric" revenue streams to "network-centric" streams. In other words, a change from the traditional method of buying games as finished articles from retailers, to the increasingly fashionable open-ended approach.

Although it's becoming possible to identify more diverse sources of revenue, as well as ongoing sources, Macdonald's message to smaller development companies was one of warning. "It's my belief that the impact on small and medium developers is going to be quite stark, that with the scale of the [next-generation] projects we're talking about it's unlikely they're going to be able to self-fund, and it'll be increasingly difficult to find third parties that'll be able to fund such large projects."

At the same time it's his opinion that larger developers will also have to adapt their working practices. Instead of a large permanent staff being kept from one in-house game to the next, Macdonald foresees a situation where the biggest studios will outsource many more of the specific processes--and this is where the smaller studios could gain in the future. That will, he admits, mean potentially significant changes for both sides of the equation, but he also feels that the overall talent resource in the gaming industry should increase, meaning more jobs.

But if that message sounds rather negative, there's better news in the form of greater potential earnings. Among the new sources of revenue that are springing up, over and above the traditional point-of-sale income, are merchandising opportunities, mobile phone link-ups, and episodic content, as well as a large predicted upsurge in money from in-game advertising.

We've already seen the introduction of some of these kinds of revenue streams with Xbox Live Arcade and the now-established business model of MMOGs, where a game is never really finished in the traditional sense, and for the most part players never finish paying for the game either.

Macdonald finished with his hope that the industry would react positively to the challenges ahead and that flexibility on the part of developers would enable better exploitation of new opportunities. While it's likely to be important for the industry to broaden and improve its skills base, his parting message was that the games industry should mostly keep on creating great entertainment experiences.

GDC London continues on Wednesday, when the London Games Summit begins, and GameSpot UK will be on hand to bring you more news throughout the week.