This article is part of ExDev Week.
External development, whether it involves porting, co-development, asset creation, or any one of a number of other things, is becoming an increasingly important part of the industry as games get ever larger and more complex. Hiring external teams has often been cited as a solution to the games industry’s long-running and seemingly endemic problem of recruiting huge internal teams only to let them go again once a game is complete.
But what does the future look like for external development companies? Will the industry switch over to a movie-style production process, where one-off teams, probably made up of external developers, are assembled on a per-game basis? Or will we see a return to bigger internal teams once the current, years-long wave of layoffs is over? And what about AI?
GamesIndustry.biz asked a number of senior figures in the external development space what they think the future holds.
Claude Bordeleau (Chief Revenue Officer, Winking Studios)
“The future of external development will be more strategic, more integrated, and increasingly central to how games are made,” says Claude Bordeleau of Winking Studios, one of the largest external game development studios in the world. Bordeleau is also a member of the External Development Summit (XDS) advisory committee, and was previously a director at Keywords Studios.”In the short term, the market is still digesting the over-expansion of the last few years. Budgets are under pressure, greenlights are harder to secure, and many publishers are being more cautious. But longer term, I believe external development will continue to grow. Games are not getting simpler. Players expect more content, more platforms, better live support, and higher production values. Very few companies want to maintain every capability internally at the level required.
“That means external development is moving from capacity support to capability support. It is no longer only about helping a team produce more assets. Increasingly, the best partners will own features, pipelines, live content, co-development mandates, and in some cases significant portions of a game.
“External development is moving from capacity support to capability support”
“I also expect the market to polarise. Large, tier-one providers will benefit from scale, security, global reach, and the ability to support complex multi-disciplinary programs. At the same time, highly specialised boutique studios will continue to thrive when they offer exceptional craft or rare expertise. The most challenged companies will likely be those caught in the middle: not large enough to provide scale and not specialized enough to command a premium.
“Geography will also evolve. The winning model is not simply ‘East versus West’ or ‘low cost versus high cost’. It is trust. Clients need partners who understand their creative goals, communicate clearly, protect their IP, and take accountability. I believe the strongest global teams will combine Western-facing leadership, creative direction, and client intimacy with the extraordinary production depth and technical strength that exists across Asia and other major development regions. When executed well, that combination can create exceptional value by combining creative proximity, operational scale, and access to world-class talent.”AI will undoubtedly reshape game development workflows, but I do not believe it will diminish the need for great external partners. Historically, better tools have not reduced ambition; they have raised expectations. Every major technological advancement in our industry has ultimately led to larger worlds, richer experiences, and greater demands from players.
“AI will automate certain repetitive and derivative tasks, but creativity, taste, judgment, and vision remain fundamentally human capabilities. AI is extraordinarily powerful at recognising and recombining patterns, but it still requires human intelligence to create new ones. The most memorable games are not built on efficiency alone; they are built on original ideas, emotional resonance, and the craftsmanship required to transform a vision into an experience that players care about.
“Human connection will become an even greater differentiator”
“AI will also increase the amount, variety, and responsiveness of content that players expect. As a result, service providers will need to evolve from transactional, asset-based production toward higher-value creative, technical, and strategic contributions. The studios that thrive will be those that successfully combine human creativity with technological leverage.
“Ultimately, I believe human connection will become an even greater differentiator. Publishers will continue to seek partners they trust, teams that genuinely care about the games they are helping create, and collaborators capable of bringing passion, creativity, and fresh thinking to the table. The future is not human creativity versus AI; it is talented teams using AI to amplify their capabilities and create experiences that would not have been possible otherwise.
“Finally, I think the industry is being reminded that games are still driven by passion. The last few years saw more corporatization, financial engineering, and process-heavy management across parts of the industry. Some of that was necessary, but great games are ultimately built by talented people serving a strong creative vision. The best external development companies will be those where management enables creators rather than gets in their way.
“So the future of external development is not just ‘more outsourcing’, it is deeper partnership. The companies that succeed will be trusted, creative, technologically adaptable, globally capable, and willing to take meaningful ownership in the success of the games they help build.”
Xu Xiaojun (Studio Head, Studio Gobo)
“The optimists among the external developers see publishers reducing headcount as an opportunity, while the pessimists fear declining demand,” says Xu Xiaojun, whose Brighton-based studio, part of the Keywords Studios empire, collaborated with Sony on Lego Horizon Adventures. “The reality is likely somewhere in between: reduced overall demand, but more reliance on external development.
