The global gaming industry is an industry enjoying rapid growth. It is an industry worth $93 billion USD. It outperforms all other entertainment mediums but does not enjoy the tax concessions that apply to television and film production in Australia. In fact, the gaming industry made a $2.46 billion contribution in the Australian economy last year. This was solely on the back of homegrown studios producing Australian owned content without any federal government backing whatsoever.
However, there was a small glimmer of hope. By small I mean literally small. Put half a centimeter between your thumb and any finger, small. The Greens party had secured a Senate inquiry into the local game development industry. The purpose of this was one that should have secured the attention of all politicians and policy makers:
“Just looking at it from a purely hard-headed economic perspective, we are missing an extraordinary opportunity here”, Senator Scott Ludlam told The Australian.
“You look at the inhabitants of parliament — a lot of them don’t take the sector seriously and perhaps they never will. But that doesn’t mean we can wait around for them to disappear. We have to build the case and build the evidence base,” he said.
Considering the amount of growing interest in gaming within Australia, the logic is sound; invest in an industry that is almost certain to produce economic benefit.
In fact, it was so appealing that the Labor government was initially for the growth of local gaming developers and the local gaming industry. Former Labor arts minister Simon Crean put the Australian Interactive Game Fund (AIGF) into motion. The AIGF was in a bid to help the local gaming industry survive and revive itself after the closure of multiple foreign owned studios.
However, this bid was quickly shut down.
Now, the innovative and creative local gaming industry – full of potential economic benefit – is on the road to absolute obscurity.
If you want to blame someone, blame the Abbott government, but in particular, blame Senator George Brandis and his recent National Program for Excellence in the Arts (NPEA). The NPEA excludes interactive games from receiving any funding whatsoever. This low blow stacks on from the previous year when the AIGF was cancelled.
The games industry has been left with minimal support, mirroring what happened to the local film industry.
On top of all of this, it took the Game Developers Association of Australia 10 years to secure the AIGF.
Now it’s gone. Just like that.
Let’s rewind a little bit. The initial, relatively small investment of $10 million had produced a variety of local success stories. A prominent example is the individual, multi-award winning, narrative puzzle game called “Framed”. If it’s to be looked at from company expansion, the grant had allowed companies such as Defiant Development, Tin Man Games, The Voxel Agents and Uppercut Games to expand.
Defiant Development founder Morgan Jaffit spoke to The Australian, and stated that the $550,000 that it had received enabled the company to create commercial success with titles such as “Hand of Fate”.
“It turned us from being a small group of contractors doing largely work-for-hire projects to a 15-person full-time studio creating our own IP with the ability to self-publish, distribute, market, and reap all the rewards of what we create, which has put us in the position of being a long-term business in the Australian games space,” Mr. Jaffit said.
An important fact to note is that the AIGF was not a handout, it was not something that was given with the connotation that it was to be spent willy-nilly. No.The grant was a loan that was awarded to individual projects and studios to be paid back over time.
Mr. Jaffit remarked that the returns usually paid off tenfold.
So, let’s do the mathematics. Defiant Development received $550,000. $550,000 x 10 = $5,500,000.
Just let that sink in.
However, it’s not all doom and gloom for the local gaming industry.
Victoria has been marked as the gaming capital of Australia. It boasts almost 50 per cent of the 200 commercial game development studios in the country, and it’s all thanks to the funding provided by the state government.
According to The Australian, the funding program ranges from enterprise programs that give studios a dollar matched grant, which is capped at $150,000 to help set up a business, to a $30,000 grant that assists with marketing and legal costs.
The Victorian government has made a step in the right direction by granting the studios in the gaming capital of Australia some money to get the engines running. An example of one success story from the grant is Big Ant Studios, makers of the well-received Don Bradman Cricket game.
In an interview with Business Spectator, CEO Ross Symons states: “They pay half of the salary of the intern for six months and that really helps. Over the last ten years we have had nine interns, eight of which are still in the industry. For the relatively small amount they are putting in, the state’s getting a hell of a lot in return”
Australia was home to some of the largest game development studios in the world. However, the good times never last. The very unsustainable work-for-hire model of producing licenced games and ports for overseas publishers have left the industry vulnerable to the unpredictability of the global market.
Local development has gravitated slowly towards mobile gaming, with stellar results. However, the mobile gaming market is extremely competitive to the point where one would consider it brutal. There are 50,000 games released annually on iOS alone. Making an independent title stand out from the other 49,999 will only get harder as time progresses.
Hang on just a second though. It’s not entirely the government’s fault.
