Creative State 2020+ Submission to Victoria's consultation on - September 2019 - iGEA
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Submission to Victoria’s
consultation on
Creative State
2020+
September 2019
www.igea.net
Interactive Games &
@igea /igea.net Entertainment Association
E x ecuti v e S u mma r y a n d
R e com m end a t io n s
Executive Summary and Recommendations
The Interactive Games & Entertainment •V
ictoria’s current policy settings for the
Association appreciates the opportunity games industry are working. Building
to contribute to this important consultation an industry takes years and it is vital
on Creative State 2020+. This submission that existing support mechanisms
provides an overview of Victoria’s game remain in place to support the long-term
development sector and reflects on success and sustainability of Victorian
what Victoria has been able to achieve, games businesses.
from successful and growing games
businesses to the two globally renowned •O
f all of Australia’s jurisdictions, Victoria
events of Melbourne International Games has an opportunity to turn its ambitious
Week and the Melbourne Esports Open. but still maturing games industry into
an Asia-Pacific equivalent of the kind of
Our paper highlights why there remains industry that exists in the UK or Canada.
a vital need to continue investing in the What’s needed is an expenditure-
games sector and the many diverse and based incentive such as a rebate – an
unique benefits that the industry provides initiative that is significant but proven,
to the state – from growth and foreign necessary and transformative.
investment to productivity and jobs – while
highlighting some current challenges and •T
he process for developing Creative
risks. State 2020+ can also look broadly at
the range of alternative or additional
Our submission also seeks to illustrate policies that have been successfully
a vision for what the games industry adopted elsewhere in Australia and the
can achieve through the many practical world. The submission outlines some
examples of countries and regions key support mechanisms that could
analogous to Victoria in population also be considered, including attraction
size and economic progress where funding to encourage other major studios
governments have worked closely with to Australia and a payroll tax rebate to
industry to build, in many cases, billion- encourage studios to hire and grow.
dollar industries that hire and upskill
thousands of workers.
The second half of our submission
provides our views on this consultation
holistically, including providing our
support for the guiding principles and our
perspectives on the discussion themes.
Our submission finally outlines our three
key messages for policymakers in the
context of Creative State 2020+:
2 Submission to Victoria’s consultation on Creative State 2020+
I ntrod ucti on
The Interactive Games & Entertainment Together with our fellow creative sectors,
Association (IGEA) is the peak industry we would like to take this opportunity to
association representing the business and applaud Victoria’s long-term focus on
public policy interests of Australian and creativity, recognising that building a
New Zealand companies in the interactive creative state also creates a state that
games industry. Our members develop, has an ambitious economy, innovative
publish, market and distribute interactive businesses and a talented workforce
games and entertainment content and and communities. We are particularly
related hardware. We proudly represent appreciative of the Minister for Creative
a number of influential Victorian-based Industries Martin Foley MP, Creative
games businesses, including Australia’s Victoria and Film Victoria for their
largest game studio Firemonkeys, recognition of video games as both a
development industry leaders Big Ant creative artform and business-minded
Studios and Wicked Witch, the successful industry. Through Creative State 2016-20,
and celebrated Hipster Whale, the ‘AAA’ they have supported the game studios that
Introduction
satellite studio Sledgehammer Games and call the state home and have shared in the
of course Nintendo Australia which has its celebration of our many successes. We
headquarters in Melbourne. appreciate the opportunity to participate in
the Victorian Government’s consultation on
Creative State 2020+ and are pleased to
be able to provide this submission.
Florence by Mountains Studio includes loving nods to Melbourne
Submission to Victoria’s consultation on Creative State 2020+ 3
T he s tate of Vic t o r ia ’s
g am es s ect o r
More Australian game development •L
eague of Geeks, a major Melbourne-
studios continue to call Victoria home than based game development collective
any other state. These are studios who whose meticulously maintained debut
are hiring and training game developers, game Armello continues to strengthen its
producers and designers and creating fan base year after year.
games that are enjoyed not only in
Australia, but (mostly) elsewhere around • Mighty Games, another significant
the world. According to our research, there Victorian independent game studio with
were 46 Victorian game studios in 2017, a talent for designing and developing
located not only in Melbourne but also creative and appealing social games like
in regional areas. Considering that our Shooty Skies, which was downloaded 5
research only measured ASIC-registered million times in its first few months.
businesses and relied upon voluntary
survey responses, it is likely that this figure • Mountains Studio, whose first game
is conservative. Florence, launched in 2018, won several
international awards for Best Mobile
Victoria is home to some of Australia’s Game, including at the Game Awards,
most significant and successful games Game Developers Choice Awards and
titles and studios and we would like to start British Academy Games Awards.
our submission by highlighting just a few
of them: • Opaque Media, an innovative studio that
developed a Virtual Reality Earthlight
ig Ant Studios, a leader of Victoria’s
•B spacewalking simulator for NASA and
games sector and one of its most the Virtual Dementia Experience for
Alzheimer’s Australia Victoria.
The state of Victoria’s games sector
influential studios which has created,
among many other titles, games with
distinctly Australian character like Rugby • Paper House, whose first game
League Live 4, Cricket 19 and Big Bash Paperbark, developed in partnership
Boom. with League of Geeks, follows a wombat
in a beautifully rendered Victorian bush,
• Firemonkeys, Australia’s largest game deservedly winning awards and acclaim
studio, owned by the global video for its design and artistry.
games giant Electronic Arts (EA), which
continues to develop and support a • Sledgehammer Games, the Australian
range of globally popular titles, including satellite studio of the acclaimed
games for EA’s acclaimed The Sims and developer of the ‘AAA’ Call of Duty
Need for Speed franchises. games, one of the greatest video games
franchises of all time, and part of the
• Hipster Whale, one of Australia’s most global video games giant Activision
successful game studios of the past Blizzard.
decade, who have turned their success
with Crossy Road, which has been
played by over 200 million players, into
a collaboration with Disney and other
successful titles.
