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Virtuos' Jake DiGennaro discusses the past and future of co-development

Virtuos chief revenue officer Jake DiGennaro discusses the impact of co-development on the video game industry.

The practice of co-development—contracting external studios to provide labor assistance on game production—is hardly a new practice for the video game business. But in the last couple of years, its impact has drastically grown alongside the size and complexity of triple-A games in the industry.

Companies like Sony and Microsoft are now acquiring some of the studios they previously outsourced co-development work to, and co-development companies like Keywords and Virtuos themselves are no longer as hidden from the public eye.

At Virtuos, chief revenue officer Jake DiGennaro has watched the growth of co-development since his early days with the company. He joined the studio as a business development manager, and now serves as its chief revenue officer.

At this pivotal moment for game production and the use of co-development, DiGennaro was able to provide a look back at what's made Virtuos a successful partner in the industry—and give a look forward at what opportunities await the company in the future.

How did co-development become so necessary?

DiGennaro's rise through the ranks of Virtuos neatly parallels the company's journey from a small operation set up by former Ubisoft exec Gilles Langourieux to the multinational juggernaut it is today.

Looking back on the company's growth, DiGennaro noted that Langourieux (who helped set up some overseas support studios for Ubisoft including Ubisoft Shanghai) saw that the scope and scale of triple-A game development was growing beyond the company's capabilities.

"On the eve of the Xbox 360 and PS3 era, he saw this big, very sophisticated production studio[...] which was way ahead of everybody in terms of multisite development, and they were struggling to fill their games with the volume of content needed to meet market expectations," he said. "He sat there and said 'if they're having a problem, everyone must be having this problem.'"

One kind of executive would have stayed inside Ubisoft and tackled that problem head-on, but Langourieux took an entrepreneurial gamble and set out to form his own company in 2004.

Virtuos puttered on for almost a decade, laying groundwork for what would become a sharp increase in demand around 2015. DiGennaro noted that the big shift in the industry's use of co-development came alongside the release of the Xbox One and PlayStation 4 in 2013. Both Microsoft and PlayStation released some successful launch titles on both platforms, but making bigger and bolder games would take more developers than you could put under one roof.

Other technological advancements like Perforce and improved broadband access across the globe has made the recent co-development boom possible too.

DiGennaro invoked the memory of the boom/bust cycle of so many game studios in the 2000s, when companies would land a publishing deal, release a successful game, then scramble to find more work after increasing their overhead and consequentially, their burn rate. The hope with a company like Virtuos is that you can offload that overhead and burn rate to another partner, who in turn can focus on finding a continuous string of clients that will keep said developers employed.

He also explained that a big part of the company's success has been in finding great game development talent in parts of the globe where fewer opportunities exist to join the conventional game industry. A side effect of operating in countries like Malaysia and Singapore is that you can cultivate local talent and keep them employed in their country of origin—reducing the "brain drain" that can impact the economy of those regions.

This brought us to an interesting point in our conversation: though DiGennaro and Virtuos prefer the phrase "co-development" (and to be fair so do other firms in this end of the industry), the notion of contracting short-term workers in foreign countries to do grunt work for your game conjures a vision of conventional outsourcing.

That's especially true when you consider the lower salaries (and corresponding costs of living) in these countries.

The outsourcing-adjacent nature of co-development came to a head up in Edmonton in 2022, when Keywords Studios contractors supporting the developers at BioWare Edmonton successfully unionized, complaining about low wages and a forced return-to-office policy in the midst of the COVID-19 pandemic.

DiGennaro did take this point head-on, saying that Virtuos is very determined to not present itself as an overseas sweatshop where developers can export labor. "I long ago stopped viewing Virtuos as an outsourcer," he explained. "Outsourcing has a place in external development, but it[...] assumes a lower class of citizenship, and skill, and everything."

He didn't go into specifics, but he did state that Virtuos has a very high retention rate, and and has the goal of ensuring its developers feel like they could comfortably stay with the company for their entire careers.

