Gamasutra has an interesting interview with the Metroid Prime developers who founded Armature Studios. They discuss the unsustainable business models of many modern game development studios. They have a theory they are testing with the formation of Armature Studios that having the entire development process carried out in-house is not necessary to create top-class games and is too expensive. Read the interview over there if you’re interested.
The new Austin, Texas-based company is in many ways an experiment intended to demonstrate a different type of development: keeping a small in-house staff to conceive ideas and rapidly prototype gameplay concepts and technology, then working with external contractors and outsourcers for full production.
The company is currently hiring, but plans to cap out at around eleven employees — and deliver full-scale, triple-A games with its distributed development model.