4 Submission to Victoria’s consultation on Creative State 2020+
• Tantalus, one of Victoria’s oldest game celebration anywhere in the Asia-Pacific
development studios with a 25-year region, with its centrepiece event PAX
history of working with publishers Australia welcoming more attendees and
around the world and honing their hosting more panels in 2018 than ever
specialist expertise in performing in its history. In 2018 IGEA ran a booth
licensed platform conversions for global to collect stories on the power of games
partners, including with Microsoft on their for our Digital Australia 2020 research.
acclaimed Age of Empires series. We heard stories from many Victorians
(including young people from regional
• Tin Man Games, a major Melbourne- Victoria who had travelled for hours to get
based game studio that has published there) as well as fellow Australians from
over 35 titles, achieving particular all states who told us about how important
success and acclaim with their MIGW was to help them connect with the
Gamebook Adventures series. They industry and artform that they love.
also published Miss Fisher and the
Deadly Maze, bringing another beloved Melbourne also hosted the inaugural
Australian character to the interactive Melbourne Esports Open (MEO) in 2018,
screen and to new audiences in Australia arguably the biggest esports festival in
and abroad. Asia-Pacific region, marrying Victoria’s
quadruple loves of creativity, sport, culture
• The Voxel Agents, a studio founded in and entertainment. The first MEO pulled
2009 that has produced internationally in over 12,000 fans into Melbourne Park
popular games played by millions of and was watched by millions around the
people and whose latest game, The world while the second MEO fitting took
Gardens Between, won Game of The place during the consultation period.
Year at the Australian Game Developers Given the continued rise of esports and
Awards award among other local and the unprecedented popularity of gameplay
global accolades. spectatorship in Australia and around the
world, whether it is watching international
• Torus Games, another longstanding gaming competitions or online streamers
Victoria studio that has operated for showcasing indie games, it is clear how
The state of Victoria’s games sector
25 years focusing on both original and influential video games are as a cultural
licensed titles and a string of games and force.
franchises that have sold in the millions.
Finally, our submission would like to
• Wicked Witch, a significant and influential highlight the Australian Centre for the
Victorian studio with a long history of Moving Image (ACMI) in Melbourne as one
success over almost two decades, from of the best cultural institutions in the world
original games like Puzzle Wiz to distinctly that gives homage to video games and
Australian rugby, AFL and cricket games. is another example of Victoria’s special
Wicked Witch is also working with relationship with games. As an industry, we
Microsoft on Age of Empires II. are already in conversations with ACMI on
ways to collaborate ahead of its reopening
Of course, Victoria’s connection with in 2020. The recognition of games in the
video games goes well beyond just its Victorian Government’s creative industries
development industry and the state strategy is justified, visible and – most
has had a major impact on connecting importantly – working.
Australian and international game players
culturally. Melbourne International Games
Week (MIGW) remains the largest games
Submission to Victoria’s consultation on Creative State 2020+ 5Vi ctor i a’s g a me d e ve lo p me n t
i n d us tr y m a t t e r s
Victoria’s game development industry matters
While it is already well understood Based on our Digital Australia 2020
by Victoria, we would like to use this research, just under two out of three
submission to again highlight the Victorians played video games in 2018,
economic, cultural and social importance almost three quarters of Victorian game
and opportunities of video games as a players were adults and games were
creative sector that should be nurtured roughly equally played by men and
and supported. women alike. Mirroring national trends, 89
per cent of Victorian households had at
Australians and Victorians least one gaming device. The ability for
love video games games to project Australian stories and
voices to audiences at home and abroad
Video games have amongst the largest are therefore profound from a cultural and
support base of any creative industry, economic perspective, although given the
with well over 2 billion gamers in the world fact that Australian games are only a small
including over a billion in our region alone. drop in the global ocean, we are not yet
Australians spent over $4 billion on video close to fully leveraging this opportunity.
games and games hardware in 2018, a 25
per cent increase from 2017. This means Victorians care about
Australians spend more on games than making games
they spend on films, streaming services,
pay TV, music, books or likely any other Victorians don’t just love to play games,
creative or entertainment activity. they also believe in the importance of
games and in the artistry and industry
Cricket 19 by Big Ant Studios, the official game of the 2019 Ashes
6 Submission to Victoria’s consultation on Creative State 2020+of making video games too. According Game studios allow creative
to our research, two thirds of Victorians people to express themselves
believe that making games in Australia
is important for the economy, and even Perceptions that game developers are
more believe that the games industry is exclusively software developers and
Victoria’s game development industry matters
important for Australia. Victorians have engineers are untrue and thankfully
also recognised the importance of games dated. While video games are of course
outside of pure entertainment, with a third technology-driven and continue to draw
of Victorians having already used games Victorians into the ICT sector, game
at work for learning, over half of Victorian studios are also training up and giving
parents saying that their children have opportunities to a diverse next generation
used games at school and almost a third of Victorian creatives, from digital and
saying their children have learned some visual artists to writers, actresses and
coding at school. actors, composers and musicians, sound
engineers and directors.
