Australian Games Industry Analysis
Creative Industry Perspectives
Abstract
The following is an analytical report covering the games development industry in Australia; it focuses on political and cultural factors, relevant infrastructure, the resultant implications, and the related challenges that this majorly overlooked and undervalued industry currently faces.
Glossary
ABS — Australian Bureau of Statistics (independent statistical agency of the Government of Australia)
AIGF — Australian Interactive Games Fund (government funding assistance for startup video game companies)
ALP — Australian Labor Party (left wing, democratic socialist political party)
APH — Australian Parliament House (Australian national government body)
Esports — Electronic sports (referring to the scene where video games are played professionally for money earned through prizes, salaries, and sponsorships)
FTTN/C/P — Fibre to the Node OR Curb OR Premises (NBN internet infrastructure terminology, referring to how far the underground cables are laid out from each property, with diminishing effectiveness the further the cables are run)
GDAA — Game Developers’ Association of Australia
HFC — Hybrid Fibre Coaxial (More NBN internet infrastructure terminology, referring to a different type of cable to the fibre optic)
IGEA — Interactive Games & Entertainment Association (association representing the business and public policy interests of Australian and New Zealand companies in the computer and games industry)
Indie — (referring to typically independent development teams, not belonging to major companies or labels)
LP — Australian Liberal Party (right wing, conservative political party)
NBN — National Broadband Network (the latest form of internet infrastructure currently rolling out across Australia)
Introductory Statement
The Australian video games development industry has been one of turbulence; its promising path to prosperity consistently marred by roadblocks manifest in both direct and indirect political intervention, global economic factors, and the country’s long since dated foundational infrastructure.
The objective of this report is to highlight the factors that have effectively stifled the Australian games industry’s growth, making its path needlessly difficult and leaving its current state one of monumental missed opportunities in today’s national economy.
Political Policies
Australian policy creation and support (financial or otherwise) for local video games development has been intermittent, half-hearted and often poorly targeted; seeking to fit a cultural template established by and more befitting of art, film and television (McCrea, 2013).
“A key feature of the games industry is that it is poorly understood by the political class” (Banks & Cunningham, 2016).
The political stories surrounding the Australian games industry have been — somewhat typically — primarily of the Left vs Right agenda. Generally speaking, the ALP have historically been more in support of the arts and creative industries, and the LP quelling them where possible. This has been particularly prevalent with the games industry, where government support and funding has been gained and lost, mirroring the swing of political parties gaining and losing seats of power.
Funding
Before addressing issues of investment and funding in full, it needs be said that the industry was showing sure signs of promising success and growth back in the late 2000s. There were numerous major studies prospering such as Pandemic and 2K Australia; however the money and investments would all but vanish overnight as a result of the global financial crisis in 2008. The games industry would barely survive, experiencing a slow crawl back to where it left off in the years following, and were just in the midst of finding solid footing again when the first inklings of government funding were received in 2012.
“The Global Financial Crisis of 2008 practically destroyed the Australian games market” (Dring, 2016).
The Parliamentary business reports (APH, 2016b) tell the tale of the now former funding for Australian video game developers introduced in 2012; the AIGF. The Australian Interactive Games Fund was intended to address the ‘lack of sophisticated investment’ that the creative industries, and specifically the games industry encounter. Reed, the Chief Executive Officer of the GDAA explained that there are no incentives for investors to invest in innovation, within Australia. He continues; that without these investments it’s difficult for companies to take risks and invest in experimental ideas, and that this was what the fund was originally intended to address.
The AIGF was designed to be self-sustaining; it would function as a loan of up to $1 million for startup game companies, and that funds repaid would be allocated to future funding of loanees — the program was determined not to become a sector reliant on patronage from government. The fund began as a $20 million allocation by the ALP during their period of power in 2012, and in the following years under the LP it would be slashed in half, and eventually abolished completely despite it showing promise.
