What The Australian Government Needs To Learn From The New Zealand Games Industry

While everyone else in the world is enthusiastically supporting their local game industries, Australia is doing the opposite. While the global market for games continues to grow each year, Australia’s game industry is actually shrinking. How can we change this?

As most working in the Australian games industry know, the federal government cut the Interactive Games Fund last year — a fund that was becoming self-sustaining and was helping Aussie developers get a piece of the $91.5 billion global game market. The decision has been in the news again recently, thanks to Greens Senator Scott Ludlum’s, who secured an inquiry into the shrinking Australian games industry, focusing in particular, on the decision to cut the Interactive Games fund . While lucky states like Victoria have access to state-level funding, the rest of us are stuck with little help from the government.

Right next door, putting us to further shame, New Zealand is aggressively supporting its games and tech sector. I was recently hosted by Grow Wellington, a government-supported body tasked with the city's economic development, to check out their local industry (full disclosure: they funded my visit). Wellington is home to about 100-150 full time game developers, including PikPok and Camshaft Software, who made the move across the ditch from Melbourne.

The entire country of New Zealand has about the same population as my hometown of Toronto, but despite this Wellington boasts an extensive and innovative support system for games and other tech startups. R&D funding of $566 million over four years has been used successfully by a number of game studios, four co-working spaces, and a government supported incubator/accelerator program called CreativeHQ which is currently incubating Gamestarter, a crowdsourced game design platform.

New Zealand has also legalised crowdfunding for equity, making it much easier for game startups to access much needed capital. In Australia, only "qualified" investors — i.e. people who already have lots of money — can currently invest this way in Australia, which severely limits things. The kiwis already have an equity crowdfunding platform too — PledgeMe. Overall, you get the sense that the kiwis want their tech and games industries to thrive and they are willing to do what it takes to make sure it happens.

My trip to Wellington was inspiring, but it was also incredibly frustrating to see the high level of support provided to our neighbours in comparison to at home.

I run Games We Play, which makes mixed platform games for social enterprise, non-profits and educators. I’m also the Director of the Games & Interactive program FTI in Western Australia, where my role is to offer support and advocate for WA game developers. Even though FTI offers the only games support and funding in available in WA, we too had our funding slashed by the federal government last year.

Being in these roles, I see an incredibly creative and talented group of people in Western Australia who feel very frustrated, myself included. The games being created in WA are quite incredible, especially considering the relative lack of government support we receive. Paradigm, a wacky and wonderful adventure game set in post-apocalyptic Eastern Europe, received no government support, but managed to raise $40,000 on Kickstarter and was featured on one of Pewdiepie’s let’s play videos. The award-winning Freedom Fall, an innovative platformer which also received no government help, launched last year on Steam where it enjoys a 91% positive rating. I’m proud of the programs we’ve been able to offer at FTI — such as OOMPF! Games, WA’s only games funding program — but there is so much more we could be doing, and I can only imagine what we’d be able to accomplish with the same government support that Wellington game developers receive.

More broadly, I see a huge economic opportunity (I mentioned the $91.5 billion consumers are spending on games this year on games, right?) being squandered, even in light of a looming recession and a critical need to diversify Australia's economy as the mining sector slows.

And guess what? Government support for games works. Victoria's support of its games industry has resulted in the state being responsible for 40% of Australia's game production. Canada has its highly successful Canadian Media Fund, which has helped to grow a vibrant Canadian games industry through its support of numerous studios and projects, such as Hinterland Studios’ The Long Dark (which is doing really well on Steam Early Access). The UK also seems to agree, as they’ve just invested nearly $18 million in their games industry.

So, Wellington's support of its industry is not only economically smart, but is a proven strategy to build a vibrant and innovative local games and technology industry that is being used globally. Australia can, and must, learn from them.


Dr Kate Raynes-Goldie is the Director of Games & Interactive at FTI in Western Australia and founder of Games We Play.

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Comments

    Abbott: "No seriously, what does this have to do with coal?"

      Damn it. It's only Monday and this is already comment of the week!