According to the same research, a
significant number of Victorians also Game businesses are therefore providing
said that they were interested in a career increasingly important work opportunities
in games, had studied coding or had to creative professionals in the wider film,
even tried making games themselves. TV and print sectors that are experiencing
According to our analysis, Victoria has limited growth by comparison. The
more universities and colleges teaching games industry is also developing deep
tertiary-level courses in various aspects synergies with Victoria’s vibrant post-
of game development than any other production, digital and visual effects
jurisdiction, reflecting the strong interest (PDV) sector. Based on conversations
among the next generation of Victoria’s with our members, there has a been
workforce in this industry. a deepening of relationships between
businesses across both sectors including
Game development is an increased collaboration on projects and
important creative output transferability of workers, particularly as
games engines become more important to
Video games are an artform that is animation and filmmaking. In the future we
arguably more unique, diverse and expect our industries to draw even closer.
impactful than any other creative output.
Games create striking visuals like film or Bridging the creative and
TV and deliver narratives like literature technology industries
and theatre. They convey emotion through
sound like recorded and live music The games sector has a unique position
and display colour and movement like in the Australian economy in that video
dance and visual art. And unlike those game businesses are often both creative
other artistic mediums, they are deeply businesses as well as technology
interactive and therefore particularly businesses and video game practitioners
compelling and engaging. Whether we are often have skills that are highly sought-
talking about atmospheric and immersive after in industries well beyond games.
platformers like The Gardens Between, Video games are at their heart technology
moving and personal interactive stories products and services and are often
like Florence, or gorgeously stylised among the most complex, detailed and
games like Crossy Road, it’s clear that interconnected kinds of software that exist.
Victorians are particularly creative and While video games continue to be popular
talented auteurs in game design and as entertainment for people of all ages
development. across the world, games are also finding
Submission to Victoria’s consultation on Creative State 2020+ 7‘serious’ applications, including in the As Creative State 2016-20 highlighted,
education, healthcare, defence, business, more than 90 per cent of Victorian digital
research and community sectors. games are already developed for a global
audience. Australian games are already
Melbourne Metro Trains’ Dumb Ways to popular in English-speaking and European
Victoria’s game development industry matters
Die game, based on the viral public safety countries and our proximity to Asia means
video, remains to this day one of the that we are on the doorstep of the region
best examples of gamified government of the world where digital games are most
messaging in the world. Showing a popular. Also, unlike many other kinds
different side of games, Victorian studio of Australian exports, including other
Big Ant Studios has developed simulation digital exports, individual games have the
software for law enforcement, while former potential to provide a long revenue tail
Victorian studio Well Placed Cactus’s and generate sustained wealth through
B2B capabilities were regarded so highly ongoing content that capture and grow
that the studio was acquired by Deloitte. player bases and leverage diverse income
Reflecting innovation like this, Australian streams.
game businesses that specialise in
‘gamification’ or ‘serious games’ are in Contributing to Victoria’s
high demand. Game developers also economy and society
often have highly transferrable skills, while
practitioners of game engines and those Wildly successful and globally popular
as the forefront of emerging technologies Victorian video games are some of, if not
like AI and virtual, augmented and mixed most of, Victoria’s most successful creative
reality are among the most in-demand exports that have brought in significant
professionals in the entire technology levels of investment, tax revenues and
industry. jobs into the state. A typical 50-person
studio might spend approximately $7
Video games are the ideal million each year on staffing, expenses,
creative export investments and development costs. Many
Victorian-made games are built on original
Games are a high potential export intellectual property, meaning that export
industry for Victoria given that they profits flow through to proud Victorian
are increasingly digital and therefore businesses who re-invest these profits into
exported instantaneously around the building even more and better products
world without transportation costs or to export. Victoria’s pool of (English-
significant environmental footprint. Unlike speaking) talent is highly regarded and
many other kinds of Australian products Victoria’s advantageous time zone also
that may only have viable or sustainable makes our game development businesses
export markets in certain parts of the ideal candidates for collaborative or
world, the global digital games market is joint projects with overseas partners.
the entirety of the billions of game players For example, the global positioning of
across six continents. The ability of video Melbourne’s Sledgehammer Games
games to transcend language and cultural studio helps it to contribute to a 24/7
barriers by focussing on interactive user cycle of development on Call of Duty
engagement, visual communication, games. Australia’s small, but advanced
universal themes and fantasy worlds and sheltered consumer market makes
gives our medium an automatic edge in it an attractive testbed for trialling new
universal exportability over Australian technologies including innovative gaming
films, TV programs and books. products and services, further enhancing
the attractiveness of our businesses
globally.
8 Submission to Victoria’s consultation on Creative State 2020+C u r rent and f u t u re
c hal l eng es f o r Vic t o r ia
However, moving forward, Victoria’s game around the world (which is discussed
development industry is not without its further in this paper). There is a brain
challenges. Our 2017 industry survey drain occurring where many of our most
tells us that despite the numerous success talented and ambitious game developers
stories and undeniable talent in our – meaning many of our most talented
industry, it remains small, employing just and ambitious creatives and technology
928 workers in Australia with around half practitioners – have left and are continuing
of that figure based in Victoria. This simply to leave Victoria and Australia to use
is not reaching the potential that Australia their talents. This also means Australia
Current and future challenges for Victoria
and Victoria can and should have the is missing out on tens, if not hundreds of
capability to achieve. The preparation of millions, in foreign investment as video
Creative State 2020+ must be considered game publishers set up new studios or
in this context and we urge policymakers ply capital into existing studios almost
to ask frank and bold questions about everywhere around the world except for
what needs to be done to bridge the gap Australia. By way of example, just one of
between where we are now and where our members alone has invested well over
we want to be. We will also shortly be $20 million into its studio here. The recent
conducting our next industry survey and Interactive Aotearoa report developed
look forward to sharing and discussing the by the New Zealand Game Developers
results with the Victorian Government. Association, which we were a research
partner of, noted that the emergence of
As we outlined in our Building a thriving significant new studios in the country
game development industry paper that had slowed in recent years.1 We worry
we released in December 2018, Australia’s that Australia and Victoria has been
game development industry is being experiencing the same and if so, growth
outpaced year-on-year by countries all
1 NZGDA, Interactive Aotearoa, 2019, p. 8
Paperbark by Paper House, set in the beautiful Victorian bush
Submission to Victoria’s consultation on Creative State 2020+ 9needs to be reignited lest the industry drift particularly if the forward-looking policy
into stagnation. recommendations from Interactive
Aotearoa are implemented.
