Australia’s neglected video game development industry is well worth Commonwealth support, argues a Greens senator who sparked an inquiry into the sector.
Senator Scott Ludlam said the Federal Government should be doing more to support highly skilled Australian digital experts, commenting ahead of a Senate inquiry due to hand down its findings about the industry.
“[We discovered] how neglected the sector has become and how much good work is getting done on the smell of an oily rag,” Senator Ludlam told ABC News.
“The sense also that the games industry was kicked really hard by the global financial crisis and the spike in the Australian dollar and such support that was there at a Commonwealth level had been ripped away.”
In 2014, the Abbott government cut the $10 million Australian Interactive Media fund provided for gaming studios, sparking an outcry from the gaming community who argued the funding was critical to the success of local developers.
The Greens secured a senate inquiry into the struggling video game industry last June, and the inquiry is due to report its findings on April 29.
“The Coalition senators, and the Labor senators for that matter, I think bought a really good attitude to the inquiry and really receptive to the evidence that was given, so I’m quite optimistic,” Mr Ludlam said.
Submissions to the inquiry were received from major global game studios, including EA, down to Australian developers like Halfbrick Studios, which produced the immensely popular game Fruit Ninja, an app that has generated over one billion downloads globally.
“It’s very much a global market, and we are really well placed to take advantage of that, but there are other countries that are better placed, particularly in terms of incentives that their governments offer and the support and strategy that they give,” said Kate Hynes, chief legal officer at Brisbane’s Halfbrick Studios.
“We really need some strategic thinking and some strategic support from the Government to really take us from where we are, which is huge potential, to actually realising that potential.”
Grants and tax breaks needed to offset years of hardship
The submissions highlighted export grants, production tax offsets and tax breaks as vital to supporting both new and existing companies.
Developers argued this would put Australia’s laws in line with other countries that offer tax breaks to gaming companies, including core development hubs in Canada and Europe.
“There are definitely disadvantages to being in Australia,” said 40-year-old Matt Hall, director at independent developer Hipster Whale.
“Networking in our industry is really important, and getting overseas to basically rub shoulders with people outside of Australia is essential.”
Hipster Whale is best known for Crossy Road, a Frogger-type arcade game that made $10 million from 50 million downloads in its first 90 days of release.
The game requires the player to tap the screen to make a chicken or other character cross the road, avoiding cars and other obstacles.
“People have referred to Crossy Road as a bit of an overnight success, but most of the overnight successes you’ll find in the video game industry are people who have been working hard for ten years, and in my case thirty.”
Mr Hall made his first text-based adventure game at the age of eight, and spent decades developing games, even moving home to live on his parents’ farm in rural Victoria when money became tight.
While these two companies show the potential for success, many developers struggle for years to create a game that is both viable and sustainable.
Global gaming market soon to top $US100 billion
According to research firm Newzoo, the global games market will be worth $US102.9 billion by 2017, with key markets including the US, China, India, Japan and South Korea.
China’s market alone is currently worth $US10.12 billion, and is set to grow to $US11.38 billion by 2017.
Halfbrick found massive success in China, which has a huge appetite for Western games, but experienced difficulty in navigating the country’s arcane digital laws.
There is a ban on “direct publication of a game in China by a foreign developer”, so a studio looking to release a game in that market would have to license the rights to a local firm. There are also pressing issues of IP theft and piracy.
“It is an incredibly difficult market to navigate, and to deal with the issues in market, and to pull appropriate amounts of revenue back out of the market,” Ms Hynes said.
“We have really called on the Australian Government to look at some of the barriers to trade that we are experiencing in China.”
Hipster Whale, meanwhile, generates 95 per cent of its revenues from overseas. Most game developers are exporters and the majority of their income is generated abroad.
“If the Prime Minister’s serious about this innovation agenda – which is about finding new export markets among other things, making the most of the amazing digital skills that we’ve got here in Australia and looking to diversify the economy away from commodity exports – these people tick all of the boxes,” Mr Ludlam said.
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