“Looking from an industry point of view, external developers are the ‘cost centre’. As in any industry, maturity brings efficiency, or so the theory goes – thus ‘costs’ will be optimised. This implies suppliers – external developers – will accept lower margins to win business. But different to other industries, our ‘assets’ are people. When the industry picks up – led by new technology, innovation, or new playing habits – external developers will compete against publishers again for talent, because the potential reward and profit will outweigh the risk of carrying the fixed costs. Business logic dictates the publishers will not externalise profit, and only externalise risks. External developers shouldn’t be satisfied with just being a cost solution.
“I see a future where external development continues to play a pivotal role. The studios that thrive will be those who can successfully convert project experience into enduring expertise, and can deliver value beyond headcount alone.”
Stuart Muckley (CEO, Code Wizards Group)
“People often look at the current industry setup and settle on one thing that’s behind it all,” says Stuart Muckley, head of the Code Wizards Group, which has worked on everything from Apex Legends to Fruit Ninja. “Obviously that’s too simplistic, as it’s not AI, nor live games not landing, nor wages, nor budgets, nor changes in the market, nor player behaviour. Instead, it’s all those things, plus the fact that games are exceeding budget. Those overruns are either making the game come out at breakeven or at a loss.
“For ExDev, and especially service providers, it’s an opportunity and a challenge.
“The drive for cost efficacy (not efficiency) is leading to studios thinking differently. Lots of which mirrors how the movie business has changed over the years.
“Cost used to be the only determining factor. Now it’s quality versus cost versus risk. Quality matters, because players want to play the best game, and only good games keep players spending and playing. Cost is important, but so long as a game is coming in on budget, then it’s less of a problem. Risk is currently a massive determinant, because companies don’t want games to be leaked/released/hacked, and IP needs protecting. Deciding how a studio is structured, how much external development should be utilised, and which teams to use is a factor in all three elements.
“It’s very likely game projects will start to follow a model similar to the movie business”
“Equally important, we are seeing a shift from long-term to shorter-term investment, which often involves small amounts being invested in individual games (project financing) rather than investors taking equity in a studio.
“The first consequence of increased project financing is that it’s very likely game projects will start to follow a model similar to the movie business, where a legal entity is created for each game. Investment can then differ between games, and the studio can greenlight each ‘project’ as it’s ready for the next milestone.
“Let’s create an example to help illustrate this.
“Assume that Amazing Studio Inc. wants to create a game called Wizardlicious. Amazing Studio Inc. would create a new company called Wizardlicious Limited or Wizardlicious Inc. At the beginning, Amazing Studio Inc. would own 100% of the game company, but could then take investment as a sale of a percentage of the Wizardlicious company. This leaves the studio 100% self-owned, but each game can take different investments and have many equity owners.
“Creating an entity per game allows the IP/franchise to vest in the main studio and the game risk to be allocated to the new legal entity. It minimises the risk, as the game company could be shut down without many ramifications to the studio. It allows more transparent investment, because the capital means a share of the game company, and any legal governance is around that game only. It also allows an individual game to be sold more easily. Best of all, it allows investors to capitalise a game they think is achievable within 1-4 years and get a riskier, larger investment back in a relatively short term.
“A side effect is that it will reduce the desire to hire staff for the game entity (apart from short-term freelancers) and most of the development will be outsourced. The studio will bring in various parties to lead the effort – think executive producers and art directors – but they will instrument the other outsourced exdev and service providers. It’s likely new studios will emerge through angel and funding rounds, but investors will be clear that they’re backing a team, probably for the long term, and spreading risk among future titles.
“Most of the development will be outsourced”
“For exdev/service providers this is both an opportunity and a challenge: increased workload is always welcome, but there is zero chance of credit insurance against the new game entities. This means the risk largely resides with the exdev/service provider. Whether this will lead to pre-payments, more frequent payments, and invoice factoring is yet to be seen. But risk management will be a major attribute in this new world.
“Lastly, and I’m biased on this, we see the rise of specialist exdev/service providers. Where once a single studio may have been commissioned for full SKU, there’s now many teams being pulled in for a single game and/or full SKU exdevs are focusing on genres or platforms. Specialist service providers/exdevs are a way of derisking part of the development by bringing in experts to help the build. They’re onboarded and offboarded as soon as the work is complete, which also helps cashflow and cost management. Best of all, those same providers can be re-engaged for the next game in the series (or DLC or similar games) without having to have them on the payroll.”
