What Does $20 Million Of Federal Funding Mean For The Australian Games Industry?

Today the Federal Government announced it would be investing $20 million into the Australian games industry, but what does that mean for creatives in this country, and how will it impact industry in the long term? We spoke to the CEO of the Game Developers' Association of Australia Tony Reed about the effect of this new funding.

Funding on this level doesn't happen by accident.

"It was a long educational campaign," admits Tony, who was instrumental in helping convince Federal Government to invest in the Australian games industry. "Certainly in Canberra there were certain perceptions and this had a lot to do with mass media reporting."

"Whenever games hit the news it's bad news. So it was a long educational process about what games are, what their audience is and how they play — and certainly the commercial side of things, the economic benefit. It was really important to communicate that."

According to Tony, it was important to inform decision makers in Canberra that game development was an industry, not a hobby, that video games could genuinely contribute to the Australian economy. Big releases such as Fruit Ninja and L.A. Noire helped Tony make a compelling case.

"Being able to take these success stories to Canberra and say, 'here you go' was a really important part of this process. Look at the number of people that have downloaded Fruit Ninja. They became amazing tools to help educate the political sector."

Now that the government has been convinced of gaming's potential, the burden now falls on industry itself. Not only does the Australian games industry have to deliver on what Federal Arts Minister Simon Crean referred to as a 'downpayment', it has to actually help shape the fund itself. Both Canberra and Screen Australia — who will be administering the fund — have called on the industry itself for help. They want this fund to help spur long term development and are happy to admit that the games industry itself might have a better idea of how to distribute the resources.

"Industry is going to have a lot of input into what this fund will be and how we can grow from it," explains Tony. "We're putting out an industry consultation paper so everybody gets to feed their thoughts into this process.

"Screen Australia will be administering this fund, but they need our help and they've been open in saying they want the help of the industry. They want advice on how this fund should be implemented. We need to work out how to use this fund properly — not just throwing money at the industry. How do we use it so it will be effective over a long period of time."

Tony Reed would like to see some sort of balance.

"Business support is important to me," he says. "I'd like to see companies that are established get that level of support they need; to not worry about the commercial side of things too much, to focus on creating games. That's really important to me.

"There's nothing to stop us from utilising that fund, not in a tax incentive kind of way, but as a program that will allow developers — more established developers — to go out to publishers and say, 'we have a fund here that can help offset the cost of production, this might help out with the problems the exchange rate has imposed on us'. Maybe we can use the fund in some form to help secure those deals.

"We need a healthy balance of new creative IPs, but let's not discount those contract opportunities. Let's have a healthy balance of both."

Now that the Australian government has place faith in local industry, Tony believes that it's important to pay back that support with interest, with a self-sustaining games industry that can pay dividends on this initial bout of funding.

"The responsibility of the industry is to mature and grow," he says. "We don't want an industry that becomes reliant on government support. What we want is an industry that becomes self sufficient using this fund, but can feed back into the economy and support new companies in our space.

"Part and parcel of our responsibilities is showing the broader public what games can do. There are those perceptions, that games are toys — but we're so much more than that.

"We can do amazing things."

But Tony Reed wants to be clear — he hasn't asked for a "handout".

"We've never asked for that, our message has always been 'help us grow' — by doing this we can contribute to the Australian economy."

Tony Reed hopes this is the beginning of a long and fruitful relationship. This initial bout of funding is good for three years — $5 million for the first two years, $10 million for the third — but Tony expects to report back far sooner, and report back with a true success story.

"I'm confident enough in the industry that we won't be waiting three years," he says. "I think I might be back before that to say, 'here you go'. You put faith in us and we delivered.

"And then we'll present our next strategic plan."


    To be honest. It mean more mediocre Australian games.

    What a terrible outcome. It's a shame that the sort of political favoritism that plagues other industries are coming into the Australian games development industry.

      Would you mind expanding on that? I don't understand why you think this is terrible, and what political favoritism do you mean?

