Fireside Chat: External Development Trends in 2024 - Catalin Butnariu & Mihai Pohontu, Amber.

[Music] [Music] [Music] let's talk about external development Trends and we have from Amber um kin and Mi go for guys good morning thank you Oscar uh good morning everyone and first of all thank you for joining us at this hour after the party um much appreciated so uh let's uh let's have um let's let's

start today let's kick things off with a chat so Amber is um an external development company we we do uh you know Services uh including full game development and and any custom game development service for uh large developers and Publishers and we've been uh on the market for uh 10 plus years now and uh it's my pleasure today to to uh um discuss with Mii who is our founder and executive chairman and just kind of take a look at um what 2023 has been like uh now that uh it's behind us uh and what uh it meant especially for external development and what are the trends that we can look for uh during 2024 U Mii welcome uh good morning everyone we're actually taking bets whether we'll have more than two people in the room at this early hour so you know thank you you're

my heroes thank you for being here um external development in 2024 clearly the market will be in better shape than 2023 because 2023 was so Dreadful um there was a massive pullback uh in 2023 in terms of external development spending um obviously most of the large companies have had the layoffs they optimize for profit um one of the first casualties were the external development tracks um so you know it's always a tale of uh two cities in on one hand full game development uh especially on mobile uh but also on HD to a lesser extent uh was broadly affected um it was super hard to find a publishing deal if you're an indie uh developer and even if you're an established Studio of a certain size it was difficult to get into that kind of relationship however C development continued uh and Services were

relatively unabated so companies that already had existing work streams with large Publishers uh did relatively okay on the services side so I mean you know art uh quality assurance localization uh those continued pretty well um so uh looking at 2024 what do we expect uh first of all increased investment in external development in Mobile um I'll be to still historically below standards that's what I would expect to see more mobile XD deals will be on the market but still in a relatively scarce environment um HD will continue um to improve um on Full Game Dev I think large Publishers will find that they need more content um they they have trimed their slates in 2023 and I think they actually need to fill in some gaps so I think that's really good news if you're IND the

developer um and generally I sense an overall Improvement just looking at the pipeline of Amber you know the start of the year was significantly better than how historical January looks like and I think the the main reason for that is that as companies withheld investment in 2023 they have actually pushed their budgets into 2024 many different companies have actually followed the calendar year so in January they had in you know increased funding to uh invest in uh in external development and accelerate their own deployment plans with their slates so overall broadly this is how uh we're seeing 2024 so you you touched on on a bunch of things here um and let's maybe dive deeper into some of these so obviously you know very you know unfortunate and uh and big topic during 2023 um were you know layoffs that happened you know uh the wide scale

across the the industry and even you know outside the industry uh and unfortunately this continued in 24 24 with you know large numbers being announced just in the last couple of weeks so um how do you feel about this is the are the are those numbers you know um accurate or is it sort of the tip of the iceberg uh kind of thing and um how do you see this trend evolving in 24 from this point so you know great question um and you already alluded to my answer when you said the tiep of the iceberg yeah most of companies do not announce layoffs unless they're compelled by some reasons so local labor laws or the fact that they're publicly listed companies um in 2023 we had 13,000 announced layoffs if I were to bet I would I would guess that this is uh actually uh just um a tenth of the overall all number of layoffs in

in games um and I think the the most affected entities were in the game studios who basically ran out of funding found it ex exceedingly difficult in 2023 to raise money uh to continue development on their on their games so they had to to retreat um and I think that is bound to continue through H1 the first half of the year it's going to be extremely tough even here at the conference like you know talking to Indies I hear a lot that you know I have two or three months of Runway and I'm really looking for a Cod development deal or partnership um and in this like scar City environment it's exciting difficult to kind of turn around um an indie studio in that uh condition so yeah um first half of the Year pretty um uh pretty tough environment uh especially for Indies but I do expect and sincerely hope that second half will be much

better so but there there's an interesting uh thing to to discuss here so um obviously you know a lot of you know bigger companies are are uh reducing their uh their staff um after presumably over investing in uh during covid years um and uh there are a few things that are happening so post pandemic remote work is now a thing there's been um you know discussions uh know tons of discussions about this um uh so but it kind of looks like uh at least hybrid work is is here to stay um and uh so there are some things happening within the talent um Talent space uh and speaking of talent space there there is something that we see especially in the last year where we have a bunch of um Talent marketplaces that uh that that have come up so these are you know platforms websites that um you know

