‘This Is A Huge Deal’: The Industry Reacts To Australia’s New Tax Break For Video Games

‘This Is A Huge Deal’: The Industry Reacts To Australia’s New Tax Break For Video Games
Image: Golf With Your Friends

After years of fighting, lobbying and presenting international figures on the size and scale of the Australian video game industry, the Federal Government will finally follow in the steps of the states tonight by providing significant tax breaks for local video game production. Along with the relief, many studios noted the announcement would enable them to hire more staff and invest more in development while competing on the global stage.

The battle for federal video game funding has intensified in recent years, as more and more advocates pointed out the vast potential of the video game industry in Australia and abroad. The COVID-19 pandemic also highlighted the social value of video games, and state governments have continued to enjoy huge success helping fund the development of games like Untitled Goose Game, Moving Out, Void Bastards, Flight Control, The Gardens Between, Necrobarista, and more.

Understandably, local developers and publishers were ecstatic. Simon Boxer, the Aussie developer behind Ring of Pain, noted on Twitter that the move would make a huge difference to the amount of money local developers actually made, whether they were working with publishers or not. Another developer also noted that the federal tax rebate was cumulative, so any developers benefiting from existing tax rebates (like those offered in South Australia) will enjoy the government’s tax rebate as a bonus.

“This might literally mean the difference between me definitely having to move overseas for a job, and now potentially being able to stay here in Australia to work,” an Australian game dev student Scott Boyd posted. “Huge news for people like me who were essentially being forced to leave for work because this offset didn’t exist/it was too expensive to run a studio in Australia compared to the rest of the world.”

However, not all developers were ecstatic. News that the offset would only be available to studios who spent a minimum of $500,000 in Australia was met with dismay by some smaller developers.

I reached out to a string of developers and local representatives to get their reaction to the news, with many replying that it had been a long, long time coming.

Update: Comments from League of Geeks included.

Lisy Kane, lead producer at League of Geeks, makers of Armello

league of geeks
Image: Bri Hammond (Supplied)

For a studio like [League of Geeks], support from the Government will only bolster our goals of developing creative, cultural and commercially successful games, sustainably. LoG has always aimed to craft video games that are commercially, critically and culturally successful at an international scale, but also to craft those games sustainably, with our future in mind. Federal government support in the form of a tax offset makes a sustainable future of developing great video games significantly easier to achieve. More importantly, we’re thrilled to see what this means for new and returning Australian game makers and the positive impact on our ecosystem in the next five years.

Dan Graf, Sydney founder of indie studio ArkimA

ArkimA’s first game, the Sydney-developed TopplePOP: Bungee Blockbusters.

A decade ago we had a small, agile indie team with a great plan, and there were great people in government striving to support us. After months of planning and applications we got the call telling us we’d been awarded funding support – we celebrated!

But government is a different world to indie games – it’s big and slow with a lot of moving parts – for whatever reason our funds were delayed for 18 months during which we were forced to change our team and project plans. It was a valuable lesson and taught me never to overbalance or rely too heavily on external support – it can be a huge boon and we’re super grateful, but we’ve got to start sustainably and plan to stay sustainable no matter what.

Tom Crago, CEO of Tantalus Games, developers on Age of Empires 3: Definitive Edition

age of empires 3
Age of Empires 3: Definitive Edition, one of the titles Tantalus has worked on.

This announcement is both welcome and overdue. It’s a terrific day for the Australian game development community and we are grateful to finally be afforded a similar range of incentives to our friends in the film and television industries. As a game development community we’ve been working on this for more than twenty years, and thanks goes out to everyone who has played a part along the way. Tantalus was recently acquired by Keywords Studios, and with this announcement we can fast-track our plans to acquire more Australian studios, and to grow our presence here exponentially.