        By political favoritism, I mean the government handing out money to certain industries that they favour and not others. It's a scourge that exists because lobbyists who work for special interests get in the ear of government and convince the government to give the special interests money that was forcibly taken from taxpayers.

        It is bad for the industry because it allows companies with crap ideas, who wouldn't otherwise be able to get money the regular way (loans, investors, etc), to profit on the back of taxpayers. If the companies can't get money the regular way, it should be a sign that they need to work harder on their project. If the companies can get get money the regular way, they shouldn't need the backing of taxpayers.

        You only need to look to New Jersey to see how 38 Studios (makers of Kingdoms of Amalur) to see how a games company can piss money down the drain and leave the bill (in the tens of millions) for taxpayers.

          This is $20 million in grants money, not tax cuts or subsidies like the sort mining companies and food producers aim for. And christ, given how little Australian creative industries are supported by the Government I don't quite see how this is any sort of favoritism.

            A handout is a handout, no matter what form it takes.

            And it is favoritism because my boss, who sells fishing tackle, is unlikely to get $20m from the Federal govt because he doesn't have the lobbyists in Canberra or the political clout to be able to extract this money from taxpayers.

              Ah but your boss is in small business (I'm guessing), and they do get substantial amounts of Government financial support in way of tax breaks and etc.

      Point me to a country that doesn't support its native industry in some way.

        Just because other countries do stupid stuff with their money is no excuse. The old adage about jumping off cliffs comes to mind.

          If all my friends were jumping off cliffs, and then told me to do so, I can reasonably judge that jumping off those cliffs is not deadly, and may instead be fun (as why would they tell me to if it wasn't fun).

          (this analogy would fall flat if tried on drugs)

          You're confusing protectionism with economic stimulus.

          If you can develop a multi million dollar gaming industry out of a relatively small amount of government investment, you'll pay back your investment tenfold. As I commented downthread, absent details of how the money is parcelled out it's hard to judge, but these could be repayable or matched grants that are relatively low risk.

          You've not really presented a case as to why this investment is a bad thing.

            If, and its a big if. If it was already possible to turn a small investment into the Australian game industry into a multi-million dollar industry, someone would have already done it. So if people who are looking for opportunities to invest their money into a guaranteed winner, and have far more practice at it than government, cannot find those opportunities, it is safe to say those opportunities don't exist.

            It is a waste of taxpayer money - it will get pissed down the drain on games people don't want to invest in.

              So what you're saying is that government should instead cut all funding on all creative ventures and invest money elsewhere, since there is no guarantee that it will make a return because Australians - according to you - don't like playing games and watch movies.

              Oh btw, The games that you see everyone playing on their phone on the train? Game studio make them. I know, scary right?

              But you obviously don't care about that. So which industry is gonna receive this grant? Fashion Industry? Film industry (Yeah like they haven't enough break already)? The industry that sells fish tackle?
              Because whoever receive this grant, it's just blatant political favoritism (according to your logic), there's no point in government investing anything because there are risk involved, is there?
              Australian game industry IS already a multi million dollar industry. Hundred of apps for IOS are being developed every day.

              Small Business are already on the receiving end of your so called "Political Favoritism.' They get tax cuts and rebates. Film industry gets the better end of the stick unlike Game industry who has been shunned by people like you for the past 10 years.

              And You're treating as if this 20 million dollars is something they'll just paddle out to whatever game studio is out there, which is a ridiculous, to be frank. If anything, they're making this grant so hard to apply that literally only a few selected studio can apply for it..

              Lastly, your most hilarious comment yet is hte one about the people who are looking for opportunity to invest their money. Lmao. If someone is walking around with 20 million dollars in their pocket, they're not gonna pour it into an industry that the local government and corporates are clearly not interested in looking after.

              And where does the bad cycle starts? people like you.
              People like you in corporate who has no faith in australian games. There are people like you in governements, corporates and everywhere else in this country. When they turn on TV, they watch AFL or Home and Away or whatever else the Americans are shoving down their throat. When they play game they play Call of Duty and GW2 and Mass effects - none of which are produced by Australians. When they're asked to support australian made/conceptualized product they go 'Nahh Australia hasn't got a industry" or "nah Australian movie sucks". And on Australia days these people walk down the street with a flag around their shoulder demanding others to love their country.