While these challenges to Australia’s
game development industry are holistic, Our key overarching message for the
Victoria is arguably most at risk given the development of Creative State 2020+ is for
relative size and position of the state’s Victoria to focus on keeping its competitive
games sector. Victoria is also facing the edge and to be intrepid and strategic
added challenge of the fact that other in how it designs its policy framework
states are increasingly appreciating for the next critical few years so that it
and understanding the opportunities can continue to charge its high-potential
from supporting game development games industry in Melbourne and across
and taking action. In recent months, regional areas. The relentless growth of
Western Australia has launched a games the video games market, worth $4 billion
fund while Queensland has expanded in Australia and $200 billion globally, as
Current and future challenges for Victoria
its sqhub working space to the Gold well as the continued growth of game
Coast. During the Creative State 2020+ development as a global industry where
consultation process alone, South there are likely tens of billions of dollars
Australia has announced a new $300,000 of development work underway at any
games innovation fund as well as coup one time, means that there is no creative
in bringing a new Sony Interactive industry worth investing in more than game
Entertainment engineering office to development. What this means is that the
Adelaide. Victorian Government can realistically
aim to grow the state’s independent
Policies like these are helping to studios into self-sustaining, successful
accelerate the growth of the games sector and renowned small and medium sized
outside of Victoria, with many of Australia’s businesses, focussed on original and
largest and most successful studios like valuable intellectual property, and for the
Mighty Kingdom, Gameloft, Wargaming, industry leaders to grow to companies
SMG Studio, Blowfish Studios and Team that employ hundreds and eventually
Cherry thriving and growing in Sydney, thousands like they do overseas. What
Brisbane and Adelaide. Furthermore, the we should aim to achieve is realistic and
relative strength of New Zealand’s game achievable because it already exists
development industry, arguably Victoria’s elsewhere, as is discussed in the following
most significant rival in the oceanic section.
region, will provide a further challenge,
Necrobarista by Route 59, an upcoming game set in a Melbourne café
10 Submission to Victoria’s consultation on Creative State 2020+A l ong- ter m g o a l f o r Vic t o r ia ’s
g am e d ev el o p me n t in d u st r y
We now turn to the heights that Victoria United Kingdom
should aspire to. While Victoria continues
to grow and remains a leading driver of The successes of Canada are likewise
Australia’s broader game development echoed in the UK. The UK game
sector, both have yet to reach their development industry achieved revenues
potential and continue to be outperformed of AUD $3.23 billion in 2018, having almost
by almost every other developed economy tripled in value from 2013 figures, and
around the world with a games sector. employed 16,532 workers, up from 9,400
When Victoria and other Australian in 2013.2 As of 2018 there were 2,261
governments consider what can be active games companies in the UK, two of
achieved within our shores, these other which being Rockstar North and Rockstar
countries shine a light for us, but industries Games which developed Grand Theft
of their scale cannot be achieved Auto V, the most financially successful
without investment and thoughtful, entertainment product of all time.
long-term planning and support. As
we will identify later in this paper – the United States
common denominator for this success are
government tax incentives to encourage Giving a detailed analysis of the US
investment, jobs and game production. industry in this submission would not
provide a helpful comparison to Australia,
Canada with the US industry dwarfing even the
most significant countries in this list. There
Despite roughly similar populations are a number of reasons why the US
and economic size, there is sadly no games industry has the scale that it does,
defensible comparison between the but like most other countries in this list, tax
scale of Victoria or Australia’s industry incentives are a common denominator with
and Canada’s industry. While Australian close to half of all US states having them.
game developers achieved revenues of For example, even a state like Georgia,
A long-term goal for Victoria’s
$118.5 million and employed 928 workers which is far from the most significant game development industry
in 2017, Canadian game developers US state for video game development
achieved revenues of AUD $3.5 billion but is supported by an attractive game
and employed 21,700 workers.1 There are development tax credit, has 160 gaming
3,500 workers in one studio alone (Ubisoft companies.3 One studio in Georgia alone,
Montreal – just one of five studios that Hi-Rez, employs over 450 programmers,
Ubisoft has in Canada), well over three digital artists and designers – or around
times more than in the entire Australian the same number of video game workers
industry. Although it is well known and as the whole of Victoria.
often joked about within the industry that
American and Canadian studios currently
employ many Australians and benefit
from their talent and creativity, the loss of
this talent from our shores is no laughing
matter.
2 TIGA, Making Games in the UK Today, 2019
1 ESA Canada, 6 Essential facts about the Canadian video 3 https://www.georgia.org/industries/film-entertainment/
game industry, 2018 digital-entertainment
Submission to Victoria’s consultation on Creative State 2020+ 11France the region and this paper has included
it as a marker of what is happening all
France is another successful environment across Europe, from Spain and Portugal to
for video game developers, where the Romania and the Czech Republic, where
industry achieved revenues of AUD $8 innovative and successful game studios
billion and employed over 5,000 people in are taking root, often hastened through tax
2018, making it France’s second largest incentives to encourage investment and
cultural industry behind books.4 The entrepreneurship.