      Abbot: "Work in manufacturing jobs in businesses tied to resources and commodities or GTFO. I ain't funding that airy-fairy new science rubbish."

        Except they've setout to destroy manufacturing jobs in everything but fucking coal...

    We also have the creator of DayZ Dean Hall here in NZ based in Dunedin although I think he almost packed up and left due to not being able to get decent internet at his business premises but with the recent fibre rollout and help from his IP he was able to get hooked up and is staying which was good to hear.

      lol I love the idea that the creator of a hugely populer online game can't play it on his own internet :P

      He also had a whinge about not being allowed to pay immigrant workers only $30K.

    Instead of asking the government for money straight out, why isn't there a discussion about *why* the industry needs funding in the first place?

    Most startups benefit from some level of government support, be it tax breaks, R&D support or exporting assistance, but we do need to draw a line somewhere.

    I want nothing more than to see the game scene in Australia thrive, but there's something wrong with the business environment if studios have no long-term sustainability. I think it's entirely rational to challenge the idea of straight-out funding when you consider that, if in light of the successes of things like the App Store and digital marketplaces, studios still struggle to stay open, pay staff and fund games.

    "Paradigm, a wacky and wonderful adventure game set in post-apocalyptic Eastern Europe, received no government support, but managed to raise $40,000 on Kickstarter and was featured on one of Pewdiepie’s let’s play videos. The award-winning Freedom Fall, an innovative platformer which also received no government help, launched last year on Steam where it enjoys a 91% positive rating."

    This is precisely the challenge the local industry needs to face. There are means to have an idea funded, and simply saying, 'We have talented people that need money' is just not good enough.

    There needs to be some sort of viability in what it is you're trying to create. Merely having the talent and potential to create something isn't enough. Video games are a commodity and the industry needs to find a way to be self-sustainable.

    That is the discussion we should be having. I think that the sooner we drop this, "But we need government help!" narrative, the faster the industry can evolve and grow into something special.

    Maybe it's not so much a lack of government support that's hurting the industry. Maybe it's the standing around waiting for government support that is. Has anyone ever considered that?

    I get that it's hard, I really do. And we've seen some gems come out of government-supported studios. But they should snowball into something greater, and they generally don't. That's an issue, and it's not related to mindless funding from the government for "talented" people.

      Mostly because games fall into the arts category, where often you do not get any income until the product is finished. Thus, some funding is required, Govt or otherwise, to keep people at their desks.
      As business models go, it's completely unstable, as you can spend years on the product, and the financial benefit is still not certain. However, as taxpayers, we should be supporting people who are creative and have the determination to put that effort in, much in the same way we fund (some) poets, song writers, sculptors, artists, etc
      Of course, once the industry becomes successful, they'll be taxed through the arse anyway, so might as well give them a leg up.

      If the Govt made it so companies would get tax breaks from creating games here, then we'd probably see more studios like 2K investing in local branches and developing the games here.
      I mean, if we can give away 2 billion to Holden, then we can probably look at developing other industries here, now the car manufacturing industry has collapsed.

      Most major industries receive/have received government support, including banks and the mining industry. If you look at any of the other countries with successful game industries (Poland, Finland, the UK etc) you'll see they have some level of government support. The reason the Aussie games industry needs funding is that its a proven model that works (which the article does state, using examples), both with our own shut down funding program and those successful ones overseas. And, saying we need funding is not the same as saying just give it to anyone willy nilly -- if you invest wisely, it grows the sector and helps everyone.

      Sure, we can do it ourselves, but it will take longer and we'll be losing out on jobs and money in the meantime to countries that have support -- you know how many talented people I see leaving WA (where they trained) to go work elsewhere?

      Plus, I'd love to see my hard earned tax dollars going to support something positive and creative, rather than the horrible things they usually gets spent on.

    This is a reasonable summary of the situation in NZ. The government is happy to let games into ICT funds, R&D funds, startup programmes, local NZ content digital funds, summer internship programmes, emerging transmedia programmes - but there is no one dedicated games fund (except the small KiwiGameStarter run independently by the NZ Game Developers Association).