In 1982, Melbourne’s Beam Studios produced an interactive version of Tolkien’s The Hobbit. The approach to interactive narrative design is the same one that remains influential today. Major producers started to acknowledge that our education system was producing some marvelous coding talent.
EA, THQ and 2K Games had acquired local studios or set up their own to produce games to sell to the global audience.
One of the prime examples of games being developed and sold to the global audience is Borderlands: The Pre-Sequel, developed by Gearbox Software and 2K Australia. Other prominent titles that included contribution from 2K Australia include Bioshock 2 and Bioshock Infinite.
Sadly, as of 2015 2K Australia no longer exists; with the studio in Canberra shutting it’s doors, and employees to be reassigned. 2K Games cited development costs as the reason for shutting its’ Australian branch down.
At one point, the dollar had sat so low that the local market was seen as an attractive place for outsourcing. This meant that Australian independent developers were able to secure contracts to produce cheap games based on popular film franchises.
Then the GFC happened in 2008. The value of the Australian Dollar reached parity with the US Dollar. It then became too expensive for global publishers to maintain local studios. Sooner rather than later, those studios had relocated to areas including; Singapore, Malaysia, Thailand and other South East Asian countries. These countries were seen as countries that these global producers could outsource to for a long time.
The rest of it is like a domino effect. Australian game studios started to close at an alarming rate. The industry contracted to just one-third of it’s size over just a few years. By 2013, 581 people were employed in the local games industry, as opposed to 1,431 in 2007.
Once again, frightening.
Alas, the GFC was inevitable, and there was nothing that could have been done to prevent the withdrawal of foreign studios. Realistically, we cannot solely point fingers at the Abbott government for everything.
The local industry has fallen so hard, that most are looking abroad, to America or Canada to fulfill their dreams of game development. There is only one major studio remaining in Australia, which is Melbourne’s Firemonkeys.
Brazil, Thailand and the United Arab Emirates are a few countries that can be deemed as emerging markets. These countries are only few compared to the many more that are investing in local industry. These markets are certain to develop into what Bollywood is to the film industry as talent, and eventually global money will spread towards these growing markets.
The global gaming industry is set to be worth over $100 billion USD by 2017, and boast a consumer base of around 1.2 billion people. Six years ago video games were bringing in four times the revenue of the cinema in the UK, according to The Guardian. Two years ago, Rockstar’s popular franchise Grand Theft Auto had been released in the form of Grand Theft Auto V. That game alone, according to “Fool.com”, has outsold the entire music industry.
It’s amazing, isn’t it?
Games are an opportunity to increase Australian exports. Games also provide the opportunity to show the world Australian cultures and artistry. Defiant Development, producers of Hand of Fate, was able to pay off the $550,000 loan granted by the AGIF in a week. With China now legalizing game console sales, developers now have a massive opportunity to market to a population of over a billion people. By the looks of it, Australia won’t be one of those that will be able to pitch to China.
Where do developers, studios, and those without jobs point their fingers now?
The likely source of blame is the Abbott Government.
With the government citing a budget emergency and slashing funding here and there to deliver a budget surplus it justifies their reasoning to slash a mere $20 million fund to the gaming industry, right?
Incorrect, but open for debate. Joe Hockey admitted there was never a budget emergency. There isn’t much room for debate at all really.
We’re not here to talk politics though. This is a write up about games, no matter how significant the political influence is on this current issue.
Realistically speaking, if it’s a part of the NPEA to slash coding from eventually being in our school and a slash to interactive games funding, it’s safe to say that this government is taking a few too many steps backwards. It’s hard to wrestle with the fact that coding and video games are industries of the future. However, they are starting now. It is important to invest in these industries now.
The future is now.
The ignorance of politicians in general towards the gaming industry is alarming. Considering it is one of the fastest growing global industries, it’s genuinely surprising that more heads have not been turned to promote local game development, in the name of economic growth, of course. Whist the general ignorance is alarming, it must be noted that it is up to the current government to somehow, if humanely possible, weasel some sort of funding to develop our local gaming industry, so that Australia can compete globally instead of struggling locally.
Remember, Defiant Development received a $550,000 loan from Labor’s AGIF scheme. Founder Mr. Jaffit stated that return is ten fold. $5.5 million. This could very well be possible across the board if investment had been placed. The gaming industry could have bloomed and the government could have seen some remarkable contributions to economic growth.
However, they will never see any of that because of their lack of investment.
As it stands the local gaming industry in the hands of a government led by a man who ate a unpeeled, raw onion, and is party to a budget being developed by the man who cries wolf. The Abbott government has missed out on a golden economic opportunity.
It’s safe to say that the local gaming industry is not in very good hands at all.
Article by Jonah Raj
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