Global retail games sales will drop by a full 20 per cent over the next three years – and publishers will be forced to explore non-traditional distribution methods in order to afford increasing development costs.

That’s according to Codemasters chairman – and MCV Legend - Chris Deering who told attendees at the Edinburgh Interactive Festival this morning that less than three out of ten boxed games released today recoup their marketing and development costs through traditional sales.

Deering’s keynote encouraged the industry to concentrate on monetising – or to ‘make a game out of – the growing online and mobile sectors in order to offset spiralling dev costs.

“Traditional revenue sources will not be sufficient to fund games development in future,” said Deering. “Traditional retail sales will not be sufficient to fund games development... but something will come in to make up the difference of these costs. We’re already seeing games that took $100 million to make with the likes of GTA.”

Deering predicted that 3G mobile phone subscribers would grow from 80 million global users today to 300 million in 2012 – with the UK seeing an increase from 14 million to 60 million in the UK alone.

Of the lucrative potential of in-game gambling, Deering commented:

“Gambling will become a significant source of development funding. It will have provide sources of income that can be directed back to development activity.

"It's already in games to some extent, but it will become more important. Gambling and collaborative games have a very big future.”