A quick and cheap way for Treasurer Scott Morrison and PM Malcolm Turnbull to boost innovation and promote jobs and growth would be to return government funding to the video games sector — funding that was slashed in the 2014 horror budget.
In 2012, Labor arts minister Simon Crean announced the Australian Interactive Games Fund (AIGF), a $20 million, three-year program run by Screen Australia to fund Australia video game development. The program dished out $10 million in two years but was axed by the Abbott government in the 2014 budget. It was designed to be self-sustaining; companies that received funds for their projects were required to pay it back to be used to fund other projects, and evidence showed that, by all accounts, the program was a massive success.
Screen Australia reported last year that the $4.178 million invested in 43 projects in the games production component of the program for specific video games generated total production budgets of $14.3 million, meaning that for every $1 invested, there was $3.42 in production expenditure. During its short life, the program funded 10 development studios for a total of $6 million.
Tony Reed, the CEO of the Game Developers’ Association of Australia, told a Senate committee hearing that several of the companies funded by the program had gone on to achieve global success, with revenues more than 10 times the original investment from the fund. Fiona Cameron, CEO of Screen Australia said that one company, Defiant Development, was able to develop Hand of Fate using around $650,000 in funding from the program. The game has gone on to earn $4 million for the company.
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“Defiant Development has gone from a company staffed entirely by contractors to a company now with 18 full-time staff. We believe the fund has made a difference, especially with reference to retaining local IP and building Australian businesses that can compete for a slice of the fastest-growing entertainment sector.”
It’s unclear why the Abbott government axed a program that was, by all accounts, a complete success. Arts Minister Mitch Fifield said in October last year that he would not pre-empt what the government might do regarding funding for innovation and creativity, but said that the government’s agenda to balance the budget took priority. The games industry did not receive focused funding as part of the government’s innovation agenda announcement late last year. Part of the problem, developers suggested, was that video games were not treated like the film, TV and music industries. Professor Stuart Cunningham told a parliamentary committee that unlike the film industry, the video game industry was arguing for funding to grow:
“Film industry leaders have always been clear: we cannot survive without ongoing government support. Games industry leaders do not make that claim. The claim they do make is: if you want to grow an industry and have it achieve some viability and have it play an important growth role in employment, high-tech recruitment and cultural outcomes, then you probably do need to support it. The amounts are tiny, but the impacts can be significant. People do not stay in the games industry if they are not viable.”
The video games industry does have access to the government’s R&D tax concession, but KPMG found this would be of limited use for most companies, which need upfront capital, rather than post-tax refunds. Australia is also lagging behind the investment some other countries put into video games. For example, Canada offers grants for up to CAD$250,000, while Finland — the home of Angry Birds developer Rovio — offers grants of up to 75% of early-stage business costs.
A parliamentary committee’s report released last week called for a new self-sustaining fund to be established to succeed the Australian Interactive Games Fund and provide tax offsets to the industry, as well as potential tax relief for businesses that use crowd-funding for projects. The video game industry will, however, need to pull its weight in improving female participation in its workforce, according to the report:
“The latest estimate of gender breakdown in the industry suggests that only 12.7 per cent of the workforce is female. This is disappointing. The low rate of female participation in the industry weakens not only the industry’s case for government support, but also its economic prospects. The committee is of the view that the industry’s long-term success and sustainability depend on a more diverse workforce.”
The Coalition has previously had issues with game development in Australia. In 2003, the Australia Council provided a $25,000 grant to developers behind the Escape from Woomera game, designed to shine a light on Australia’s immigration detention regime. The first-person shooter game came under fire by then-immigration minister and future Australian envoy on human rights Philip Ruddock, who criticised the Australia Council for funding a game that promoted “unlawful behaviour”.