French video game business Ubisoft is
one of the largest video game companies New Zealand
in the world and the publishers of globally
successful games like the Tom Clancy While New Zealand’s industry does not
and Assassin’s Creed franchises, although have the scale of most of the economies
many of these are made in the many listed above, it still outperforms Australia
studios they have established around the on many metrics. New Zealand’s game
world. development industry achieved revenues
of AUD $135 million in 20187 – greater than
Finland the entirety of Australia’s industry – despite
having a significantly smaller population
People familiar with the Finnish game than even Victoria. The industry across
development industry will not be surprised the Tasman also employed 550 workers,
that the sector achieved revenues of AUD approximately three times as many per
$3.44 billion and employed 3,200 workers capita as Australia. Like Australia, New
in 2018.5 What is more surprising is that Zealand game developers have a strong
they have achieved this with a population export focus and in 2018, Auckland-based
less than the population of Victoria. The studio Grinding Gear Games was acquired
Finnish Government’s support for the by Tencent for over NZD $100 million in
industry has helped to grow companies one of the country’s largest ever deals not
like Rovio and Supercell that have created only in games, but in the whole technology
some of the most internationally popular sector.8
and successful mobile games of the
decade. Similar to Australia, New Zealand’s
game industry has largely operated with
Poland limited government support compared
A long-term goal for Victoria’s
to our respective film and TV industries.
game development industry
The total value of the Polish game We are already aware of Victorian
development industry reached AUD $837 game developers who have moved to
million in 2018.6 While total employment New Zealand and should the country
numbers are unclear, there are understood adopt even some of its policies from the
to be around 400 active studios operating Interactive Aotearoa report, noting that its
in the country. The Polish game studio CD Government wrote the report’s foreword,
Projekt created The Witcher, based on a the gap between our industries is likely to
Polish novel and regarded as one of the increase even further.
greatest game series of all time, and is
working on Cyberpunk 2077, potentially
the most anticipated game of 2020.
Poland is not even particularly unique in
4 https://www.thelocal.fr/20190704/join-the-game-france-
makes-new-bid-to-woo-british-workers-after-brexit
5 NeoGames Finland, The Finnish Games Industry Report
2018, 2019, p. 10-11
7 NZGDA, p. 10
6 Research and Markets, Poland Animation, VFX & Games
Industry: Strategies, Trends & Opportunities, 2019 8 NZGDA, p. 17
12 Submission to Victoria’s consultation on Creative State 2020+T he Creati v e S t a t e 2 0 2 0 +
a s a hol i s ti c f r a me w o r k
The Creative State 2020+ as
Before our analysis of specific policy the technology industry – including
a holistic framework
recommendations to support the video the video games industry – and young
games industry, we have reviewed and are people in regional Victoria with a focus
wholly supportive of both the overarching on Indigenous communities should be
guiding principles and discussion themes supported and celebrated.
for the Creative State 2020+ consultation.
We have tried to incorporate these We similarly support the proposed
throughout our submission but have whole of state focus for Creative State
provided some specific further comments 2020+. Providing creative employment
below. opportunities to Victorians outside of
metropolitan areas is vitally important not
Guiding principles only for the vibrancy and sustainability
of those communities but for Victoria’s
We support the proposed guiding creative industries themselves. A holistic
principles that will help to shape Victoria’s strategy will help creative young Victorians
next creative industries strategy. We to find self-actualisation no matter where
particularly support deep and wide they are, while creative organisations can
consultations with Victoria’s First Peoples find the best talent across the state to fill
to ensure that their perspectives and key roles and find the next generation
priorities are central to the drafting and of content creators and leaders. Game
direction of Creative State 2020+. Video development is unique in that it can occur
games provide a wonderful opportunity in any location that has a strong internet
to preserve and tell Indigenous stories capability and often remotely through
and organisations like Luggarrah that teams that may have members located
are seeking to foster links between hundreds of kilometres away from each
Hyper Jam by Bit Dragon was supported by Film Victoria
Submission to Victoria’s consultation on Creative State 2020+ 13other. It has often been celebrated how We look forward to working more closely
Crossy Road was developed partly in with Creative Victoria to further track,
regional Victoria, and policies should encourage and celebrate diversity
ensure that game developers in regional reflected in games. Finally, we would
Victoria are given every chance to recreate support policies that help to provide
The Creative State 2020+ as
that success. Victorians with even greater access to
programs that teach game development
a holistic framework
Finally, we also support a whole of and design, such as through collaborative
ecosystem approach and Creative State initiatives between the government,
2020+ should focus on recognising both educational institutions and industry that
the increasingly interconnected and could potentially be considered.
decreasingly ‘siloed’ nature of creative
industries, as well as the importance of Building sustainability must also be a
continually building links between various priority for Victoria’s creative industries and
creative industries as the edges between the video games sector has a particularly
artforms and forms of entertainment blur. promising potential to succeed. Wildly
The strategy should consider how to successful and globally popular Victorian
improve the way that creative practitioners video games are some of, if not most of,
find opportunities to work with one Victoria’s most successful creative exports
another, support each other, achieve that have brought in significant levels of
common objectives and, if possible, investment, tax revenues and jobs into the
build transferable skills. For video game state. Given that more than 90 per cent
companies, this would lead to greater of Victorian digital games are developed
dialogue and collaboration with the film for a global audience, the opportunities
and TV sectors, publishing, music and for digital import revenue and foreign
visual arts in particular. To quote from the investments for the coming decade must
Guiding Principles for Creative State 2020, not be wasted.