Reed noted that the decision to discontinue the AIGF was taken by the government without consultation; seemingly no attempt was made to understand the purpose or structure of the program. It feels as though someone in Canberra [implying the APH] saw the word ‘games’ in the budget and striked it out with a bold red line. The program had barely gotten the chance to prove itself at the time it was discontinued — the GDAA reports that since then, several of the companies that initially received support through the program have achieved global success, exporting revenues more than 10 times the original investment from the fund. The AIGF ‘was working’ said Reed.
With the loss of the AIGF and general lack of government assistance aside, individually at a state level there is still evidence of support, effort, and subsequent growth. Solid policy and support program commitments in Victoria, through the Film Victoria Games Development Fund, has seen Melbourne evolve to become the hub of a surviving and thriving indie development scene (Banks, 2016). In addition to Victoria, the creative arts departments in other states such as Western Australia and South Australia have also recently begun to revive forms of financial loaning and assistance for game startup companies specifically — this however is on a much smaller scale, and respectively only at an individual state level (See Appendix F).
Internet
The rollout of the NBN is a relatively recent and (painfully) familiar story to many an Australian, and it is one that continues to mar the potential of the local games industry, amongst others. In 2009 the ALP announced the rollout of the NBN; to install high speed internet to 93% of households via FTTP — which is to run fibre optic cables to each individual premise providing the best quality service available — the remaining 7% of households were to receive a mix of wireless and satellite service where cable installation was not possible (APH, 2013).
This (originally) marked an important step forward not just for all Australians, but games developers in particular; being a creative industry that relies heavily on remote work both nationally and internationally. Remote work favours high speed connections to transfer data in a timely manner and essentially be ‘plugged in’, to minimise downtime and maximise efficiency. It is fairly typical for larger studios developing grander projects to have large portions of the work be created and implemented remotely; not all necessarily from exclusive locations.
This promising prospect was short lived however; in the years following when the LP would regain political control, they would attempt to scrap and modify the in-motion NBN rollout plans and opt for a ‘cheaper and faster’ option. Foregoing the FTTP-exclusive plans, the LP introduced FTTN, FTTC and HFC methods in addition to FTTP, producing a mixture of technologies to deliver service to all households in an expedited manner. In layman’s terms, this was a method of corner-cutting; saving a dime where possible to deliver ‘a form’ of NBN — one of an ultimately slower, lower quality service on average, but a promise technically fulfilled.
Due to complications with delivering this last-minute-modified NBN rollout, the projected ‘savings’ grew increasingly minimal, and the quality of internet service was inconsistent across the nation. The end result was a far worse national internet network for roughly the same cost — if not more expensive — with its only upside being it arrived a little sooner than originally projected. Former NBN CEO Mr Quigley (who resigned during the NBN rollout period) said if the ALP’s original FTTP plan had been continued, it would be almost complete [in 2019] and would have cost less than the current network [referring to the LP’s revised mixed network that was delivered] (Thompson, 2019).
This debacle marks a key contributing factor to the continued difficulties faced by the creative industries. One already struggling to secure investment, now is left with a less desirable foundation to build upon due to the very infrastructure beneath its feet. The prospect of investing in Australian games development continues to appear progressively less inviting, for both national and international investors. Considering the lack of infrastructure, higher support, and risks posed to productivity that lie outside of the control of the workforce, it only seeks to encourage skilled Australian workers to depart overseas in pursuit of their careers, which they do (APH, 2016a). One might surmise that the lack of nurturing and attention that the Australian creative industries receives only bolsters the international scene, the nation is losing money and skilled workers to established and thriving game development hubs such as Canada (see Appendix A).
Gaming Culture
Though the Australian Government — or perhaps the LP exclusively — continues to fail to recognise and nurture its creative industries, the same does not ring true of its citizens. Reports in recent years indicate that 92% of households contain a device used for playing games (Apperley & Golding, 2015) — Australia likes playing games, and our indie culture is experiencing progressively healthier growth each year. So what does this lack of support in local development and — more importantly — infrastructure, mean for the country and its gamer culture?
