Benefits & Challenges of German Outsourcing Studio

Christian Retzlaff founded Game Art Brain in 2019 as a limited company. Prior to this venture, he operated a one-man business with hired employees for two years. However, this endeavor carried higher risk due to the lack of protection offered by a limited company structure. Thus, the journey spans a total of seven years, marked by its ups and downs. Initially, the team expanded despite industry trends but eventually had to adapt to the realities of the industry. Specializing in graphics for mobile games in both 2D and 3D formats, they have collaborated with approximately 250 clients, including numerous well-known names. 

Outsourcing Benefits

Christian Retzlaff: With an in-house team at a gaming company, once you hire a game artist, you are committed to that individual, even if the game's direction or style evolves beyond their skill set. For example, if you hire artists for a realistic game and then switch to a hyper-casual game, those artists might not want to or be able to adapt to the new style. This is when hiring an outsourcing studio like us can be beneficial – we can adapt to any style you request and can be let go without any complications once the job is done. Sometimes, we stay on beyond just the concepting stage to help integrate assets into the game pipeline.

Also, we frequently create creatives for art style tests. Given that the in-house teams at gaming companies are typically occupied with ongoing projects, our services at Game Art Brain allow us to explore potential aesthetics for upcoming games early in the development cycle. These tests assess the viability of new styles through market research and R&D analysis. While some may lead to promising directions, others may not yield fruitful results. Nevertheless, this approach eases the workload on the in-house resources of our clients, which are best allocated towards content creation for live games. 

Another significant benefit of art outsourcing is the speed of action. When a project needs to be completed quickly and there's no available bandwidth within the internal team, hiring a full-time employee could take weeks – in reality, it often takes months to find the right person who fits the company's values and social dynamics. In contrast, art outsourcing can provide a swift solution. The process is just a briefing away, allowing work to begin almost immediately. Typically, there isn't a long waiting period before an art outsourcing team can start. For us, it usually takes about a week to get ready, including time for estimates and contract finalizations.

Finding Clients

We're fortunate to have reached a point where clients actively seek us out. This has been the trend for the past two years. Prior to this, we actively engaged in networking at conventions, outreach initiatives, cold emailing, and multi-platform advertising. Presently, our presence on LinkedIn, boasting over 8,000 followers, significantly expands our reach, allowing us to regularly share updates and offers. Additionally, platforms like ArtStation contribute to our lead generation through our impressive portfolio. While occasional client experiences haven't been perfect, the majority often refer others to us. It's immensely rewarding to witness the direct correlation between delivering quality work and attracting new opportunities. Lastly, it is a great benefit to be well-connected myself, as having a casual chat might lead to some new tasks for the team.

Good & Bad Outsourcers

Distinguishing a reliable outsourcer from an unreliable one primarily centers on effective communication. Transparency and openness are crucial values we uphold. It's essential for the designated contact person to be easily accessible and visible for verification purposes. At Game Art Brain, we prioritize direct connections. If a client prefers direct communication with an artist rather than through a producer, we accommodate such requests. However, we ensure that these conversations remain transparent and accessible to all relevant parties. This commitment to transparency helps prevent misunderstandings, such as artists inadvertently agreeing to unpaid work, which could lead to conflicts with project managers who are unaware of these commitments.

In addition, it is important to communicate certain solutions or decisions as this will give the client a much better understanding of why certain paths are taken. Clients appreciate outsourcing teams that don't just follow instructions with a "dead brain," but instead actively engage with the project. Ideas and well-thought-out decisions are always welcome and preferred. A bad outsourcing team might read feedback and apply it soullessly, without any additional thought or creativity. In contrast, a good outsourcing team understands the feedback, interprets the underlying intent, and may even surprise the client with innovative solutions or improvements on the initial ideas. This level of engagement and creativity ensures that the client feels their vision is not just being executed but enhanced. However, for this to be effective, it needs to be communicated clearly and regularly.

