Video games: Who Makes Them?

With this posting we are continuing a series of blogs which investigate the nature of hiring and employment today in industry. Outsourcing seems to have become the preferred form. The lifetime job with all of its security, loyalty to the firm and clear path to advancement that was so much part of the employment world in the years following the Second World War has become a thing of the past.

Earlier we looked at outsourcing from abroad, notably India. Today we look at the world of video gaming. This will be followed by a series on the gig economy culture of Uber.

By LAUREN WEBER, Tuesday, April 11,  for The Wall Street Journal

SAN DIEGO—The hit videogame “Rocket League” pits jet-powered racecars against one another in an antic soccer match. The big winner is creator Psyonix Inc., which has just 81 employees yet has amassed more than 29 million players in less than two years.

Employees at the San Diego company dream up new themes and car designs, program software, troubleshoot technical issues and watch over a network of contractors scattered around the world. The outside workers test “Rocket League” for bugs, translate it into foreign languages, transfer the software to new types of consoles and handle customer service.

Dave Hagewood, CEO of Psyonix Inc.

“The smaller we can be, the better,” says Chief Executive Dave Hagewood, even though relying on contractors means less control over the speed and quality of the work needed to keep “Rocket League” humming.

Overall, 40 or 50 of the 120 people who work on “Rocket League” are contractors, he estimates. It had $110 million in revenue in its first year alone.

As outsourcing sweeps through almost every industry in the U.S., the videogame business looks a lot like the workplace of the future. A lean core of in-house employees focuses on the most important jobs, with the rest hired out to layers of contractors and subcontractors. Outside workers come and go based on project cycles.

Consulting firm Accenture PLC, one of the world’s largest outsourced labor providers, calls it the “liquid workforce,” which can be turned on and off like a faucet.

More than 300 of the roughly 2,000 people who built Activision Blizzard Inc.’s “Call of Duty: Advanced Warfare,” one of the best-selling games of 2014 in the U.S., worked for outside companies or were independent contractors, according to credits listed on the videogame database MobyGames. About 70 contracting firms are in the credits of “Final Fantasy XV,” released in November by Square Enix Co.

Art-team employees at Psyonix’s headquarters in San Diego.  Photo: Ariana Drehsler for The Wall Street Journal

The videogame industry’s contractor-heavy model resembles Hollywood studios, which hire temporary workers ranging from directors to actors to publicists to make a film and have few long-term obligations after its release.

The difference between games and movies is that longtime work practices and unions in Hollywood provide a safety net for many actors and writers, whether on the job or between projects. People who make videogames are often hired quickly through Craigslist and gaming website Gamasutra or by word of mouth—and then are let go just as fast.

At the end of some subcontracting chains are 16- and 17-year-olds working from their bedrooms or school libraries. Ryan Morrison, a New York lawyer who represents game companies and developers, says he has drafted about 500 contracts in the past three years that required parental consent.

Companies say the result is just-in-time production fueled with human capital. By outsourcing low-value work or renting high-value expertise needed for a short time, game makers like Psyonix can focus on what they do best.

Outsourcing means studios “can in fact make very large games while still staying small,” Anton Wiegert, the head of outsourcing at Guerrilla Games, owned by PlayStation console maker Sony Corp. , wrote in an essay in 2014.

Revenue from videogames hit $75 billion last year, double the world-wide sales from movie tickets, according to PricewaterhouseCoopers LLP, the auditing and consulting firm.

The videogame business is emblematic of a wider shift toward project-based work. Casey O’Donnell, a game developer and game-studies professor at Michigan State University, says the industry “is a decade ahead of where a lot of other industries are going.”

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