              What a pathetic reality this is.

              Last edited 26/03/13 7:28 am

    Mark, thanks for writing this. My initial reaction to the original article was that $20 million really isn’t a lot amongst major game development but the context of being able to get major projects across the line (in regards to things like fX rates) makes a lot of sense.
    I guess I've become a little jaded with the local industry as all we seem to see these days is (great) indie titles and mobile gaming.

    As much as I don't want to be that guy. . . I hate to say it but how do you think the Opposition and Mass Media are going to interpret this federal funding.

    I'm expecting at some point seeing an article screaming "Labor wastes $20 million of taxpayer money on Video Games." Don't know what video games are. . . here have some exerts from every negative video game story we have run over the past 5 years. Labor is wasting your Taxpayer money again.

    Now over to our resident video game expert - Head of the Australian Christian Lobby: Jim Wallace.

      As someone who is self employed thus has alot of free time, let state by say i actually watch question time every time its on and i can say that your statement is only half right. the First thing Joe hockey would be saying is that the Opposition welcomes this injection (just like the school review and NDIS etc) but How is government going to pay for this when it has a 120million dollar black hole in budget (yeah i watch way to much question time)

      Remember the Opposition was always against Conroy's Filter and are not in bed with the ACL as much as Kevin Rudd and JG's governments (Abbotts leadership was only won by a very slim margin compared to the fact that Rudd was gone whether he was knifed or not)

        I can understand where you're coming from and can agree with some points, mostly in regards to how the opposition would act to this, I guess I never really elaborated on that part, I could see the opposition agreeing to the grant in theory yet asking where the funds are going to come from, since as you said, there is a 120 million dollar black hole in the budget and the government is so hell bent on returning to surplus next year.

        However my main argument is basically how the mass media would portray this story. The commercial media in Australia practically thrive off consumer ignorance, it's one of the main reasons why shows such as Today Tonight and A Current Affair are still in production after 17 and 24 years respectively. They would not miss an opportunity to peddle fear and spread misinformation about the government because it would fuel ratings which is for the most part the only thing these organisations care about.

        I could easily see Seven and/or Nine running a story based on how the government is wasting your money on video games which studies show cause aggression and violence in kids whilst showing video of young kids playing Call of Duty and Grand Theft Auto, implying that those are the sort of games this funding is going to be used for even though we know this would more than likely not be the case.

        The reason I bring up the ACL is not so much because of the association between the Labor or Liberal Parties, but rather the fact that he seems to be one of the go to guy for Seven's Sunrise whenever they run a story regarding Video Games (particularly the R rating and violent video games)

        Now I know not all news organisations are like this, Fairfax have already covered the story in a fairly positive light and I'm fairly certain any coverage on it by the ABC will be in favour of it as well. It just the big players: Nine, Seven and the Murdoch empire that i'm not too sure about.

        Last edited 15/11/12 6:17 pm

          i understand about 7 10 and 9, but dont the likes of news corp in with them, dispite creating fox news, the murdoc empire also has a majority share in Sky News and Sky News australia which i gotta say its like the ABC the only place you will find actual news. but yeah dont get me started on that sack of filth called jim wallace

            Nope, according to the ever reliable Wikipedia, Sky News is in fact equally owned by three corporations: Seven, Nine and British Sky Broadcasting group. I do not believe Sky is subsidiary of News Corporation. . . I would assume BSkyB own a majority share to ensure the programming is run in a similar style to it's British counterpart.

            As for Jim Wallace. . . let's just say every time Seven decides to give him airtime in any form a hole in one of my walls slowly gets bigger. . .

            You can disagree with him, but there's no need to get personal and call him a "sack of filth". Jim's a really nice guy. I disagree with a lot of what he says and does, but you shouldn't really get personally insulting over a difference of opinion.