A proactive approach to problem-solving and decision-making demonstrates a deeper level of commitment to the client's project. It shows that the outsourcing team is not merely completing tasks but is invested in the project's success. By explaining the reasoning behind certain decisions or suggesting alternative solutions, the client gains confidence in the outsourcing team's expertise and dedication. This collaborative dynamic fosters trust and can lead to more fruitful and long-lasting partnerships.

All in all, transparency and communication are key. Ensuring that clients are kept in the loop about decisions, solutions, and the creative process not only prevents misunderstandings but also adds value to the relationship. It transforms the outsourcing team from mere executors of tasks to trusted partners in the creative journey.

Quality

As for quality, much depends on the internal loops of art feedback and the seniority of our team. For example, besides being the CEO, I also serve as an art director, and I have substantial experience in this area. Our lead artist initiates the feedback loop, and I perform a double-check to ensure everything aligns with the client's brief. While artists may overlook certain details in the briefing and believe they are adhering to them, it's crucial to have these internal checks. We're very open with our clients about why there might be delays – for example, explaining that we're performing two extra loops internally to ensure the right quality.

Often, upon reviewing the work, I find it's not yet ready to send out, particularly for significant clients. In such cases, we may need to redo it to uphold our standards. Despite the time and financial investment these internal loops require, they are crucial in ensuring we consistently deliver high-quality work. This practice is instrumental in fostering long-term trust with our clients, demonstrating our unwavering commitment to excellence. Personally, I am dedicated to upholding our company's reputation and ensuring our work always meets the highest standards.

As a smaller company, everyone is more personally involved compared to larger businesses. In larger companies, processes can feel more mechanical, whereas in a smaller setting, we operate with greater passion and care for the outcomes. Our employees are much more easily convinced by the company's vision to deliver quality, putting their hearts into their work. At times, I find myself working late into the evening to make corrections, even if we are over budget because it’s crucial to deliver exceptional results. This personal commitment to quality, shared by the entire team, makes a significant difference.

Challenges

The competition is incredibly tough, particularly as a German studio, given the prevailing price standards. Adhering to Germany's minimum wage regulations makes it challenging to compete with studios in regions with lower labor costs. Sometimes, we have to rely on freelancers due to the high expenses associated with full-time hires in Germany. When clients present significantly lower budget offers, we're forced to decline, even if it means passing up exciting opportunities like the one we had with Sega. It's painful to turn down projects, but maintaining profitability is essential for our sustainability.

It's disheartening when big companies approach us with exciting opportunities that we ultimately have to decline due to budget constraints. While it may seem tempting to assemble a freelance army to handle these projects, it's not feasible. Integrating numerous freelancers into our existing workflow would lead to chaos and compromise project quality. Instead, we rely on our internal team and strategically add one or two freelancers when necessary to maintain project stability. Price negotiations are a constant battle, as we must adhere to certain financial constraints.

Furthermore, we often encounter clients with unrealistic expectations regarding pricing. For instance, some clients use AI to quickly generate high-quality content at no cost, leading them to expect similar results when requesting custom 3D assets from us for instance. However, creating detailed 3D characters involves significant time and resources, including high-polygon modeling, rigging, and animation, resulting in high production costs. When we explain these factors to clients, they may be surprised by the associated expenses, highlighting a misconception reinforced by AI technology. While AI can produce quick outputs, replicating the same quality and complexity in custom assets requires substantial effort and expertise, factors that clients may overlook. 

Additionally, the hurdles extend to 2D artwork, where clients also come with their hyper-realistic generated references. Crafting this highly hyper-realistic piece can be time-consuming, taking weeks compared to the mere seconds of AI-generated outputs. Rendering a 2D illustration is particularly labor-intensive. Adding to the challenge, it's daunting to match the superior quality of AI-generated references, which are trained on the work of top artists. Replicating this caliber of work with an existing team is a formidable task. Also, clients expect most of the time such excellence on a tight budget and deadline. This challenge has prompted us to explore integrating AI into our pipeline as well, specifically for support in the rendering phase.