Marco Bettencourt (CEO and Founder, Redcatpig)
“The future of external development will be much less about outsourcing and much more about true co-development,” says Marco Bettencourt, head of the Azores-based co-dev and porting studio Redcatpig, which recently worked on ports of Planet of Lana.
“The strongest partnerships are the ones where, after a while, the client almost forgets we are an external team. When that happens, external development is doing its real job.
“As games become bigger, more technical, and more multi-platform, studios will need external partners that can do more than provide extra capacity. They will need teams that can take ownership, understand the creative and technical vision, integrate into existing pipelines, and help solve production problems with accountability.
“Geography will matter less”
“I also believe geography will matter less. Great teams can now be built outside the traditional development hubs, as long as they have the right talent, communication culture and production discipline.
“The future is not about making games cheaper. It is about helping studios make better games, with trusted partners working as a real extension of the internal team.”
Adam Orth (COO, Midwest Games)
“External development in games is already expanding beyond the traditional co-development, porting, QA, and art support ecosystem we know today, and it will continue evolving quickly over the next two years,” says Adam Orth of the for-hire publishing support company Midwest Games. Orth’s career has seen him take on senior roles at Microsoft Game Studios, Digital Eclipse, Readyverse Studios, PopCap Games, LucasArts, and Sony Computer Entertainment, among others.
“The next major evolution is external publishing development: experienced publishing operators embedding alongside studios and publishers to provide scalable support across production, marketing, community, platform strategy, forecasting, data analysis, creator programs, and launch execution. As teams continue to face intense budget pressure, hiring constraints and an increasingly competitive marketplace, the old model of building every publishing function internally has already become harder to justify.
“The next major evolution is external publishing development”
“At Midwest Games, we see the future clearly as a flexible, modular publishing ecosystem where external specialists can plug into a project at the exact moment they are needed. That might mean helping an independent developer shape a stronger funding ask, supporting a self-publishing team through Early Access, augmenting a larger publisher with tactical go-to-market expertise, or using data and forecasting tools to pressure-test positioning before major spend begins. The best external partners will not simply execute against a task list. They will bring publishing judgment, market context, operational discipline, and measurable impact to every engagement, helping teams make smarter decisions, reach the right players, and build momentum that extends well beyond launch week into the full product life cycle.”
Chris Wood (CEO, Tanglewood Games)
“A shift is happening, and needs to happen, in how the industry views and values specialist studios and the focused expertise we provide,” says Chris Woods, head of the Unreal Engine support studio Tanglewood Games, based in Hartlepool in the UK. “We are valuable partners, nimble and experienced enough to slot into any development team in a frictionless way, who can take projects to the next level.
“Studios like Tanglewood Games are also learning the value in banding together, sharing our knowledge of fitting into pipelines seamlessly, but also pitching co-operatively to share opportunities and offer multi-faceted solutions.
“The future of the games industry isn’t teams of hundreds at huge studios, it’s in highly specialised studios coming together, each doing what they do best to achieve common creative goals. Networks of these specialised studios are being formed right now, and I strongly believe these networks hold the key to a future of sustainable and efficient game development.”
Myke Parrott (CEO, CodeDev)
“I think the future of external development is incredibly bright,” says Myke Parrott, head of CodeDev – The Unreal Guys, a Surrey-based firm that specialises in Unreal co-development work.
“Over the last 12 to 18 months, we’ve seen a real shift in how studios view specialist external partners. It’s no longer just about adding capacity – it’s about bringing in deep expertise exactly when it’s needed, whether that’s solving complex technical challenges, accelerating delivery, or de-risking critical milestones. Being able to flex up and down at speed gives developers top-class talent options that otherwise would be very difficult to attract in such a timely manner when compared to hiring FTEs.
“At the same time, the role of external development is expanding beyond pure production. The best partners, I believe, will increasingly help studios explore new technologies and drive innovation, whether that’s UEFN, Verse, AI-assisted workflows, or emerging platforms. As games become more technically demanding, external studios won’t just be an extension of development teams – they’ll become trusted partners in R&D and innovation as well. I think that’s where the industry is heading.”