            He gets airtime because he's out there talking about these issues in public and in traditional media. His opposition is busy ranting on the Internet. If a news story comes up, and the TV station needs a talking head, who exactly are they meant to turn to?

    I still maintain a strategy like what Canada has done with tax breaks for game development will be a much better plan than handing over money.

      Exactly, tax breaks are the way to go. Otherwise we will end up seeing wads of money going to big projects that never see the light of day - or even worse scams like Interzone in Perth (http://www.kotaku.com.au/2010/02/wa-dev-interzone-games-close-to-liquidation/) blowing $500K of Western Australian Government funding. Imagine what the Indy community could have done with that kind of money!!

      Last edited 15/11/12 5:49 pm

        Yeah - the problem is, that approach hasn't worked well either, and it also raises questions about why only give it to that industry? Its worked OK in Canada, but Britain dropped their breaks because they were a waste of time.

    When I first saw this I was thinking, "Is this the same as the kingdoms of amalur/rhode island arrangement? I hope it doesn't end the same way."

    Also, maybe they'll be funding the next angry birds or minecraft!

      Well considering how many shit movies/TV shows Screen Australia has funded so far, my confidence is pretty low.

      Kath & Kimderella anyone?

    What's not clear from the releases is whether it's a repayable grant, matched grant, or seed funding for project pitches- the distinction makes the administration quite different. The degree to which it is capped is also important- is there a max or min amount developers can draw on?

    There are grant programs for any number of industries, so it will be interesting to see how they do this one.

    "Look at the number of people that have downloaded Fruit Ninja. They became amazing tools to help educate the political sector." If you're talking about the "number" of people being a useful fact to help educate, that's fine. If you're talking about all those people educating the political sector about what gaming is and what games can do... that's trying to teach calculus using only a multiplication table...

    To be honest. I really want them to focus on e-sports. But this is a step of Australia getting somewhere in the Gaming Industry. Currently people who study gaming design and software/computer engineering are likely to move to another country where their industry of choice is obviously bigger there then in Australia and the government has realised that is a issue. Hopefully this could help it but i doubt it

    "What Does $20 Million Of Federal Funding Mean For The Australian Games Industry?" banning 18+ rating games again WOOT TROLOLOLOL

    I think, if nothing else, this proves video games are art. Crean is the Arts Minister.

    As long as it doesn't end up like film funding where you only get money if you make some bullshit Australiana tourism propaganda movie that showcases how awesome being Aussie is, then I'm all for it.

    So many small studios in Australia are living off government funding. The fact is there is no demand for Australian made games, because there is NO INDUSTRY. There won't be an industry. We're too small and insignificant. There's no money to be made here. It's a fact that so many indie developers shut their ears to.
    I worked at a small studio as a 2d and texture artist, and honestly, it is not comforting to have my income paid by Australian government funding. Made me feel used and worthless.

    How can 20million dollars be a bad investment from the government? The guidelines from screen Australia are pretty strict, so its not like they are running down the street with a sack of money throwing it at anyone waving a console from the window.
    My only gripe is they are leaning towards supplementing already established developers, and by being established, they have already released successful games, and probably don't need the money other than to hire 2 or 3 new interns.
    It would be nice to see it go towards newer indie developers, with fleshed out ideas presented with all of Screen Australia's guidelines, eg- business plans, marketing, etc.
    At least that way, we might see new genres and ideas, instead of the same old games getting remade.
    Funding is always a chance, and 20 million is low in the budget scheme of things for an industry.
    Sometimes it pays off, sometimes its a dead rubber, but at least they are trying to stimulate growth in an industry that is still in its proverbial infancy in Australia instead of the car Industries for a change.
    And as for the guy saying aussie made games have no market, your thinking is broken from the get go, with mobile systems racing ahead on sales, and the submission systems for them, you are part of the global market. The only thing that effects us is our high Aussie dollar atm.
    I am one that approves this funding.