It was fourteen years ago, almost to the day, that I sat in the office of Stephen Conroy, who was then the Shadow Minister for Communications and Information Technology. I was the President of the GDAA and we were lobbying for precisely this rebate. Mr Conroy said that in order to enact this kind of change, we needed to bear in mind the ‘vomit principle,’ which means that when lobbying politicians you have to say the same thing over and over until you throw up. I am ecstatic that today it seems we have finally said it often enough.

Dylan Miklashek, studio manager at Gameloft Australia

oregon trail
Image: Oregon Trail

With the Federal government announcing a 30% tax offset for video game development, this is a major historical day for the Australian Video Game Development industry and Australia as a whole. There was only once piece missing necessary in making Australia competitive with the top video game development countries and cities in the World. Competitive costs. With a 30% tax offset from the Federal government, and hopefully a 10% tax offset from each state government, Australia is now more than competitive, it is the #1 choice!

Over the years, we already demonstrated the talent and the ability to deliver top level successful games, and we already have a beautiful place to live. This will now allow the Australia Game Development Industry to scale up to the World leading cities and countries. It will allow existing developers in Australia to scale up and motivate international publishers to build. Which will in turn create an amazing and long term video game development ecosystem and most importantly, it will create thousands of jobs and inject millions of dollars into the Australian economy.

A truly phenomenal day for Australia! Aussie Aussie Aussie! Game on!

Luke Henry, partner at LDB Group

Editor’s Note: LDB Group is a financial advisory firm in Melbourne which has helped studios apply for tax offsets and export market development grants specifically for video game development. 

The announcement is a welcome change in the position from the federal government. It represents a boon for sustainable game development here in Australia. The business of game development is capital intensive and can be subject to risk of individual title success. Successful studios typically sustain a regular release of titles or extend the lifecycle of a successful title.

A production offset will allow start-up studios to build on the success of individual titles and more readily scale into future development. For established studios it could mitigate the financial risk on release of a title, opening the door to investors and financiers funding larger projects. Australia has some of the best game developers in the world and any financial support to the industry will help keep the talent in Australia and provide much needed job security. IGEA have done a fantastic job on behalf of the industry to achieve this outcome. I look forward to seeing the detail on budget night.

Nico King, executive creative director at Chaos Theory Games

Image: Chaos Theory Games

The 30% Production Tax Offset for video game development is a turning point for the Australian games industry! There are a wide range of benefits for studios of all sizes and we are very excited about what the future looks like in Australia. As an independent games studio that has been self-funded up until this point, this initiative will allow us to employ more staff to work on our next game, be more competitive on an international stage, and makes seeking external investment for future projects a much more appealing prospect.

The impact of this policy on attracting larger international studios to Australia will also help bring in senior game development talent and create an ecosystem of mid and large sized studios, helping solve one of the biggest challenges we face. Thank you to all those involved in making this happen. Games are the forward-thinking, export-focused, and creative industry that Australia needs more of right now.

Chelsea Rapp, chairperson of the New Zealand Game Developers Association

icarus
Icarus, an upcoming New Zealand survival game.

New Zealand has a similar incentive for film, however games have forever been excluded from it. Even though allowing games into this scheme would cost a fraction of what the NZ government is spending on the Lord of the Rings TV prequels production. This is something the NZGDA has also been campaigning for, as programmes of this nature have proven to be beneficial to not only the games industry but also the wider economy in countries like Canada and Finland. Film/TV productions pack up and leave NZ when they are finished, whereas a game studio is far more likely to remain in New Zealand – contributing to the local economy and helping to build skills and communities. However the New Zealand government has told us over and over again – ‘don’t even ask’. And even though they are reviewing their Screen Sector Strategy 2030 this year, we know that many studios and businesses haven’t heard any updates since last year.

