Interview: Babel's Leinfellner, Williams Talk The Rise Of Outsourcing

Games outsourcing and localization firm Babel Media was recently acquired by global outsourcing firm Quatrro, with EA veteran Richard Leinfellner taking over as Babel CEO. According to initial statements, Babel says it will retain its individual brand, as well as its exclusive focus on games, with the new investments to be used expanding its North American, European and Indian facilities, along with the founding of new divisions in South East Asia and Eastern Europe. Leinfellner is a veteran of the industry, who started his career in 1982 and co-founded Palace Software, worked for Mindscape, and last served as an executive producer and vice president at Electronic Arts. Gamasutra talked to Leinfellner and Babel founder Algy Williams about their bullish plans to quadruple Babel Media's size in "three to four years" and to offer more significant asset outsourcing work, outside of the current localization and QA business the firm concentrates on. What led to this deal? Algy Williams: The company was founded in 1999 by myself and two others, and we've grown from three people to 500, are operational on three continents, and we work with pretty much every single major publisher in the world. We've concentrated all of this time not on just building a single service company, but an international company able to offer outsourcing on a range of services. Probably about two years ago now we began to realize that the speed at which the outsourcing market was growing was such that our clients would want to deal with suppliers that had huge operational strength and capability, and as importantly, if not more importantly, a really strong balance sheet. So we started to look around for the best possible combination, and we came across Quattro. They tick all of our boxes. In terms of operational scale they're a very large company, with over 2000 employees and they've got an incredibly good track record at scaling business up very quickly and very efficiently. They've got offices in India, China, and Sri Lanka, in the States, and so their geographic profile slotted in with ours very well. Their balance sheet is very strong, and the balance sheet of their operational partner, DE Shaw, is unbelievably strong. It's also really exciting for us to have Richard join, with his huge experience in games development, and to bring a publisher perspective to our business. And looking at the next stage, with long term, high volume contracts across multiple service lines and multiple locations, that's going to be absolutely vital to us. Why did you come to Babel, Richard? Richard Leinfellner: I've been in games since the early 80s, and I've been with Electronic Arts for the past eleven years as a VP and executive producer, and one of the things I've found is that it's always very difficult to manage your workload evenly. So, for example, you can have these huge teams sitting about waiting for work. And a while back I took on a special project to look after outsourcing in the studio, and I found it solved a lot of development problems, allowing studios to manage their resources better. So I became very interested in this model. You've talked in about this outsourcing model as the "Hollywood" model, right? RL: Most large game developers carry a large amount of staff between projects, and when you look at it, it's exactly like the "old" Hollywood model. Back then, everyone worked for the studios -- the carpenters, the electricians -- but now they have the ability to select from a workforce on demand. And what we want to offer is that kind of range or services, that flexible workforce, which will allow the developers to become more creative. We work with testing, localization, and so on, but we have more service lines we'll be announcing soon. AW: This transaction is going to allow us to deliver our current core services on a far greater scale, plus start to expand our India operation (and various other locations) but as Richard said, we have more services in the pipeline. RL: We're not really in the position to announce exactly what we'll do, but if you look at the jobs we currently do, they're pretty much in the "post-production" stage of development. What we'll be moving into is development services. Look at it this way. There are maybe three stages to developing a game. There's the IP generation, which very clearly is up to the developer or publisher, then there's the actual development of the game, and there are many aspects of that where we could help out, and then there's post-production, where we already do. AW: Another way of thinking about it is that we're planning to quadruple the size of our organization within the next three to four years. That's going to be a combination of organic growth, but also acquisition. Do you see this model changing the face of the games industry? RL: If you look at some of the trends regarding the margin for game development, it's inevitable that publishers are going to want a better margin. It really comes down to at which point does outsourcing make the most sense, offer the most value, and still allow creativity? The way Hollywood managed this was to outsource more, and there is absolutely no indication that the progress of the games industry should be any different. I mean, if you look at, say, MMOs, or episodic content. In many ways they're really not any different from television shows -- a regular output of new content. So you could consider it the TV model, even. AW: I can quite easily see EA's headcount staying steady, or possibly reducing, but their sales and profitability going through the roof, if they choose to "expand" though outsourcing. You have the office in New Delhi, are you looking to push further into other emerging markets? AW: Absolutely. The first thing to emphasize here is we're going to be investing considerable sums into all of our current operations, but yeah, the emerging markets are incredibly interesting, not only from locations from which to deliver our services, but also their domestic markets are thrilling. For example, we don't have a location in East Asia yet, and clearly we're looking at solving that pretty rapidly, because if you look at our client list, we have very significant Japanese and Korean clients. Have you noticed a difference in the strengths of your current locations? People always argue that cheaper outsourcing in India suffers due to cultural or other barriers. AW: Well, if you look at India, an example is it doesn't have a console culture. So if you're looking at somewhere to place QA work, there are some titles you'd never send to India. An ice hockey game for a console, for example. But then again, a cricket game would be perfect. So there are those content issues. And a number of our clients do prefer to have their IP worked on in the west, but the beauty of having a global presence is that going forward, not only can we provide our clients with 24 hour support if that's what they require, we can give them a choice where we execute the work.