this is how Victoria can “create a whole
that is stronger than the sum of its parts”. The size and ongoing growth of the
Australian and international video
Discussion themes games market means that the Victorian
Government can realistically aim to
Equality of access and diversity at grow the state’s emerging independent
all levels are key priorities for the video studios into self-sustaining, successful
games industry. The diversity of video and renowned small and medium
games as an artform and their digital form sized businesses, focussed on original
means that there is nowhere in the state intellectual property and commercial
where video games cannot be enjoyed partnerships, and for the industry leaders
and given the growth of the mobile games to grow to companies that take up whole
sector, thousands of games including buildings and rejuvenate precincts. While
many Australian-made games have no existing policies like grants have helped
cost barrier to play. We also believe Victoria’s industry become what it is today,
video games are particularly advantaged they often provide little support to the
in their ability to tell diverse Australian larger studios that the eco-system needs
stories – such as Victorian-made games to hire workers, engage small studios
that have culturally-diverse characters like for support, attract foreign investment
Florence or explore LGBTQIA+ issues like and raise the industry’s profile and
Australian Game Developer Award winner attractiveness internationally. This is
That Boy Is a Monstr. where an expenditure-based incentive,
discussed later in this submission,
becomes essential.
14 Submission to Victoria’s consultation on Creative State 2020+This submission has already discussed the global focus of Australian-made games as an
export product, games as an intersection of creativity and technology and the massive
local and global market of game players. Therefore, it is no surprise that we wholly support
the three remaining discussion themes of engaging globally, technology and its impacts
and growing audience and markets. On the last point, we note the commentary on the
consultation website that “there are too few occasions … where a new digital game finds
its biggest audience”. While we would argue that Victorian-made games have achieved a
greater audience and market than any other creative output from the state, we do agree
that more should be done to support local studios market their games and find channels to
players so that the industry can realise its full potential.
S upp or ti ng e xist in g g a me s
p ol i ci es b ey o n d 2 0 2 0 +
Supporting existing games
None of the diverse and wildly successful and business development support to
policies beyond 2020+
video games industries that we’ve the next generation of game developers
already discussed in this paper were built among other creatives. We wholeheartedly
overnight. Countries like Canada and support the continuation of these
the UK have slowly but surely built their programs.
billion-dollar industries that employ many
thousands of high paying workers through However, one of the key reasons for
a farsighted vision and commitment to a Victoria’s dynamic and forward-looking
range of long-term policies. This is the games industry – apart from the talent and
trajectory that Victoria is moving towards creativity of Victorians themselves – is the
and there is no doubt that Creative State support that the Victorian Government has
2016-20 has been achieving results provided to help promising projects get
by supporting creative Victorian game off the ground and for studios to establish,
developers do what they strive to do and grow and find success. In particular, the
helping them to participate, engage, grow Assigned Production Investment –
and achieve success. Games and Games Release programs
have been pivotal to Victoria’s reputation
We believe there are significant merits and legacy in leading Australia’s game
to the current approach, articulated in development industry. The continuation
Creative State 2016-20 of supporting of the programs past 2020 as industry
the game development industry through investment is vital to the long-term growth
initiatives that support different segments and sustainability of Victoria’s game
and levels of the sector. For example, development sector, particularly at a time
the Creators Fund provides a means when other states are recognising the
for independent creatives including benefits of supporting games and are
burgeoning game developers to focus competing with Victoria to land projects
on projects and gain the experience and studios. Based on our conversations
to bring these projects into fruition and with the industry, the scope and design of
into the next stage of their careers. these funds are still working well and some
Foundry658 serves a similar part of the have told us how important funds like
creative sector by providing seed funding these have been to their success, allowing
Submission to Victoria’s consultation on Creative State 2020+ 15them to not only transform ideas into Government-industry collaboration that
successfully shipped games, but to give have provided so many Victorian game
them a leg up to attract private investment developers exposure to both public
and enterprise loans, thus giving these audiences as well as publishers and
funds a type of ‘multiplier effect’ well investors – exactly the kind of benefit that
beyond their face value. We also believe Creative State 2020+ should continue to
the funds are being administered cultivate. We are proud to be members of
particularly well by Film Victoria, who the MIGW Steering Committee and hope
continue to show a determination for the to see the state’s involvement in the week
industry to succeed. and commitment to investing in its success
continue for many years to come.
Likewise, the Games Company
Placement program helps studios and Finally, we recognise the support that
talent find and support each other and Creative Victoria in particular has provided
plays a vital role in the policy eco-system. to the state’s game developers through
We would also urge consideration of an trade missions to help them show their
expansion of this program to better link wonderful games to the wider world. These
industry, games colleges and students, include recent missions to the Game
similar to what is being trialled in other Developers Conference (GDC) in San
states. In the next section we recommend Francisco and Gamescom in Germany. We
Supporting existing games
a new expenditure-based incentive that have heard from our members and other
policies beyond 2020+
could have a traineeship component Victorian developers how important trade
attached. missions have been to showcase their
games to consumers, but particularly to
Melbourne International Games Week industry and how they have helped them
has grown from strength to strength find publishers, investors and clients.
since its start and Victoria’s support for Despite the increasingly diverse ways in
Game Connect Asia Pacific (GCAP) and which games businesses around the world
PAX Australia has been central to this. are now connecting with one another,
MIGW brings a vibrancy to Victoria and physical trade shows are often still where
particularly Melbourne’s creative sector deals are made and relationships forged.
that has an ongoing influence extending We urge Creative Victoria to continue this
well beyond the week and beyond even support and work closely with Austrade
video games. Creative Victoria’s Pax and industry to maximise the opportunities
Rising Grants is an ideal example of for the local industry abroad.