So there are certain scenarios where incorporating AI into our workflow can be advantageous. However, the real challenge arises when clients approach us with requests to modify AI-generated images, such as extracting objects or making adjustments. It's disheartening to encounter such tasks because they deviate from the creative work we're passionate about.  

We've learned from numerous past mistakes, especially regarding the dangers of overcommitting resources to a single client. If we invest too heavily in serving one client and they unexpectedly cease collaboration due to internal issues like bankruptcy, it significantly disrupts our operations. Suddenly, we're left with idle artists and the challenging task of finding new projects to keep them engaged. This often leads us to initiate our own projects to maintain a steady workflow. However, these internal tasks are typically unpaid and serve to fill portfolio gaps or support marketing campaigns, rather than providing an immediate financial return. 

Alternatively, if you have numerous small clients, it requires an extensive number of project managers to oversee these tasks, which may not yield sufficient returns. For instance, dedicating a single project manager to a minor task, such as creating a single icon, often results in disproportionate efforts for modest returns. Having many small clients for security purposes, where the loss of one can be compensated by others to avoid major disruptions, can overwhelm project managers with numerous tasks across different clients, each with their own unique needs. Despite this, the income earned may not correspond to the effort expended. Moreover, artists can become overwhelmed by constantly shifting from one task to another in an hourly rhythm. These small tasks are rarely streamlined; one client takes longer to provide feedback while another is quicker, but they all expect immediate attention. This constant hopping around can be very challenging for artists.

The key is to maintain a healthy balance by securing a mix of small, regular, and large clients, as well as ongoing projects with long-term clients. However, achieving this balance is challenging as it requires careful selection of projects based on their feasibility and alignment with the workflow.

It's challenging to maintain this balance because you're always striving to find the right mix: which projects to take on, what aligns with your capabilities, what adds value to your pipeline.

Making this balance happen is not always easy, especially since clients often like to test art houses for a fit. These tests can be both beneficial and challenging, as they offer an opportunity to showcase our capabilities and alignment with client needs. However, they also present another layer of complexity to our operations. A good test does not guarantee the job, as some companies let multiple art houses compete against each other. Even if the test is successful, factors like speed or budget may influence the final decision, sometimes leading to the job going to another art house despite our best efforts. Some Asian studios gain a head start by offering free tests, a strategy we cannot afford to adopt. Instead, we often endeavor to offer test discounts to remain competitive.

Nevertheless, it's disheartening when our studio isn't selected, as it essentially means working at a loss on the test. This dynamic underscores the complexities involved in conducting and participating in these tests. They often pose significant challenges for us as a company, requiring considerable effort to ensure their success. Despite our best efforts, there's often pressure from clients to provide discounted or even free tests, which we've reluctantly agreed to in a couple of instances during difficult times.

Another head start other studios gain is by assigning a dedicated team of highly skilled artists specifically for performing tests. These dedicated teams often consist of a small group of experts who handle all the testing tasks with precision and efficiency. However, for smaller companies like ours, replicating this approach isn't feasible due to resource constraints. In larger companies, while dedicated test teams may initially ensure high-quality results, there's a risk of diminishing quality over time. This decline can occur as teams rotate through different members, gradually replacing experienced artists with junior staff. Without client intervention, this shift can compromise the consistency and excellence of the final output. While larger companies may use this strategy to manage workload effectively, it doesn't always prioritize maintaining consistent quality throughout the testing process.

As a client, I've firsthand experienced the challenges mentioned above during the testing phase, often witnessing a decline in quality when transitioning to full production. In response, I've proactively engaged with company leadership, advocating for the inclusion of specific artists whose work I valued in the testing phase. However, not all clients may be as vigilant in monitoring these nuances, potentially leading to issues later on.

At our studio, such occurrences are unlikely to happen. Unlike some companies, we don't have a dedicated testing team. Instead, our internal processes, overseen by senior art leadership, ensure there's no drop in quality throughout the production process.