New Zealand studios have been hiring many Australians recently, especially since the Trans Tasman travel bubble opened up. The challenge going forward will be the ability for New Zealand to compete with Australia in attracting new studios and bringing in experienced talent. Australian studios will be better equipped to create new businesses, provide higher-paying jobs, improve sustainability, build their creative IP portfolios, and provide new options for work-life flexibility. Before this, Australia and New Zealand were on a relatively even playing field, however this programme certainly increases the incentive for Kiwi game studios to relocate senior talent and business operations to Australia.

Steve Wang, general manager of Wargaming Sydney

This is great news and timely, for the Australian industry. Australia has shown that it has the creative and technical talent that matches the best in the world, through the success of the games that have been made locally. But what has been lacking is the support to be able to fast track that growth – to create a strong eco-system of game development that can build on itself as we have seen in many other countries, such as Canada, who per capita have a much larger share of the global market than Australia does.

This is the adrenaline boost that we need to catalyse rapid industry growth. Wargaming is a great example of a global developer with studios in many countries. Making Australia a competitively attractive place to build games will both attract international talent and provide the fuel for rapid growth of local talent.

Philip Mayes, CEO and founder of Mighty Kingdom

mighty kingdom
Image: ABC

The announcement today comes on the back of a huge amount of work by countless people within the industry, and I want to acknowledge that effort and give a huge thank you to everyone who has made this happen.

Mighty Kingdom recently listed on the ASX, and as a result we were already planning for significant growth. The new digital games tax offset means we can push the accelerator harder, widening our pipeline of content, and really expand the scope and scale of our products.

When compounded with the existing South Australian Video Game Development Rebate, it makes South Australia the most  attractive place to make video games in Australia. The announcement today straps a rocket to an industry that was already seeing significant growth.

Personally, I am excited at the opportunities this will bring to everyone within our industry. The possibility of having a full career within the games industry, from startup to AAA, has just increased significantly.

Jason Imms, board member of Tas Game Makers

Image: Giant Margarita / Party Golf

Tas Game Makers celebrates alongside other Australian games communities at today’s announcement of a 30% tax offset for video games. It has been a long road, we’re deeply thankful for the hard work and lobbying performed to get us here, and looking forward to learning more about the eligibility of established and emerging game makers.

Tim Watts, Labor Shadow Assistant Minister for Communications, Cyber Security

Australian MP Recommends Parents ‘Stay Sane’ With Animal Crossing
MP Tim Watts advocating the use of Animal Crossing during the height of COVID-19 lockdowns in Australia. Image: Twitter

This is a welcome backflip from the Morrison Government after seven years of neglecting the industry, but as always the devil will be in the details. Labor has been advocating for some time that the Australian video game industry could be a billion dollar industry and a serious source of job creation in our post-pandemic recovery with the right support.

Simon Boxer, director of Twice Different, creators of Ring of Pain

Image: Ring of Pain

Currently if an indie studio partners with a publisher they’ll generally see about 25c to 34c per $1 the game makes, after everyone along the chain has taken a cut. A huge slice of income is lost to platforms, publishers and tax. If we had a 30% rebate after shipping Ring of Pain it could’ve afforded an extra 6+ months of development time for our team. When looking to pursue a new project that’d be huge for us! A real bridge towards growing the studio and making a more ambitious project.

That small amount of time can easily be the difference between an established project succeeding or failing to meet the quality bar needed to survive in the market, or for an early stage project to secure additional funding.

Tin Man Games, creators of The Warlock of Firetop Mountain, Fighting Fantasy Classics, Miss Fisher and the Deathly Maze

This is huge for the Australian games industry. Lots of small to medium [developers] have been punching well above their weight for years with little financial support. This will not only help them punch way higher, but will also make overseas investors/publishers/developers take more notice.

Liam Esler, managing director of Summerfall Studios, creators of Chorus

video games
Image: Summerfall Studios

A 30% tax offset has been something the Australian videogame development industry has been working towards for a long time, and it is great to see the government recognising the value that we can bring to the Australian economy. Summerfall is proud to be a member of IGEA, who consistently work to lobby government and deserve enormous credit for helping make this happen.