facilitate um Freelancers getting work uh from uh from from companies or even companies so know services companies um U setting up their their staff on on such platforms so that their clients can uh can can pick up resources from there what's your take on this uh on this trend well first of all game developers are by and large unhappy to return to the office you know the latest results of the game developers survey showed that the vast majority would prefer to work remotely um and um I think uh there are companies that are trying to swim against this trend and calling people back to the office at least a number a small number of days um I'm I'm personally very much in favor of working in the office but he also needs to make sense sometimes in in many cities around

the world the community is extremely taxing you know can take people you know upwards of a couple of hours per day to commute to and from home um and that starts not to make sense in an environment where you can be equally productive um just staying at home and using those hours for for a better purpose like making games as opposed to just commuting um so partly as a result of this trend working remotely people are a lot more open to freelancing so what I'm seeing what I think is going to happen over the next year in the games industry is that we will adopt an employment model that is more akin to the film industry where it's very much Project based um you're making good money let's say above average uh to current salaries if you're engaged with uh with a project and then you'll probably have a downtime between projects where you can you know work on your personal stuff or take vacation and then you'll sign up to a new project um

so this is much more um akin to a contractual um model I think it will work better for um for the entire industry because it's more honest you know right now what happens is that when a large studio finishes a project there are massive layoffs in the studio even though the the core premise of employment is a full-time indefinite uh engagement right and that actually doesn't happen in practice um so avoiding the the layoffs scenario having a more clear understanding of how you interact with a company and also having flexibility in terms of how you parcel out your you know your time investment you can as a freelancer you make your own schedule you can have part-time engagements with several companies um depending on your interests and and skills and so I believe this will become the dominant uh model in in games in the years to come but and what what about um

so for fre Freelancers it's it's clear but what about um you know companies themselves you know services companies using Talent marketplaces to to basically sell their services yeah it's not something limited to service companies obviously they will be leveraging networks of Freelancers as well but U you know all creative Studios uh all service organizations and even Publishers will be increasingly leveraging this model because it provides flexibility and and it meets all business demands all right let's uh switch gears for a second um and you know it it's impossible to to have any panel in the beginning of 2024 without uh talking about AI so let's just uh check that off the list um so you know obviously the hot trend of 2023 uh lots of talk about how this will

impact the games industry you know some people are considering it uh you know looking at it as a tool others are looking at there a threat that will you know um kill jobs um you know there's a there's a specific example where you know if we look at keywords which is like the poster company for for services they have their stock has been affected during last year because you know fears of how AI will will impact the services industry um your take on this in for 202 for um there was quite a bit of speculation whether AI contributed to the wave of layoffs that that we've seen last year I I personally don't think that's the culprit there are other forces at play in optimizing for profit the inability to raise money um a general uh Retreat from external development all of these factors contributed AI I think was a marginal um influence on that um however um you know you kind of mentioned the dichotomy

between like seeing AI as a threat and seeing it as a tool I think AI is here to St it has been used in games for such a long time and you know uh as you very well know programmers have been uh using uh generative AI to create code for for quite a few years now um and and you know it's broadly used across the industry to uh generate concept art uh today um and I think in the next couple of years we'll see the Advent of generative uh 3D models um so where out of a prompt you can create full 3d environments um it's already getting there not quite uh ready for prime time so to speak but uh uh making progress I think as an industry we have and we will always Embrace technology and its Evolution over time and I think one of the really cool things about games is that it it always been at the front Forefront of this Innovation you know it

always pushed hardware specs it always uh leveraged the you know the latest advances in engine technology and and we will continue to do so we're extremely adaptable and flexible and creative about using technology for uh create events do you think Services know companies that offer services are by by Nature more susceptible to being disrupted by I or not really I I do believe there will be an impact in especially in uh production of art uh currently uh our production is extremely resource intensive and uh expensive um so I think uh over time you know your personal creativity and specialization will matter more because some of the road tasks involved with creating art will be um freed up by the use of technology and you know we broadly call that AI but it can be many other ways to

