On show … EB Games held an expo at the weekend for the booming number of gamers.
Australian video game creators fear the local development industry is on the brink of collapse after a string of studio closures.
Seven high-profile video game studios have shut down in the past six years, with the latest casualty, KMM Brisbane, closing its doors on Friday.
Pandemic Studios shut its doors in Brisbane in 2009, Krome Studios shut in 2010, while THQ’s Brisbane and Melbourne studios shut in 2011 along with EA’s Visceral Games and Rockstar partner Team Bondi.
KMM Brisbane shut last week after finishing work on a movie-licensed game.
The studio’s art director, Jason Stark, says there are three main reasons Australian game studios are shutting down: the high Australian dollar, tax breaks for game developers overseas and a decline in middle-ground games.
He fears thousands of jobs are being lost and that the local industry will have a difficult time recovering as those with the experience to start a studio flock to jobs overseas.
“The writing has been on the wall for a long time,” Mr Stark said.
“But it’s maybe a little surprising the extent to which it has happened.
“We’ve all expected the industry to be shrinking – it’s been bad times. It’s gone from being a mild contraction to being pretty much obliterated.”
Mr Stark says the main reason for the loss of local jobs is the high Australian dollar is making it unprofitable for big overseas publishers to fund video game development in Australia.
He says local studios boomed in the late 1990s when the Australian dollar was sitting around 50 US cents.
“We could simply make a video game for half the price of what they could in the United States – that’s when you found a lot of the studios taking off,” he said.
“With the dollar currently above the US, it’s now more expensive to make a video game here than what an American publisher considers locally.”
Mr Stark says another reason for the collapse is that tax breaks for video game studios overseas mean companies are moving wherever they get the biggest incentives.
In Canada, the Quebec government subsidises 37.5 per cent of a video game studio’s payroll.
The tax break has led to many publishers increasing the size of their Canadian studios.
“They’re hiring like crazy [in Canada] and that’s where a lot of local talent is flocking to … where streets are paved with video game gold,” he said.
Mr Stark says there are no similar tax breaks in Australia.
“I’m personally not a believer in subsidising industries – I believe the free market should take care of it,” he said.
“But having said that, we’re losing a lot of talent, and your nation quickly gets to the point where if times do come good again, we’re not going to have enough experienced people here to start the companies.”
Mr Stark says it is “virtually impossible” to find video game jobs in Australia.
He says about 90 per cent of local developers move overseas when a studio shuts and only a handful who have families or commitments remain in Australia to take on uninspiring roles.
“An excellent environment artist who I worked very closely with – he has had job offers from the likes of Bioware – they’re a very prestigious games company – but because his family is staying here he will instead be taking a job in IT putting PCs together,” he said.
“That is not the exception, that is the rule.
“Either people are moving overseas or they are seriously downgrading their career choices.”
Rise of mobile gaming
Mr Stark says the development environment has changed significantly with the rise in popularity of mobile apps and games.
“The sort of middle-ground products, which a lot of local developers specialise in, that were movie-licensed titles that were low to average budget, have since proven to be just not viable from a business point of view,” he said.
“People are either buying AAA games or they’re buying $2 games on their iPhone. They’re not really interested in a $60 ‘meh’ game.
“There is a really boom or bust environment at the moment.”
But Mr Stark says Australian developers may see a future in the move to mobile phone games because of the small development costs and team sizes.
Australian mobile developers Halfbrick Studios (Fruit Ninja) and Firemint (Flight Control, Real Racing) have already showed local developers do not need large studios to make games that sell in the millions.
“The days of the large Aussie game studio are numbered, at least for now, and the survivors will be turning towards iOS (the iPhone/iPad operating system) and they will be starting small and agile,” Mr Stark said.
“Hopefully one day they will grow to be bigger again, but it certainly seems to be the way the local industry is heading, at least for the next few years.”
Mr Stark says he plans to start his own small studio to develop games for the iPhone now that KMM Brisbane has shut down.
“Another job is pretty much non-existent. That was my first option, to obviously look elsewhere, but there is no work to be had. It’s very slim pickings,” he said.
“I have a family here. I like the sun. I’m not in a hurry to move to Canada, so that’s pretty much my only option – to make a go of it alone.”
More gamers than ever
The collapse of development studios comes despite a recent survey finding more Australians have access to video game devices than ever before.
The Interactive Games and Entertainment Association’s (IGEA) Digital Australia 2012 report, released last week, says 92 per cent of Australian households have devices for playing video games, up from 88 per cent last year.
Australians spent $1.7 billion on video games in 2010, according to NPD Group Australia, and on the weekend more than 15,000 gamers attended the first annual EB Expo on the Gold Coast, making it already the largest video game expo in the country.
The event at the Gold Coast Convention Centre allowed gamers to play unreleased titles that are due out in the holiday season and listen to live sessions with notable overseas video game developers and companies.
EB Games national brand and marketing manager Debra McGrath says it pre-sold 13,000 tickets and broke the convention centre’s pre-sell record.
She says EB Games focused on big-name companies like Sony, Nintendo and Microsoft for the first year of the event, but future events could open up to showcase local and small-time developers.
She says the expo team is still deciding on how to expand the event.
“At the end of the day for this first expo we really had to get the core of the show right,” she said.
“But we’d love to do that (open the show up). It’s one of our grand plans to expand the show and showcase the local development and even work with local universities.”
Ms McGrath says future iterations of the expo may see a casual gaming section, to accommodate the popularity of mobile phone games.
“Hopefully there will be an entire casual gaming section right alongside the hardcore gaming,” she said.
Mr Stark says the expo is an excellent idea and could help the local industry.
“It’s a shame it wasn’t happening five years ago though, we could have had strong showings from local studios like THQ, Pandemic and Krome of course,” he said.
“But hopefully, it’ll be interesting to see if they invite small developers.”