Australian game developers earn over A$116m in 06/07

Just some facts in this post – and apologies for the delay.

According to figures released in April by the Australian Bureau of Statistics (ABS), Australian-based game developers received $A116.9 million in revenue over the 2006/07 financial year.

The ABS data indicated that as of June 2007 there were 1,431 employees in the local industry, which indicates considerable growth from 9 months earlier in September 2006 when employees stood at 1,024.

Confirming the status of the industry as a service exporter, ABS figures showed that 92 per cent of developers’ revenue came from non-resident clients over the 2006-07 financial year.

In contrast, sales of game hardware and software in Australia reached A$1.32 billion in 2007, surpassing box office revenue, with software sales accounting for approximately A$750 million of this.

 

Can newspapers cut journalists and keep quality?

Outsourcing and downsizing is a common theme in media as it is in most industries. But the announcement from Fairfax in Australia that it will be cutting 550 jobs raises the familiar question of whether the quality of news can remain the same with fewer journalists (see article in The Australian Fairfax sheds 550 jobs and quality journalism).

The clear response to the announcement has been concern that editorials, and in particular investigatory journalism will suffer, reducing the “fourth estate’s” ability to act as society’s monitor and watchdog over business and government.

The move towards outsourcing news stories – particularly foreign news – to news agencies and wire services such as AP, Reuters, and Bloomberg has been a trend for a long time. How often have you scanned several news sources only to find the same news verbatim?

Ironically, in the past, newspapers’s adoption of new information technologies was used to rationalise the posting of reporters around the world, as they could report back instantly (don’t take my word on this). These communications technologies however have resulted in a far more centralised production process where a few companies distribute reports to newspapers around the world.

Evidently, outsourcing of articles to syndicated news agencies can result in a reduced variety of available ‘news’ products. But a few things worth noting are:

• We also have access to a far greater range on news sources online that we have in the past
• The volume of news has increased phenomenally – newspapers maybe be using more syndicated news, but that doesn’t necessarily mean they are cutting their core offerings.
• Web 2.0, which we are all spending more time using, clearly appears to be challenging some news companies, just as they had embraced the internet as it was. Fairfax did particularly badly with its entry into online services.
• The Fairfax cut equates to about 5 per cent of total full-time staff. But notable (in my opinion) is that its flagship product the Australian Financial Review is to remain unaffected. These journalists write well and know their stuff.

 

Australian censors ban UK game

Australian censors have banned a London-made game for being too violent, according to the London Free Press.

The article has quoted the Board as labeling the game “violent and sometimes gruesome game with a sinister storyline and ominous outcome.”

“The violence and aggression inflicted upon the protagonist is of a high level, naturalistic and not stylized at all.”

With no R18+ rating for games in Australia, it is not surprising that games depicting ‘mature’ scenes are not given a classification. Introducing an R18+ rating for  games (like there is for film and video) would allow adult gamers the freedom to choose, and parents with game-playing children the information not to choose games with explicit violence or mature themes.

 

Games in Queensland and Victoria – state government support

An article from the Courier Mail

 

Greens support games in Australia

The Greens have offered their support to the games industry in Australia to secure the same tax offsets currently enjoyed by the film industry.

Screenplay blog in The Age quotes Senator Christine Milne from the Greens who met with GDAA president Tom Crago:

“Given the tremendous popularity of interactive computer games, Australia’s games developers would doubtless receive the same community support if only Australians knew how successful they are becoming on the world stage,” she says.

“The interactive games development industry is an excellent example of an innovative, smart industry that Australia should be encouraging, while moving away from the old economic paradigm of ‘dig it up, cut it down and ship it overseas’.

 

Coalition follow Labor and promise games a funding review

The delegation from the Games Developers Association of Australia (GDAA) were assured that the government, should it be returned to office at the November 24 election, would review the eligibility of games for the tax offset scheme currently provided to the film industry.

The promise was made by Senator George Brandis, Minister for Arts and Sports at a meeting with industry delegates on the 2 November. PALGN quoted GDAA CEO Greg Bondar as saying “Senator Brandis was most sympathetic to our concerns and also undertook to ensure that a review of GDAA’s call for a 40% tax rebate for the games industry in Australia would be undertaken if the Coalition was returned to government.”