uh create assets um in generative or procedural fashion cool so okay AI uh here to here to stay and that topic checked off our list um Switching gears again so one thing about um you know Services um companies uh we these such companies you know simply by Nature tend to to come up a lot in emerging markets and you know Amber is uh is is very hot about being present in Emerging Markets uh uh itself you know we as a company we were born in uh in in Romania um so a couple of uh questions on this um how were these markets uh no I mean we know how they were affected but how do you think um these markets will evolve 2024 um and um

um yeah how what's your take on that I think the the broad Trend over the last couple of decades has been towards democratizing the the games industry by um extending all over the world I mean there is game development in almost every country around the world uh today and I think that's really wonderful because it allows for full creative expression in the global Community obviously very big differences in the quality and the specialization of the developers uh the Western markets you know so broadly Western Europe US Canada um you know Japan Korea they're very mature markets whereas you know other parts of the world are still emerging from a game development expertise standpoint um I think um generally uh external development and Outsourcing companies have been compelled to look at emerging markets in order to lower cost uh which is an important consideration

when when engaging with a partner with a publisher or another Studio they definitely um would like to have as low overcost as possible uh for a quality service so you know companies like yours that you have mentioned have been extremely aggressive about expanding in places like Eastern Europe and China and Southeast Asia um and they have really broad food print there um I would say that on par uh Emerging Markets have been more affected than the traditional Game Dev markets uh partly because of the retreating external development hits them directly so they're less likely to employ people in those territories um but I also think Emerging Markets will recover really fast um when when demand again shows up you know they do have a competitive advantage in the availability of talent and the lower cost base so that will matter a lot

thank you and we're close to time so um just you know two three quick predictions for 2024 in terms of U external development and the industry in general um I've already alluded to one which is um I expect um a lot more external development activity in the mobile sector as Publishers are finally getting to terms so with the new environment that they're playing in um you know and figure out creative ways to um overcome the challenges of idfa and so um and also I believe uh we will see a lot more um activity around alternative uh distribution methods on mobile um you know such as setting up web shops and transacting on the web and having crossplatform experiences that monetized primarily on the web to kind of circumvent uh the Apple and Google um monetization rules and um also what I'm

uh predicting is that the second half of the year will be a return to normal um I think the trends are really positive despite the layoffs I think we are going to um exhaust uh the layoff scenarios in the first half of the year and the second half of the year the industry will return to growth yay thank you um I mean obviously opportunity for question here but I just wanted to add to that I think it's interesting the the principle you're talking about with the the movement to more of a Hollywood style like separation of having to have the team internally versus not it's a really interesting one and we're particularly looking at that as a as somebody who's been doing publishing where we're offering contracted publishing Services increasingly and we're offering a lot of the sort of startup consultancy stuff for expertise that teams used to think they need to have in house but now can't justify so I think I I kind of with you on that one

entirely does anyone us have any uh comments or thoughts they want to ask any questions people are still recovering from maroke oh was there one there I have a question there go I was just wondering about your experience with the trying gen for for your services so far yeah so we actually um um experimented with combining of few Frameworks to create the 3D model generation um it's called Jenny uh we've actually kind of released it and open source everything that we did uh created a webinar to explain how we went about it um and so we have a quite a bit of experience in that area and uh we plan to continue to experiment and hopefully contribute to evolving the technology because I think it's really useful and it will transform game development you will really not need hundreds of people to create a AAA experience if you have generative AI for for your um 3D assets

um also in terms of test automation we've been using Bots for many many years so before it was really cool um we were using it to test U Edge conditions on maps and detect crashes and freezes um so in that's really not exciting but it was very useful and and it generated a uh ample Improvement in the test process for us um so broadly those are the two areas that we are looking at but specifically on certain games uh we are deploying procedural generation of content uh and this especially useful in live operations uh all right I think I think we're done then okay so I thought you were about to make an added comment to that so on that note thank you very much I think it's really interesting you know the the optimistic view I mean the thing I'm finding interesting I was just talking to my friend Albert a few seconds ago the number of teams that are coming out post redundancy who have

already started pulling together teams and I think we're in the same situation where we're in about 2011 uh which is the last um of downturn I remember where teams like I know supercells started to turn around and become and I think we'll see the next super cells and next things coming out of this downturn in my opinion but anyway thank you very much guys thank you cheers