This offset paves the way for future Federal support to help build and grow the Australian games industry, and for studios like Summerfall, has significant implications for funding opportunities. In concert with the work being done by State screen agencies to support us, a 30% tax offset makes Australia a far more attractive option for starting and running a game development studio.

I’m thrilled to see the Federal Government recognising what games can bring to the table, and working to ensure we sit on equal footing with other screen industries. A healthy screen funding ecosystem that is fully inclusive of the games industry puts us all in the best possible position for success.

Nick Pearce, creator of The Forgotten City

the forgotten city
Image: Modern Storyteller / The Forgotten City

We’re delighted that the Government has listened to the Games Industry. As a small start-up studio, this offset should allow us to quickly level up, hiring substantial additional team members, developing better-quality games in less time, and being a serious contender on the world stage. Assuming the details come together, this could be the power-up our industry has been waiting for.

Ross Symons, CEO of Big Ant Studios, developer of the AO Tennis series, Don Bradman Cricket and Cricket 19

big ant
Image: Kotaku

Having been a part of Australia’s games industry for the past forty-plus years, I can safely say that this is the single most important and significant thing to happen to the local industry, ever. This is exactly what we’ve been calling on the government to provide, to give game developers the same opportunity that other art forms, such as film, have long enjoyed in this country.

This investment by the Australian Government will result in an incredible increase in jobs and give developers an even greater opportunity to innovate and compete in this lucrative global industry. Big Ant Studios is currently hiring, and with this announcement, we will scale that further.

Vee Pendergrast, Operations Manager of CODE, New Zealand Centre of Digital Excellence

My opinion is this is good news and should be well-received although we need to see the detail to check how it will interact with individual studios and businesses. It will ultimately de-risk production and create jobs. However — I am always cautious until I see the detail.

 

Comments

  • The exclusion of gambling is welcome but the 500k requirement is a bit harsh. They really should have a scale on the tax break so that it’s more appealing to studios of all sizes, but at least it’s something.

    • For smaller developers, I think there are grants available that will more or less do the same thing. And those are a set amount, meaning it wont vary if they have a quieter period. Not sure if there are still federal grants (there were for a while with the Australian Interactive Games Fund) but some states definitely do.

      South Australia gives a 10% rebate for development over $250k for example, which is a much lower benchmark. Film Victoria also has some pretty in depth support for games including grants.

      I havent looked into it that deeply so theres still probably a dead zone at some finance point, but its not a flat 500k or nothing situation. This is on top of support thats been on the up for a while now.

      • The IGEA has a table of what grants are applicable in what states and I don’t think NSW’s coverage has anything specific for games, more general small business grants etc. NT and WA are fairly lacking too, but Queensland alongside SA and Victoria have some specific funding options for video game development. Maybe with the Federal funding the States with less options will be able to find some more specific incentives for development.

        • Yeah, NSW has definitely been behind with this. Victoria seems to have the most comprehensive support from the little looking I did, but South Australia seems keen on it as well.

          Queensland, not sure what they have, but they’ve been a bit of a hotspot for a long time for developers so I’d expect some. As Victoria has about half the developers from what I saw (think it was 48% Vic, 19% NSW, 19% Qld that I saw), its not surprising they have the most support.

          One has happened because of the other.

          Either way, was more pointing out that this wasnt the only support out there, and that there had been support, in particular for the lower end, for a while now in one way or another.

          The support mentioned here really only brings games into line with the film industry support, in particular the post digital and visual work which has a 30% rebate. Theres enough similarities between the two industries that it makes sense.

          As I interpret it, they’re really just expanding on computer specific entertainment fields to be the same. Which is a good thing as it starts to recognise that games and films are similar in intent, which might be the opening for games to be classified the same way as films.

          Governments think and work in strange ways, and that could be the endgame with this. Or, I could be wrong and this is just Scotty from Marketing realising its an election year.

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