The coalition government’s move to reassure the games industry comes two weeks after the industry delegation met with Labor communications shadow minister Senator Stephen Conroy, who also was ’sympathetic’ to the games industry and promised to recommend that the GDAA get a seat at the review of the 40% tax rebate for the film industry, stating that it was time ‘to recognise the contribution of the games
industry to the Australian cultural landscape, and the conomy as a whole.’ (see press release on GDAA website)

It is fortunate for the GDAA in one sense that the upcoming election has provided the political competition necessary to generate such promises and expressions of support. Yet it also means that the issue may be given more attention (albeit pre-election) than it otherwise would have, and both political parties are being careful in the construction of their promises. Offering to recommend the association is given a seat at the table of a review of the tax rebates gives very little tangible support indeed. Post election of course, both parties are likely to give less attention to games than they are to inflationary pressures and the odd $50 billion plus of additional spending that they have promised. Even within the portfolio, expediting the roll-out of broadband is bound to be a much bigger funding issue.

Rather than go for the cultural angle, I wonder if it would have done the industry any better to approach the Department of Industry rather than Communications. AusIndustry and InvestAustralia have previously taken considerable interest in the games industry, but surely this path has been tried already.

 

Australian games industry ‘could triple’ with government support

Following on from a recent post, the Game Developers’ Association of Australia believe that the industry could triple in size if the government introduces two key policies, according to an article in the Brisbane Times.
The first is offering the industry the 40 percent tax offsets/rebate and other funding schemes that is currently available to the film industry.

The second is the introduction of an R18+ rating for games (as movies have) that legalise the sale of games that do not make the MA15+ grade.

GDAA president Tom Crago says local games studios are flourishing but the industry is being driven by overseas funds and in turn the profits from Australian developed titles ultimately end up overseas:

“A better investment and regulatory environment here would see more Australian-owned intellectual property, more jobs in the local industry and increased exports of Australian games.”

- Tom Crago, GDAA President

Crago believes that it is “somewhat incongruous that this ‘cultural value’ argument should result in the film industry receiving maybe 1000 times the funding and support that the video-game industry receives.”

This comes despite games employing many of the same skilled workforce in areas such as animation and special effects that are used in the production of film and TV. “It’s a sign of a government behind the times in terms of how Australians are spending their leisure hours and dollars,” says Crago.

Many within the development community believe the Australian industry is at the crossroads and will soon lose most “work for hire” contracts to cheaper countries such as India and China, or countries with more government assistance, such as Canada and France. It needs to cement its future with original franchises such as the recent global hits, Heroes of the Pacific.

So does the government’s rejection of the industry’s request come down to a cultural argument? Is the government unwilling to support a healthy, growing industry (which could be a fair call)? Do they not see the ‘danger’ of this industry being lost to low-cost offshore production locations? Are they too short-sighted in the euphoric rise of the minerals boom being fuelled by China to care about supporting new and innovative industries? Or does support for games industry not secure the same number of jobs and more importantly, votes, than supporting the film industry will garner?

The fact that many games are not recognisable as “Australian” makes it more difficult to attract policymakers attention. There is nothing visibly and uniquely “Australian” that will be lost in the domestic market if existing games development shifts offshore. Despite this being a sticking point for their lobbying of conservative politicians, it is no doubt a big positive for the games they develop and possibly a reason why their work is well received by American and other overseas investors/publishers.

 

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Some data on industry size (sales) in Australia:

GfK data showed Australians spent more than $1 billion at retail on video games and console hardware in the 2006-07 financial year – $200 million more than cinema box-office takings.

Sales for the first half of 2007 were up 30 per cent, with more than 5.5 million games and half a million gaming consoles bought in six months.

Last month, Halo 3 enjoyed the biggest opening-day sales of any entertainment product in the world, easily eclipsing the likes of Spider-Man 3 and the final Harry Potter novel.

 

Australian Government turns down game developers

The Game Developers Association of Australia (GDAA) have had their request for tax rebates for the film industry to be extended to investment in games developing rejected by Federal Government Communications IT and Arts Minister Senator Coonan.

