The video game industry is quickly becoming one of the biggest entertainment industries in the world. Last year Grand Theft Auto V became the fastest entertainment product to surpass $1 billion in sales – it only took 3 days. Before that Call of Duty: Black Ops 2 held the title at 15 days. Video games have reached $1b faster than Avatar, Harry Potter and the Deathly Hallows Part 2, and the Avengers – all took 19 days (Forbes). So, there is obviously a demand for video games world-wide.
Let’s not dance around the point. The Australian games industry is not as big as it used to be. There are few big studios remaining after THQ and SEGA closed studios recently. Team Bondi still remains, but its next game Whore of the Orient is without a publisher.
The Australian Federal Government’s 2014-15 Budget set out on May 13 put another sword through the industry with the immediate cessation of a $20 million Interactive Games fund, of which only $10 million had been handed out. There has been huge uproar from many developers. Calum Spring, Lead Programmer at Cardboard Keep, told me his team was in the process of applying for funding when they heard about the cessation. “It means one less pathway for us and the rest of the industry to create viable ventures and games,”Spring commented.
The reason for the lack of an industry can be related back to a lack of government support. Small companies often require government assistance to get off the ground. In the case of the video game industry, breaking onto the console scene is very expensive for an independent developer. There are added requirements, like submissions to the Australian Classification Board, which are big hits to a team’s budget; oft-times a submission is simply unaffordable.
Developers find themselves trapped in a cycle of death: With no money to tap into the console market, it is difficult for developers to earn enough profit to fund a new project or even get one off the ground. Additionally, smaller independent teams do not have the money to afford to properly market their products – a key to increasing public awareness and hype. Yet, the Australian government appears to not want to provide industry assistance to help developers make a start – especially not a Government pushing for free trade and reduced industry assistance throughout the whole economy.
Reducing industry assistance is aimed at forcing existing industries to become internationally competitive. Reducing assistance on an industry trying desperately to gain traction is like throwing a baby into water and expecting it to swim on its own. You have got to support that baby for a few years before he is capable of swimming by himself. With that said, the ‘Interactive Games’ industry is not being singled out, cuts to funding for other industries, particularly the automotive industry are occurring too.
James Lockrey, Director at Chaos Theory Games – the team behind S.W.A.P. – told me, his studio did not qualify for any funding because the new studio does not meet many of the guidelines (1, 2), such as a requirement for five years of experience in the game industry or at least two to three years experience in a senior development role on large-scale (budget of $4m or more) PC or console game/s.
“Looks like we might be making mobile games for a while!” wrote Lockrey.
For a fund which aimed to assist developers, the guidelines were fairly steep. No start-up team of young developers unable to prove their worth would ever have received funding. With very low budgets to begin with, the odds of them hitting overseas markets alone are against them.
Even a studio like Nnooo which has games out on Wii, Nintendo 3DS, PlayStation Vita and soon PlayStation 4, could not acquire funding. Bruce Thomson, Business & Marketing Director at Nnooo, sums up most people’s thoughts, “The cessation of this initiative is a short-sighted action from a government more concerned with achieving immediate gains from a $10m saving than the long-term growth of a creative industry which globally is worth more than the film industry.”
There is plenty of local talent in Australia, just no dedicated plan for proper assistance.
So why on earth would a government not want to support the video game industry?
There is a term in economics called comparative advantage; it is the backbone of free trade – a direction Tony Abbott’s government appears to be pushing for. It is the idea that countries should specialise in areas which they are most productive in, purchasing other goods from other countries at cheaper prices. In its current state, the Australian video game development industry is not productive enough for the Australian economy.
Let’s be honest, in recent years there have been very few successful video game developers in Australia. Nnooo and Halfbrick are some examples of the most successful, still operating ones. Team Bondi had the biggest chance of reviving the industry, but it went into administration not long after the release of L.A. Noire. As a more recent success story, Melbourne based studio Straight Right was responsible for the Wii U ports of Mass Effect 3 (2012) and Deus Ex: Human Revolution Director’s Cut (2013).
While Nnooo makes downloadable console games, Halfbrick mostly creates mobile titles such as the highly popular Fruit Ninja and Jetpack Joyride. Sure, the mobile game industry is profitable, but the over saturation of the market brings with it high risks of a lack of visibility. Further, many Australian developers are forced to offer their games for free or on mobile platforms because it is the only viable option money wise. There are plenty of new development teams in Australia which simply cannot afford to enter their dream market – the paid console/ PC market. During my time at 2013’s EB Games Expo, many of the independent developers I talked to would have loved to release on consoles, but income constraints reduced their options to releasing the title for free, hoping for some kind of exposure. While Sony, Microsoft and Steam have made advances towards assisting independent developers – Sony’s Indie Initiative, Microsoft’s ID@Xbox program and Steam’s Greenlight program – it is difficult for Australian developers to have their product reach mass public awareness.