Fly as a bird in the stunning game Feather by Samurai Punk
16 Submission to Victoria’s consultation on Creative State 2020+T he cas e for a n e w
e x pend i ture - b a se d in c e n t ive
expenditure-based incentive
In preparing Creative State 2020+, the One of the goals that Australia (and
Victorian Government is surely seeking Victoria) must adopt is to increase the
The case for a new
the answer one question above all others number of game development companies
about its video games sector: how do they with 50+ workers, which we just don’t
now take it to the next level? have enough of and which are often the
least supported. These larger studios
The answer, we believe, is simple and are vital to the ecosystem as they often
is the reason why Australia and Victoria provide the lion’s share of the industry’s
lags behind almost all other developed employment opportunities, can support a
regions with their games sector by such variety of projects and can collaborate with
a significant margin. Coincidentally, the smaller studios. Clusters of larger studios
answer is also why Victoria and Australia also help to create an attractive eco-
have been able to become global leaders system, with many talented foreign and
in the adjacent PDV sector. expatriate Australian game developers
(and particularly those with families) often
The answer is the establishment of an reluctant to come to Victoria because
expenditure-base incentive such as a of a perceived lack of ‘safety net’ job
percentage offset, credit, refund or rebate opportunities. Clusters of larger studios
for game development similar to Australia’s also help to increase competition for talent
30 per cent PDV offset for film (uplifted by and increase overall salaries, and while we
an additional 10 per cent state incentive acknowledge this can lead to difficulties
in some jurisdictions). An expenditure- obtaining high-demand talent in the short
based incentive has worked to encourage term, particularly for smaller studios, over
investment in game development the longer term it will lead to a much larger
everywhere around the world it has been and more successful and sustainable
implemented in, and it has worked here workforce and industry.
to build up Australia and Victoria’s PDV
sector in a relatively short period of time. While Australia has wonderful examples
As a policy solution, it has proven time and of independent, homegrown 50+ worker
time again to work – and it’s needed. studios, such as Mighty Kingdom in
South Australia that has scaled up
Objective and rationale significantly over the past two years, they
are unfortunately still few and far between.
As outlined in our policy paper, Building An expenditure-based incentive would
a thriving game development industry, give our 10-30 person studios in Victoria
percentage-based expenditure incentives that develop high quality games every
work because they complete the missing opportunity to scale up into larger studios.
piece of the policy framework. While the It would also create the right environment
existing grant schemes help enterprising to turn existing studios into investment
developers turn into studios, and emerging opportunities and trigger the establishment
studios into growing small businesses, or acquisition of studios by global
expenditure-based incentives help small- publishers, who are vital to the industry.
to-medium sized studios grow into industry
leaders while simultaneously attracting Australia’s three largest studios
the largest game developers in the world Firemonkeys, Wargaming and Gameloft,
to either invest heavily to grow existing who were all either newly established or
studios or set up brand new studios of acquired studios, have together brought
their own here. a pipeline of work, jobs and millions
Submission to Victoria’s consultation on Creative State 2020+ 17in investment with them and it is no publishers, including the parent publishers
coincidence that they also happen to of some IGEA members, actively and
be the three largest studios in Australia. seriously scoping opportunities to set
However, these larger studios are currently up studios in Victoria or elsewhere in
experiencing a range of challenges – Australia. While our talent and a low dollar
including higher development costs are keeping Australia in the game, our
expenditure-based incentive
compared to overseas territories and worry is that a lack of the same kind of
difficulties finding talent at home – and expenditure-based incentives that exist
it cannot be taken for granted that in the in the US, Canada, UK and Europe will
The case for a new
future they will continue to grow or even again mean that those studios are instead
stay in Australia at all in the long run. established in those countries that already
have an embarrassing number of studios.
Impact and benefits And unlike the fleeting international
footloose film and TV productions that are
An expenditure-based incentive would receiving significant portions of Victoria
help turn Victoria into an affordable and and Australia’s screen industry incentives,
cost-effective place to do business and these game studios will be invested in
allow Victorian studios to compete on a for the long term, establishing a footprint
more level playing field. Every year there via bricks and mortar studios, thereby
are tens of billions of dollars of game attracting other studios and talent to
development investment being spent on Victoria.
projects, contracts and studios everywhere
else around the world where conditions are The fact that these other regions continue
more attractive, and it is time that we give to implement their expenditure-based
our studios the ability to compete based incentives year after year, and subject
on their talents and creativity – because them to exhaustive analysis, shows that
they will win. they work. For example, research identified
that across the UK in 2016, £78 million of
A percentage-based model works tax offsets helped generated £390 million
because unlike a contestable grant (which in game development expenditure.1 It
predominantly supports studios in their also provided £294 million in Gross Value
initial growth stages for a limited period of Added and directly supported 4,640
time) it reduces costs, leads to sustainable full-time jobs.2 All of this benefits the state
growth, promotes healthy risk-taking and through economic growth – through the
attracts commitment from private investors games sector and flow-on effects on other
over the long term. This has a number industries – and increased tax revenue.
of flow-on effects, including supporting Analysis showed that the same £78 million
Australian studios to create and leverage in offsets helped to generate £156 million
original intellectual property and make in tax revenues through the video games
them attractive providers of commission- sector.3 Analysis of France’s incentive
based and ‘fee-for-service’ development likewise identified similar results, with each
work to the global industry. €1 of support providing €8 of additional
investment and €1.80 of additional taxation
It will also reduce the cost to global game revenue.4
publishers of locating game production
activity in Australia, encouraging them to
create substantial studios here that have
1 British Film Institute, Screen Business: How screen sector
the creative and financial freedom to tax reliefs power economic growth across the UK, October
2018, https://www.bfi.org.uk/sites/bfi.org.uk/files/downloads/
develop their own projects and contribute screen-business-full-report-2018-10-08.pdf, p. 90
to or even lead ‘AAA’ projects. These
2 British Film Institute, p. 77
are not just hypothetical opportunities.
