With the communication technology we have today like skype, google plus, etc, how feasible is remote development now? What I mean is a dozen or so developers around the country/world working on the same project and communicating strictly through the internets.
I know there is value in sharing an office, but what are some other foreseeable pitfalls to this approach? Assume your developers are “mostly” responsible people 
Its better than not doing anything, but inferior to an office
Seriously: most people don’t have as good a work environment at home - interruptions, chores, spouses, kids - its just easier to get work done in a place where everybody is there to work. Plus, it takes extra discipline to work at home where there is nobody else watching – not because your lazy or irresponsible, just because people are herd animals and they pick up clues from people around them.
Telecoms tends to raise the barrier to casual communication =- even though it’s easier than it used to be, it’s still hard to say ‘do you see what I’m seeing’ without a whole set of steps to capture videos or share screens or whatnot. Plus., it’s easy for people to think they’ve got an agreement after a 10 line chat session but actually be meaning/doing different things, which is bad; face-to-face communicaiton has more bandwidth than anything else - if your colleague is dubious you’ll see it in person a lot faster than you will in chat or even over skype.
Remote access to your work network and computer is great as a workaround, for emergency fixes, for when you have a flu, can’t make it that week, or even just for a change. But as Theodox said nothing beats an office space for actual productivity.
As a side note, I think remote works best with more tech savvy oriented people. Artists and designers need the human interaction, whereas programmers need less. The Secret World was developed by studios in three continents, and you could see that the more techish the person was, the more natural was his/her interaction with peers over IM, email and etc.
With that said though, remote access to the work environment is great, specially for emergency fixes. 
I know that http://www.slightlymadstudios.com/ is a “work-from-home” studio. Last year they’ve set up some sort of “crowd sourced development” for a racing game: http://www.wmdportal.com/projects/cars/.
for me working remotely completely kills the team vibe. It’s hard to describe, and I guess depending on what your doing it’s ok, but if you work in a small group with a lot of communication over cubicles or in a room, being online just isn’t the same thing. I’m sure people do it, and it’s ok, but it just doesn’t have the same feel to me.
Well Theodox is completely right: It’s inferior to an office in pretty much all areas. And as UncCheezy says it kills the team vibe. Even strong, motivated teams that are there from the beginning will eventually deteriorate over time. It’s not a question of “if” but a question of “when”.
For example: There’s a reason why more than 9 out of 10 amateur mod teams fail even before they start producing anything (and even fewer actually releases something). Well… there are more factors ofc but I would say that “working from home” is the number one factor. Even if you have individuals with strong self-discipline, there are just way too many pitfalls and you can’t avoid them all: Organizational problems, Team spirit deteriorating, Communication issues (especially when you have people in different time zones: Europe and USA for example.) and yea… people just seem to lose motivation and/or not work as hard as they would in an office.
Mod of the year 2012: Black Mesa (source engine -based revival of the single player campaign in Half-Life) took something like 6 years to complete, and the project were at risk of being closed down several times.
I agree with all the points posted. I think my motivation here is that one day i’d like to work on a project in a town thats comfortable to me (money, population, etc.) and other team members could work from a town they are comfortable with. It was a pipedream I know
It’s not impossible. It’s just hard
The company i’m working for is 90% decentralized. We have two developers in Los Angeles - including myself, two in NYC, and a small handful of developers in Tel Aviv. We also have individual team members working in South Carolina (I think?), Pennsylvania, and Arizona. We’ve released multiple games with a distributed approach relatively successfully. My previous job was working in a normal single-office situation with ~60 devs, so I’ve seen both sides. These are the problems that, to me, seem to be the most glaring.
Firstly, the most obvious burden to development is going to be time zone differences. Because we handle a lot of our development on opposite sides of the planet, getting simple questions answered can have 8-12 hour turnaround times, and can often not lead to 100% understanding. Work-blocking issues that might take an hour or so to fix in a normal office situation can be dragged out to last entire days, as one group of developers is waiting for the other group to get to work and fix problems. This is alleviated by delegating work in such a way that minimizes interdependence, and giving plenty of time to allow for failure and testing.
Another issue: source control. Although very straightforward/easy/fast when all of your devs are on the same gigabit LAN pulling from the same server, working with remote depots hosted on private servers greatly limits your flexibility to deal with hundreds of gigabytes of assets. Why? Frankly, business internet in the US (and in most non-Nordic countries, i’m assuming) is EXPENSIVE and SLOW. Asset pushes that often sit in the tens of gigabytes have to be planned ahead, and time set aside for. Random internet outages (99.9% up-time? yeah right!), remote server crashes, and erroneous assets that interrupt overnight file transfers could all mean an additional day spent waiting for content on the other end of the pipe. Once again, the solution to this is ample planning, time for failure, and really thoroughly tested pipelines. Dropbox helps.
And of course, my biggest personal issue is the lack of a professional community. This might only be my personal view, but there is a lot of motivation and joy that comes with struggling alongside other people to make cool shit. A lot of this type of motivation is lost when working remotely.
Benefits? Extremely flexible working hours. Work from wherever as long as you have internet. Fun travel destinations on overseas trips. Super-high levels of independence and self reliance. Zero office drama. Work sans pants.