That we do not have the local supply to meet the populace demands; our games industry is not self-sustaining, Australians would not be able to consume the media that they enjoy if it wasn’t being produced overseas to meet the demands here. While this may seem an unfair judgement, as all ‘gamer’ countries consume game products not developed locally, it is to highlight that our lack of a skilled workforce is simply because they leave due to the negligence and lack of industry here, it is not because Australia does not produce skilled games developers. Australians, somewhat known for their pride in the nation, could be playing more locally made games, in support of their own.
The Rise of Esports
The idea of Esports has been around about as long as games have, but only in the more relatively recent years that the scene has evolved to earn its title. The rise of online streaming platforms such as Twitch.tv, and the mass amounts of money now circulating the worldwide games industry in the modern era, has enabled the Esports industry to reach a new plateau (Li, 2017). Esports has grown from taking place in dingy community halls; now filling massive stadiums with millions of dollars in prize money on the line, seeing professional video game players compete in front of audiences.
If you’ve not heard about these events in detail before, that may be because they simply don’t take place in Australia often, if at all. This is largely due to the aforementioned infrastructural issues plaguing the country — Esports generally has fairly laborious internet demands as a majority of its viewership comes from online, worldwide. Esports culture is universal, it is less about spectating local teams like in traditional sports, and more about seeing the best in the world play the same game as you. It is a culture that Australians wish to be a part of as a ‘gaming nation’, but must often travel overseas to be able to attend these grand and memorable events in person.
Conclusion
Missed opportunities, money, and work going overseas — the recurring symptoms caused by the lack of nurturing that the games industry has weathered, and for that matter Australia in general regarding communication (internet) technologies. These all pose as contributory factors that reflect in the country’s digital rankings; lower than far less developed countries when it comes to modern technologies (Ziffer, 2019) — a woefully absurd state of affairs.
The statistics prove time and again that the games development industry is a profitable and ever growing venture. Local game developers report increasing incomes, reaching $111.1m in 2015–16, despite a fall in the number of digital game productions since 2011; indicating developers are producing more valuable and sophisticated products (ABS, 2017). The latest surveys tell that the local games industry generated $143.5 million in the 2018–19 financial year, up almost 21% since 2017, and growth is seemingly on the rise with 1,275 full time equivalent employees, up 37% since 2017 (IGEA, 2019a).
Despite these promising numbers however, as a nation we still lag behind — Canada’s latest reports indicate their games industry is roughly 20 times the size of Australia’s. While the latter would appear to be on a progressive rise, it’s a late occurrence; one can surmise this is mostly due to the covered implications in this report — if the funding and support was present 10 years ago, the landscape would likely be telling a very different story.
The ALP has pledged to restore the AIGF amongst numerous creative industries support schemes (APO, 2019), what will it take for the LP to take notice, and capitalise on the abundance of lucrative opportunities right on their doorstep?
Bibliography
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Appendices
Appendix A
“The video games industry contributed $3.7 billion to the economy of Canada in 2017 […] There are 21,700 full-time workers in the industry and the average salary of workers is $77,300 per year. Also, there are 596 active studios in the country.” (Programme B, 2019)
Appendix B
Appendix C
“So far down the list of the government’s considerations was the gaming industry that it took a full 642 days to respond to the findings of the Senate’s Interactive Gaming Inquiry. And when it did, despite receiving bipartisan support, the government rejected seven of the committee’s eight recommendations — including reinstating the AIGF and introducing a refundable tax offset for the interactive gaming industry.” (Curry, 2018)
Appendix D
“2K Australia — the developer behind last year’s action role-playing game Borderlands: The Pre-Sequel — is shutting its doors. All staff will lose their jobs, according to a company source that spoke to Kotaku. This leaves no triple-A console developer working out of Australia, and it’s part of a bigger trend of major studio closures, including THQ shutting down in early 2013, having auctioned off its assets for $72 million. THQ’s Australian studio had already closed back in 2011.” (Crawley, 2015)
Appendix E
Appendix F
“This is a special pilot fund designed to allow Screenwest to explore engagement with the West Australian interactive sector. Screenwest is looking to support local games developers and interactive practitioners. It is anticipated the outcomes of this fund will assist in securing future pathways for national and international partnerships and leverage innovative funding to create a sustainable industry in the state for the long term.” (Screenwest, 2019)