3 British Film Institute, p. 89
As Creative Victoria and Invest Victoria
4 NZGDA, p. 31, citing Deutscher Games Fonds, Ernst &
already know, there are currently global Young analysis of Fonds d’Aide au Jeu Vidéo for Game, the
German Games Industry Association, 2018
18 Submission to Victoria’s consultation on Creative State 2020+What would an expenditure-
based incentive look like?
Offsets and credits requirements, type of expenditure
around the world covered, minimum expenditure thresholds,
maximum rebate available and other
To show what an expenditure-based criteria. Many of these measures also exist
incentive could look like, the below alongside separate grant-based incentives
table provides examples of just some and many regions have multiple layers
of the offsets, credits or rebates of incentives, such as in Canada and the
currently available around the world. UK which has both federal and provincial/
Please note that the table is indicative country incentives, and in the European
What would an expenditure-based
only and individual incentives may Union which has EU and national (and
differ significantly in terms of eligibility sometimes regional) incentives.
incentive look like?
Country, state or province (alphabetical) Per cent of eligible production / labour
costs refunded
British Columbia (Canada) 17.5 per cent
Colorado (US) 20 per cent
France 30 per cent
Georgia (US) 20 per cent
Louisiana (US) 15-20 per cent
Ontario (Canada) 35 per cent
Manitoba (Canada) 35-40 per cent
Nevada (US) 15-25 per cent
New Jersey (US) 30-35 per cent
New Mexico (US) 25 per cent
Nova Scotia (Canada) 25 – 50 per cent
Poland 19 per cent (proposed)
Prince Edward Island (Canada) 25 per cent
Quebec (Canada) 30 per cent
Singapore 40 per cent
Tennessee (US) 25 per cent
Texas (US) 22.5 per cent
United Kingdom 20 per cent
Submission to Victoria’s consultation on Creative State 2020+ 19Recommendation Designing an incentive
While it would undoubtedly be a significant As part of this investigation, we note that a
policy, a percentage-based expenditure percentage-based expenditure incentive
incentive is necessary if Victoria is can be designed strategically and flexibly
committed to moving its sector from a to ensure support is deployed efficiently
creative and ambitious, but undersized and to address budgetary constraints
ecosystem of largely small and medium and specific policy priorities. Examples
sized studios, to one that hires thousands, include:
attracts tens or hundreds of millions in
investment and work and competes for • Capping the rebate, with the French tax
attention globally. It is therefore the one credit capped at £6 million for instance
key policy that we recommend must be
seriously considered for implementation as • Scaling or ‘stepping’ the rebate
a part of Creative State 2020+. depending on budget, such as in
What would an expenditure-based
Germany where the rebate is set at 50
We note that one of the most significant per cent for smaller projects and 25 per
challenges for Victoria’s games industry cent for larger projects
incentive look like?
and policymakers is the lack of support
currently available at the federal level. • Providing qualified rebate levels, such
We note that unlike Canada and the as in Nova Scotia where developers are
US, where screen incentives are heavily eligible for the lesser of a 50 per cent
weighted towards provincial/state rebate for labour expenditure or a 25 per
policies, Australian screen policies have cent rebate for total expenditure
traditionally followed a complementary
national model that emphasises federal • Different rebate levels depending on the
grants and offsets, with state-based grants level of investment in the state, such as
and offsets often in a supporting role. in Manitoba which pays a higher rebate if
For example, the Australian Government more than a quarter of salaries are paid
provides a 30 per cent PDV offsets with to state residents
South Australia, Queensland and most
• Specific eligibility criteria for larger game
recently New South Wales now offering an
studios, such as in Ontario where special
additional 10 per cent ‘top-up’ to create 40
rules apply to large multinational-owned
per cent incentives for PDV work in those
studios to encourage them into the
states.
province
IGEA has called on the Australian
• Increased rebate for production in
Government to adopt a similar 30 per
regional areas, with Nevada for instance
cent offset for game development and
offering an additional 5 per cent bonus
we will continue to advocate on behalf of
for production in a rural county
the industry every day until there is one.
However, Victoria must urgently consider • Lower threshold for expenditure in
whether it can afford to wait for federal regional areas, such as Tennessee’s
action, or whether it is timely to move policy of a reduced minimum spend for
forward and proactively introduce its own music scoring work outside of the capital
expenditure-based incentive in the 10-30
per cent range either in anticipation of a • The inclusion of a cultural threshold for
federal offset or in lieu of one. We therefore eligibility to ensure there is a sufficient
call on the Victorian Government to Australian connection, such as the UK’s
investigate such an incentive as part of its cultural test which measures, personnel,
preparation of Creative State 2020+. facilities, cultural contribution and
content
20 Submission to Victoria’s consultation on Creative State 2020+You can also read