In a previous entry, >>Howard Government to ‘bring Hollywood home’ through tax breaks<< I mentioned the new package the federal government was providing the film industry to ‘bring Hollywood home’ which included a 40 percent refundable tax rebates for film production.

The entry was also critical of the package and its ambitious goal:

…on first glance the tax incentives appear somewhat short-sighted or parochial on the policymakers front by exacerbating an artificial division between supporting “Australian stories” and allowing international films to use local locations and talent.

Quoted on Builder AU news, the Minister said in a written response to the GDAA:

“The Screen Media Support Package announced in the Budget has the potential to benefit screen content producers of all kinds. While games will not be eligible for the tax offsets announced as part of the Package, the introduction of a Location Offset is expected to have positive indirect flow-on effects for screen businesses, as digital and visual companies develop larger and more skilled workforces.”

Builder AU quotes GDAA CEO Greg Bondar saying the introduction of a rebate would have led to an additional AU$25 million in new investment into Australian-developed titles.

Raising the game developers’ interest in receiving government support to encourage investment, the aforementioned DISCONTENTS entry asked the question “why film and not games?”

On the game / film divide, one could argue that the film industry still has the justification of “culture” on its side, having enjoyed a long history of support from a cultural policy approach. Film and television policy has long supported the production of “Australian” programs to ‘protect our culture and national identity.’ Like nobody would watch Australian programs if there was not a 50 percent local content quota on free-to-air broadcasts? Games in contrast are rarely distinguishable as ‘Australian’ (and probably export better than films for that very reason!)

But if the goal of the film industry package is to increase economic growth, then games developers have a very cogent argument for the package being extended to them.

Undoubtedly, the Minister, and Treasury, would be anxious about extending tax incentives beyond the industry that the policy was originally designed for. Fears that such a move would open the flood gates to lobbying from any number of industry bodies claiming that they are no different to the industry sector receiving benefits. With this in mind, it is not all together likely that the tax incentives will be extended to the games sector if Labor wins office this election, despite their being “very sympathetic”.

It is an indictment on industry [industrial] policy that an industry should need to show it is in danger of dying – that capital will dry up and jobs will be lost, before a government offers any kind of support. One has to wonder whether if the Minister’s response would be any different if the GDAA showed that they were being undercut by programmers and developers in China and were set to lose x number of jobs without government intervention. That is not meant to be a statement advocating the propping up ailing industries, nor one that supports the indiscriminate provision of tax dollars to high-growth industries.

One does wonder though, whether the recent ‘lull’ in industry policy in Australia is not so much a sleeper as it is the conservative continuation of prevailing protection for inefficient industries.

 

The future of Queensland’s ‘Smart State’ policy

An article in ABC opinion by Scott Prasser, ‘Smart State or Dumb Distraction’ examines the emergence of the ‘Smart State’ policy in Queensland, to what extent it resulted in policy change rather than rebadging , and its future after the resignation of Premier Peter Beattie.

Prasser points out:

Smart State seems reasonable, sensible and most all economically needed. Of course politically it has unbalanced the Opposition as it is a hard policy to criticise. Also, as the strategy is pro-business and pro-development it has seized the Coalition’s traditional territory and allowed considerable funds to be provided to business and has been a great way to win votes.

Furthermore, the smart state project has meant considerable funds to universities, especially the University of Queensland, and probably explains its vice chancellor’s high praise for the Beattie Government.

Ask Vice-Chancellors from outside of Queensland however, and they would be certain to label the generous funding the University of Queensland received from the State Government as protectionism. The university has managed to attract a number of academics and researchers away from key ‘competitor’ institutions.

And when it comes to investment attraction, Queensland is the only State that has not signed a memorandum of understanding not to poach investment from other states by offering more incentives.

The Queensland Government is quick to advertise its low taxes and business-friendly climate. But State policies are not all about allowing the economy to function freely, as Prasser indicates.

However, the Beattie Government’s rejection of Commerce Queensland’s The Role of Government in Queensland report to further free up the economy to the private sector and market forces, suggests that the smart state strategy has been more about old style handouts by governments to particular interest groups than about developing an innovative economic and business culture.

 

Singapore and Australia to sign film co-pro agreement

News Release by the Media Development Authority on a joint agreement with the Australian Film Commission to explore a co-production agreement between Singapore and Australia.