Another challenge posed by AI technology is its impact on the demand for our services in concept art projects. Previously, we handled a substantial volume of such projects, involving rapid creation of speed paintings and brainstorming of ideas. However, this aspect of our business has significantly waned. Clients now rely more on AI-generated images and ideas, resulting in a noticeable decline in requests for our involvement in the initial concepting phase. This shift has led to approximately a 30% decrease in our income. While the use of AI offers convenience for clients by providing specific references aligning with their desired outcomes, it has left us disheartened as we miss the creative process of generating initial ideas and sketches. Since the ascent of AI technology, we've observed a stark reduction in these types of projects. 

Trends

When the gaming industry faces challenges, art outsourcing studios are among the first to feel the effects. Their livelihood depends not only on the volume of new game development projects but also on the sustained success of existing ones. Strong live games and their content needs also play a crucial role in keeping the demand for art outsourcing services high. However, when game production slows down, outsourcing studios become vulnerable to the resulting downturn. For instance, in Germany, government funding for game development has been halted since the outbreak of the Ukrainian war two years ago. Previously, substantial funding was available, but the suspension of German support has left the industry financially strained. This situation isn't limited to Germany alone; similar scenarios have unfolded in other countries as well. As projects decrease and funding diminishes in the industry, widespread layoffs have been reported across the industry. We've observed this firsthand through our outreach efforts. Moreover, since the onset of COVID-19, many companies have become more cautious with their finances, either due to lingering uncertainty or shifts in priorities.

In a recent conversation with someone from ArtStation, I learned about strategies to enhance our visibility on the platform. Initially, we received numerous inquiries through ArtStation, but that trend has shifted. There's been a significant increase in studios registering on ArtStation and engaging in studio searches since the onset of COVID-19. This surge is due to the emergence of many small companies during the pandemic, resulting in heightened competition. These small companies and artist collectives, even those with six to eight members, pose formidable competition, reshaping the market landscape.

Transitioning from the conversation with ArtStation, it's evident that the industry landscape is evolving rapidly, especially with the rise of small artist collectives and studios spurred by the pandemic. These emerging groups present unique challenges to established companies like ours. While larger entities may not feel the impact as keenly, these smaller studios often offer competitive pricing and may even go the extra mile without additional compensation, reshaping client expectations.

Given these trends and challenges, we're always on the lookout for a third leg to stand on to secure our financial stability. Striking the right balance between financial viability and other factors can be challenging for any employer. To address this, we've been actively exploring alternative revenue streams, such as selling 3D kits, bashing kits, and various 3D models. We've even ventured into the realm of NFTs and secured funding for artwork for a game in co-production. Continuously, we're experimenting with different avenues to diversify our income streams and expand our presence in various markets. 

Conclusion

In conclusion, life at a European art outsourcing studio is filled with challenges, especially given the rapid changes in the industry and economic uncertainties. From navigating the evolving landscape of AI-generated art to dealing with fluctuating client demands and financial constraints, sustaining and thriving in this competitive arena is far from easy.

Despite the obstacles encountered along the way, there's a strong sense of passion and dedication driving these endeavors. Behind the scenes, amidst the complexities and uncertainties, lies a steadfast commitment to delivering excellence and pushing creative boundaries. It's a testament to the determination of those involved in this ever-evolving field, where every challenge is met with resolve and every setback is seen as an opportunity for growth.

In essence, life at a European art outsourcing studio embodies a journey filled with trials, triumphs, and unwavering dedication to the craft. It reflects the resilience of the human spirit and the enduring pursuit of artistic excellence in the face of adversity.

Looking back, I'm incredibly proud of what we've achieved at Game Art Brain. It's been a challenging journey, but we've come a long way, driven by our passion and dedication. As we continue to navigate the ever-changing landscape of the art outsourcing industry, I'm confident that we'll rise to meet whatever challenges come our way. With unwavering determination and a commitment to our craft, we'll continue to push the boundaries of creativity and set new standards of excellence in the gaming world. It has always been my personal dream to make a significant impact in this industry, and I'm grateful for the opportunity to pursue that dream.

Christian Retzlaff, CEO of Game Art Brain