Epic Announces Epic China Outsourcing Division recaps a talk at the Tokyo Games Show by Epic's Jay Wilbur in which he comments on Japan's reluctance to embrace middleware for game development and reveals Epic Games China and plans to shanghai some jobs to Shanghai as part of this new outsourcing division in an effort at controlling costs:

According to Wilbur, one of the keys to Epic's carefully managed staff size is the way that the company has outsourced content. Epic's teams were claimed to be 50% or smaller on average than the industry norm, with Gears Of War's average team size over its development life listed as being just 30 developers.

Hence, Epic has initiated the setting up of the Shanghai-based division, which is run by a team responsible for content development at high-profile studios including Ubisoft Montreal and Ubisoft Shanghai, reportedly including former Ubisoft Shanghai studio head Paul Meegan. The people behind Epic China have worked on titles in the Splinter Cell, Rainbow Six, and Ghost Recon franchises, and Wilbur indicated that Epic itself is outsourcing to Epic Games China for low-cost, high quality game assets, but it will also be available to other developers.

Why China for Epic, and why now? Wilbur explained that the cost per man month (including overhead) to produce games in North America is around $9,000, and in Europe and Japan, it's $8,500 per man month. But costs per man month in China are less than $4,000 - hence Epic's choice to keep its core team at Epic's NC offices, but outsource significant amounts of art creation for its games.