    The reason why it is so hard for game studio to survive in Australia is because Australian government made it clear that everything has to be produced on Australian soil, which is a big fantasy for studios aiming to publish a Trip A product.

    Star War Old Republic uses outsourcing for their armors. Epic Games and few other big game studios in America all have studios based in China and they still receive support from their respective government. Australia, however, works a little differently. They want to be able to say "only Australian" made this (a misplaced sense of patriotism, perhaps) and this entire grant is only available to a small selection of studios, who, due to the limitation of these grant can only develop iOS games or mediocre games because their production cost is higher.

    Now if Australian Government truly wants game industry to strive - and not just on phone and tablet app - the only way to go about it is to hire specialist to analyses the game industry on a 'global scale", which would allow them to choose which concept to invest more carefully, while getting rid of the "home soil' requirements on those government grants.

    It is also possible to create certain condition such as "studios who rely on outsourcing will be required to hire more Australian game developers in its Australian office once its product becomes commercially successful."

    Once the Australia produces a few title that can compete on a global scale, the industry will start to fund itself.

    It's how the Koreans did it. It's how other countries did it.
    And it's how Australia should go about it.
    Right now Australian Government and its people in general still has a somewhat primitive mindset that every Australian product has to be made locally. This simply doesn't work well for IPs and film, where the producers will have to think 'globally' in order to make a substantial return of the investment.

    It's truely a shame that the Triple A dry spell will continue while iOS and mobile app front strives.

    Last edited 26/03/13 7:25 am

    Now just giving you a rundown of why "building a quality Trip A game on home soil" is a fallacy (We won't discuss talents here. Australia has a lot of talents, but the industry hasn't got enough money to make use of these talents):

    The average pay of a game designer is 65k + per year.
    Programmers and Senior management gets paid more. (Let's make it 70k per year for the sake of convenience.)

    A triple A title will require probably ( at least) 10 or 15 people + . They need the adequate skill and the developments will take over a span of 5 -6 years. (which is practically impossible for a team of 10 ~ 15)

    Let's not forget the commercial licenses for existing engine which will cost million, as well as building management and marketing, unless the government pour the entirety of 20 millions dollars all into one game, a triple a game developed on home soil is just not worth the risk.

    Now this is where my knowledge of foreign currency and relative industry knowledge come into use:

    In Taiwan for example, the exchange rate is 1 AUD to 30 NTD (new taiwan dollars)

    The average wage and standard of living cost per month is around 20 ~ 25k NTD. If you were to get a part time job in KFC in taiwan, your minimum wage would be around 5 AUD/hr, and that's if you are an adult. But you know what? That money doesn't necessarily mean that you would be living in poverty there!

    A bottle of coke in freezer cost 1 dollar AUD in Taiwan. You can get a meal for less than 4 dollars in restaurant, and we're talking about quality food here, not crappy instant noodles.

    Now, if Australia is to establish a studio in Taiwan, the standard wage of game developers working in Taiwan will be "SIGNIFICANTLY" Lower than Australian developers working on home soil. Therefore it would be extremely beneficial for a game to be "CONCEPTUALIZED" in Australia, and made somewhere else with the manpower Australian dollars can buy. If a company divide the work load between the two studio, that 5 million dollars Australian will allow heaps and heaps of talented game developers in Taiwan to make the game asset, while Australian studios can conceptualize their game on a much grander scale.

    And that's just Taiwan. If you were to have a studio based in China, where game industry is currently on the rise, you will be able to reduce the cost further because they've got more people and cheaper labor there.

    Once you have created a triple A title to compete against other big companies, you can start hiring more Australian based developers and help out the local game industry in general. What you have then is a globalized company with its headquarters based in Australia, much like how developers in other countries have their studio set up. Australian government will be able to get their investment back, which allows them to fund more studio this way.

    Slowly but surely, Australian Game industry will pick up, and in a decade there's no reason why Australian shouldn't become a gaming capital, when the country is not catering its game to australian, but everyone else in the world.

    Last edited 26/03/13 7:26 am

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