    No one in NZ "excludes" games (except the film incentive scheme), but neither does any proactively "cater for" games. The co-working spaces mentioned here aren't games-only like The Arcade in Melbourne, but instead most NZ co-working spaces includes games studios. Heck ,the EPIC Centre in Christchurch was founded by game studio Cerebral Fix after their earthquake, but is for all ICT companies and startups.

    This is the problem: there are heaps of hoops to leap through if you're a game developer if you want to tap into these diverse programmes in little ways. A clear, dedicated games fund is still needed. Currently the core business of creating games IP isn't really supported. Have a huge technical problem and already have a business? - apply for R&D project grants. Want to make NZ-only domestic content for a small audience? - apply to NZ On Air. But want to create an innovative game IP to take to the world? - do it yourself (with help from Meetups, other devs, NZGDA, crowdfunding, etc.)

    im sure that if looked up irony in the dictionary, that would be the apt description

    These days Australia does everything opposite to the rest of the world..

    Armello is a good example of what Australian game devs can do with a government grant. They got a chunk of funding to start development, ran a successful Kickstarter and have made an amazing game.

    All you have to say to Abbott is that video games stops kids from touching themselves and he should throw fistfuls of cash at the gaming industry.

      Yeah but he'd rather support the church to go about touching kiddies

    A big part of why the Australian development industry has shrunk was due to the GFC and the high Aussie dollar during this time, where we were at parity for a long time and even exceeded the US dollar at certain times. It was no longer cheaper to make games in Australia and most big publishers pulled out.

    Right now we are back to about 74 cents but the damage was done, publishers are spooked and they don't want to invest in Australia anymore.

    Not only that but Australians have ludicrously high wages compared to many other countries in the world because our cost of living is so high here, so even with the lower Aussie dollar now it's still stupidly expensive to run a dev studio in Australia compared to practically anywhere else, including New Zealand.

    Game development isn't the only industry to suffer because of this by the way - look at car manufacturing as another example. In a couple of years time there's basically going to be no cars made locally in Australia anymore because it's far too expensive.

    Throwing money at the problem is not going to fix the problem. It'll help for sure, it'll help some smaller devs and indies get their game ideas off the ground and into the world and that's fantastic. But it's not going to solve the ultimate problem which is that it's simply too expensive to make games here. What needs to be done is the introduction of tax cuts/exemptions and other incentives that will lessen the financial burden and make Australia an attractive place for game development again.

    Last edited 20/07/15 11:36 am

      A big part of why the Australian development industry has shrunk was due to the GFC and the high Aussie dollar during this time, where we were at parity for a long time and even exceeded the US dollar at certain times. It was no longer cheaper to make games in Australia and most big publishers pulled out.

      Bang on. They saw Australia as a means of cheap labour and when it came time to treat us as equal workers they bailed out.

      Game development isn't the only industry to suffer because of this by the way - look at car manufacturing as another example. In a couple of years time there's basically going to be no cars made locally in Australia anymore because it's far too expensive.

      It's not just that, the major manufacturers we basically factoring handouts as part of their income. When Holden and Toyota were left (after the others bailed out under Labor) Hockey stated that business cases be provided before any more handouts are given. Holden responded by announcing plans to bail out just days later.

      But back to the topic at hand. It's not just the actions of our government (both sides), many sectors here have unrealistic expectations on their entitlements and seem to expect hand outs as a right for doing business here rather than a temporary means to get such businesses going until they are profitable.

      What needs to be done is the introduction of tax cuts/exemptions and other incentives that will lessen the financial burden and make Australia an attractive place for game development again.

      That's not without its caveats though. While tax cuts may help, our budget is still in a mess so planning has to be there so that if there are cuts the generated taxation has to be big enough to cause the generated tax revenue to be higher than what it would have been if the cuts didn't happen.

      On final note though, it's not just the development of games that needs to be looked at. Even if a game is developed here, what of the market?

