For a while now people paying attention to the industry have repeatedly heard about rising costs of new game development. This isn't something new necessarily, and more cynical readers have often dismissed "rising costs" as an excuse to keep game prices high or to bump them up to the $60 per title we're seeing on the 360 and PS3.

"Obviously developers/publishers are greedy," they say. "After all, they make tons of money on games, and DVD's are cheap!"

Well, this can be added to the list of facts they'll have to ignore when making such statements (such as development costs, piracy, short shelf life of games, etc).

Epic's story here.

Midway's story here.

Quick overview from Gamasutra.

I think we're all familiar with the outsourcing of jobs overseas when it comes to manufacturing (indeed, I think the kids growing up now might not know things are made in America besides cars and entertainment). Many people have joked about poor tech support from countries whose names they can't even pronounce. In an effort to keep costs under control (thereby minimizing financial risk and stretching their dollar) and to stay competitive, companies like Epic and Midway are outsourcing the creation of their art assets. Even Dragon Ball Online (from Bandai Namco) is being done between Japanese and Korean developers (complete with cultural difficulties, much like Richard Garriot faced with Tabula Rasa).

Why bother with this? In 1996 a PSOne game could be made for under a million dollars. Nowadays the average last-gen game can cost (depending on who's numbers you use) at least $1 million, averaging $5-7 million, and blockbuster (or at least big-budget titles) costing as much as $30 million dollars (source).

And this matters how?

Mark Rein boasted that Gears of War, an incredible, beautifully ugly game that set the 360's world on fire cost less than $10 million to make. And lets not forget that Microsoft picked up the tab on marketing the game too (which, granted, is one of the reasons we had the whole ruckus about MS charging for the Gears maps).

Developers and publishers are on the lookout for ways to keep their costs down. I don't know about you, but Epic's story is one *powerful* testimonial for outsourcing.

Gamasutra noted that its hard to find people with the qualifications to work in the gaming industry - one could argue its an employee's market. In theory there should be no significant job losses as a result. Also, Epic believes that the outsourcing of art could help make games more affordable to develop for independents, which is seldom a bad thing. But, if nothing else, it should be viewed yet another piece of evidence to the (practically) irrefutable fact that next-generation gaming is more expensive than ever, for consumers and publishers alike. So the next time you grit your teeth at paying $60 for a game, keep in mind that game companies the world over are trying their best to keep prices as low as they can.