One has to wonder how difficult it is for a small development company to compete with the “big boys” who have practically unlimited money and resources.  But from personal experience, I’ve seen small teams of developers outdo even large-scale corporations.  Small team developers have the ability to innovate and create new technologies and techniques with less overhead.  They have less to lose and so much more to gain through their hard work.

In the words of Jeff Tunnel:

A “band” of five great game makers supported by a world wide contractor market and readily available low cost technology can make an incredibly great game. They just need passion and creativity, and they can kick the ass of any of the big companies.

Both Aquaria and World of Goo were created by a team of two guys working on their home computers.

Ultimately, it boils down to talent, ingenuity and guts.