Australia


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.

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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 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.

An article from the Courier Mail

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’.

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.

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.

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