      Due to arrogant price gouging of publishers and distributors (again, both sides have been letting it slide and putting it in the 'too hard' basket), any patience left with Australian consumers has run out.

      Thus, even if a game is made here, the consumer will import it thus further reducing any further income the developer may get post development.

      Last edited 20/07/15 12:18 pm

        Great points.

        I'm afraid that the only way to grow the games industry in Australia is for independent developers that see some success, to re-invest in their own studios and grow organically.

        In this respect, we're 20 or 30 years away from a thriving game development scene.

        Due to arrogant price gouging of publishers and distributors (again, both sides have been letting it slide and putting it in the 'too hard' basket), any patience left with Australian consumers has run out.

        Thus, even if a game is made here, the consumer will import it thus further reducing any further income the developer may get post development

        While I do agree with most of your opinion on the matter, I dont see how importing is an issue. Tonnes of developers make direct download and digital platforms their sole avenue for selling games. While it is a shame that there are no good Australian publishers that could keep a chunk of the revenue in Australia, I dont believe it is any different to the scenarios that other countries face.

        EDIT. For some reason it wont use the quote box correctly. GRRRRR

        Last edited 20/07/15 1:35 pm

        Thus, even if a game is made here, the consumer will import it thus further reducing any further income the developer may get post development.

        Developers generally don't see any income post development. The publisher pays them to make the game then the publisher aims to make a profit from it. Only in very rare cases if a game sells abnormally well would a publisher give developers a kind of bonus payment after the game has already shipped. Developers need to make their money by signing publishing contracts.

        This is the major reason why the game dev industry here has all but collapsed, because publishers were no longer willing to sign Australian developers on to create games for them. Developers don't have any other source of income generally, unless they self publish.

        Not cheap labour, OVERPRICED labour. Americans can undercut Australians by 50% or more just by charging normally. Everything in Australia is overpriced, by letting the wages and costs inflate to such ridiculous levels, Australians did it to themselves. Now you have no one but yourselves to blame if the the only jobs left are being tradies, retail workers, tourism, miners etc.

          Ah, so it's fine to exploit the currency when it's in your favour, but not keep people in jobs like a responsible employer, huh ?
          Like it was said earlier, when it came time to pay proper wages, you all ran away faster than a bogan being chased for child support payments.

          Your self indulgent whining holds no water here.

          Just go live in America on minimum wage and try to survive. I was there for 8 years, and the country is a shipwreck. You can't survive on the low wages there, and every industry is a race to the bottom. The country is a mess and the wealth divide is getting insane.

      I wrote a similar comment but it's "awaiting moderation".

      It's astonishing that so many within the industry, and specifically those with power and the highest amplification, so often mindlessly campaign for more government funding without initiating the discussion as to *why* studios need funding in the first place.

      Simply being "talented" isn't enough to justify funding. You are creating what is a commodity and so therefore the government is obliged to protect the taxpayer from unsustainable and unviable investment, not to protect or fund the industry. Granted that this government has funded a lot of crap, but at the same time, something needs to be said as to what is holding the industry back from self-sustainability.

        I agree with your comments, however the government has shown a startling lack of clarity in in protecting taxpayers from stupid investments - the failing car industry is a prime example.

        Australia will need to start investing in something soon however. There's only so much minerals we can ship off, and if the UK managed to turn it's industrial North into an IT powerhouse back in the 90's after decades of crippled economy, I'm sure we can do something similar here, whether it's in games or some other digital initiative.

    While I agree wholeheartedly with the need for the Federal Government to support game development locally, I find the claim that the games industry is shrinking spurious. It shrank. Lots. The last couple of years have seen growth, though.

    From the comments "developers generally don't see any income post development" - I also disagree with this statement. It may be true for developers working with large publishers on contracts, but that's a rare thing in these parts - I would say most Australian developers see most of their income post-release.

      my original piece had links to all the sources, but it looks like they didn't make it to the final article, but here's the piece on the industry contracting: http://www.kotaku.com.au/2015/06/the-greens-secure-an-inquiry-into-the-state-of-the-australian-games-industry/

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