A report from Gamasutra revealed the amount of games releasing on Steam is increasing. The website notes more games have been released in the first five months of 2014 than were released in the whole of 2013. In the article, while praising the influx of games as positive for independent developers who can finally get their games out to Steam’s 77 million user base, Tom Ohle, director at Evolve PR, suggests a more open Steam platform could turn it into something similar to the iOS store in that it is difficult for developers to have their game visible on Steam’s front page for more than 24 hours.
Another thing to understand is that, while many would like to work on games full-time, making games in Australia has to be made a side project because of the reasons mentioned above.
Playing the devil’s advocate, cuts to industry assistance are a necessary step in achieving global economic integration. Australia’s most productive sector is its mining and metals sector thanks to the boom of emerging economies like China and India. But that boom is expected to slow eventually. When it declines, the government will have destroyed other industries which could hope to keep the economy kicking.
Why not put some more effort into video game production? It is one of the biggest industries in the world, and it is only getting bigger. Australia needs a safeguard for the eventual decline of mining. The ever-expanding interactive entertainment industry is a way to go, at the same time creating jobs for software designers, sound producers, IT professionals, etc., rather than losing them to overseas employers.
Another argument for the difficulties of the video game industry in Australia is the high level of the exchange rate in recent years. When it increased after the Global Financial Crisis of 2007-08 (reaching a high of 1.06 USD per 1 AUD), the price of exports consequently increased, while the price of importing goods into Australia declined. This reduces the competitiveness of our export industries, one of those potentially being video games. Overseas consumers may not be willing to pay the higher price for the good, resulting in a decline of demand and a decline in profit for Australian developers. A sustained increase in the Australian dollar has made these effects long-lasting.
It is clear the Australian Interactive Games fund in its current state was not the right initiative for creating a sustainable industry. However, simply axing the fund and not finding other methods for supporting local talent is a mistake. Reductions in protection levels to whole industries can be dangerous. With nowhere else to use their skills, Australia could see an increase in structural employment, requiring more expenditure in education and training programs – or simply a loss of labour to overseas markets, as mentioned earlier. There is surely a way to improve funding for video games in Australia. It may take some time, and a more protection minded Government, but the benefits of a striving video game industry in Australia will have wide-reaching effects on the whole economy. In a multi-billion dollar industry, Australian talent is being wasted by a Government content on ridding itself of all industry assistance just to save a few dollars and reduce a budget deficit.
So what other options does the industry have?
In recent years, publishing labels have begun taking independent development teams on board. Surprise Attack is one local example. The company was founded to assist developers to manage public relations, marketing, distribution, etc. In a recent success story, Surprise Attack helped independent developers Kinelco and Long Elk Creative launch their game, Vertiginous Golf, through Steam Early Access. This is but one story which probably would not have been possible without the publishing label.
Going outside of Australia, Curve Digital is a publishing label quickly making a name for itself. While it mostly publishes games created by its sister company Curve Studios, Curve Digital has published other independent titles on PlayStation devices and PC. Recent publishing ventures include Velocity Ultra to PC, Titan Attacks! to PlayStation and, soon, indie hit The Swapper to PlayStation devices. Publishers like Curve and Surprise Attack do not appear focused on triple-A games, but rather smaller budgeted titles which may not be able to breach certain markets alone.
Which brings the argument to its final point, funding. Without proper, thoughtful funding, developers in Australia cannot possibly compete with overseas developers. Yes, there is the occasional independent success story, like Minecraft, for example, but triple-A titles bring in the most money. Australia needs more triple-A studios. To do that, more publishers have to be willing to employ local talent, such as RockStar with Team Bondi or even EA acquiring Australian based mobile developer Firemint (now Firemonkeys). Without publishers providing millions, the Government is the only other body which can help. We don’t need another $20 million assistance package. If the Government is serious about interactive games in Australia, it needs to invest much more – dare I say billions. With the industry only growing larger and faster, the returns on an investment that size would do wonders to the Australian economy; new jobs would be created in other sectors through strong economic growth, export revenue would increase, decreasing the current account deficit and creating a more stable economy. These are just a few of the benefits.
Perhaps the cuts to the Australian Interactive Games fund in the 2014-15 budget were just the thing the industry required. It has allowed us to take a step back and look at the bigger picture. Not the current picture where we continue making free mobile games, but the picture every up and coming developer dreams of: creating the next big hit that takes the gaming world by storm and puts Australia back on the map for game development.