And if you're looking for an example of how these co-development firms are performing outside of their support for triple-A giants, DiGennaro gushed about the company's work on Kena: Bridge of Spirits. The team provided support for Ember Lab, which has managed to keep its studio headcount at an efficient level while shipping a fairly ambitious game.

A screenshot from Kena: Bridge of Spirits. Thep layer character runs through a town in a lush forest.

DiGennaro shared one interesting detail—at one point during Kena's development, there were apparently more staff from Virtuos working on the title than at Ember Lab. It does raise a sort of Ship of Theseus question—if a company leading development on a game has fewer employees than the staffing company supporting it...which company really made the game?

DiGennaro was able to share some follow-up thoughts on this topic: He said that the game's development was "driven by Ember Lab’s vision."

"The co-development approach goes beyond a ratio of staff numbers, which is not a main determinant of project ownership," he noted. "As external developers are increasingly tapped upon, one of the primary benefits is that it allows game creators to focus on the ideation and core systems of the game, while bringing in extra muscle from the outside to execute and help bring that vision to life."

Where is co-development headed?

Reviewing the past and present of co-development is all well and good, but it was worth asking—where does DiGennaro see this industry headed next?

Thankfully no one needed to call in a hooded, mute spirit to answer that question. I first quizzed DiGenn about the impact of machine learning-driven tools (colloquially known as "artificial intelligence" tools) like Midjourney and GPT-3.

If one was thinking (very) cynically, such tools could reduce the need for companies to turn to external developers like Virtuos. At the very least, well-tuned versions of these programs could eliminate the need for the mass-outsourcing of asset production. That business comes with its own risks, as you might remember that Destiny 2 developer Bungie was forced to admit one such outsourced contractor snuck in a reference to a right-wing meme back in 2017.,

DiGennaro again deflected on the notion that Virtuos is an outsourcer, and also that any such software could put his team out of work. "We've been playing around with it," he acknowledged. His general hope was that such tools could help him and Virtuos' clients do more of game development's gruntwork at a faster pace. "Are there potential efficiencies to be gained relative to the time to execute the given tasks or product or individual asset? Absolutely."

"Do I think it's somehow going to replace the humans? I'm pretty skeptical on that."

He pointed back in game development history to the release of the Substance plugin for Houdini, which let developers import all elements of Substance graphs into terrain, materials, and geometry created in the latter program. "It was all like[...]'nobody's going to need anybody anymore because computers are going to do the hard work,'" he said. "[AI tools] do cool things. But there's a there's a craft associated with it that you can't [replace]."

And to any investors or bright-eyed AI enthusiasts, DiGennaro did drop a bit of game industry jadedness that might truly shift the focus of what AI tools can accomplish. "The first thing that any designer anywhere in the games industry knows—if you tell them, 'hey, we're gonna save this much money in this tool,' they go 'great, and the game just got that much bigger. They'll find a way to spend the money.'"

And if a project only scales up with the use of AI tools, the more a studio might need the services of Virtuos or another firm to support an ever-growing game. DiGennaro did hedge his predictions with the information that Virtuos isn't actively using any of those tools in production at the moment, but like any curious software development firm, they are playing around with them.

If you're trying to look far ahead on the world of co-development, DiGennaro actually suggested that you look at all the games launching between February and April of this year. You probably already know that it's a downright smorgasbord of high-profile releases—and it's the kind of slate that reminds DiGennaro of the Nintendo Switch's launch in 2017.

A screenshot from The Legend of Zelda: Breath of the Wild. Link fights a mobgoblin on horseback.

"It takes me back to that kind of watershed moment when the Switch came out...and it came out the Friday at the end of GDC, and we all went home and got our Amazon packages with our switch in it and fired up Zelda and went "wow."

"And suddenly [...] all the gears started to turn, and then you started to see things that were inspired by, or cribbed from that game."

By his guess, 2023's big hits will start to influence his colleagues in the latter end of 2023-2024. And when they're ready to ramp up production, Virtuos will of course, be there waiting.

Update (1/20): This story has been updated with additional comment from Jake DiGennaro on the subject of its partnership with Ember Labs.

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