IN THE GAME

Ahead of a Se­nate in­quiry into the lo­cal video game in­dus­try, we meet the de­vel­op­ers al­ready punch­ing above their weight and ex­plore the sec­tor’s very real abilty to launch Aus­tralia as a global tech hub.

GQ (Australia) - - INSIDE -

A de­tailed re­port on why politi­cians need to take Aus­tralia’s video-game in­dus­try more se­ri­ously.

The iphone-bound ‘ah-ha’ mo­ment for Andy Sum and Matt Hall came a few weeks into the de­vel­op­ment of their frst project. The game was Crossy Road, a mod­ern-day take on Frog­ger and a cheeky, re­lent­lessly colour­ful homage to chicken-cross­ing-road gags. “We started show­ing a few peo­ple the game and they wouldn’t give the phone back,” says Sum, a Mel­bur­nian whose fresh un­der­cut and pen­chant for but­ton-downs make him a stylish an­ti­h­e­sis to the cliched im­age of a game de­vel­oper. Those early, at­ten­tion-drunk re­ac­tions proved prophetic: just 90 days af­ter its release, the Aus­tralian-cre­ated Crossy Road would clock-up 50 mil­lion mo­bile down­loads and $10m in rev­enue. Sum and Hall, the for­mer just 24, had earned a bounty ft to re­tire on. The Vic­to­rian de­vel­op­ers met a year ear­lier and founded the gam­ing com­pany Hip­ster Whale. It took only three months to cre­ate Crossy Road, both work­ing from home, Sum from his bed­room at his par­ents’ house. Col­lab­o­rat­ing en­tirely over Skype, the pair worked with a mea­gre bud­get of $10,000 – nearly all of it spent on con­trac­tor art­work. With a zero-dol­lar mar­ket­ing bud­get, the game be­came a global word-of-mouth phe­nom­e­non. From a sim­ple cock­tail of crisp, sat­is­fy­ing sound ef­fects, id­iot-proof game­play and idio­syn­crat­i­cally Aussie in­jec­tions of wit, to date Crossy Road has gen­er­ated more than 110 mil­lion down­loads. Like many of its new-gen­er­a­tion mo­bile peers, the game is free to play – on an ad-based rev­enue model. But rather than emo­tion­ally un­in­tel­li­gent pop-ups, which drag a hap­pily blissed-out gamer away from their ob­ject of de­sire, Sum and Hall de­vised a dripfeed re­wards sys­tem with an ad­dic­tive na­ture that goes be­yond Pavlo­vian. ‘Oh,’ says one of a hun­dred mil­lion-odd gamers, ‘I get a free gift if I keep play­ing a few min­utes? Hold up – a new quest is avail­able in an hour? Hey! I can get 40 coins for watch­ing this ad?’ Easy. Well, easy enough. Turns out, gamers were happy to trade a (vol­un­tary) ad for the in­cen­tive of ex­tra – or more var­ied – game­play. Aside from de­vel­op­ing a pre­mium game with an ad­dic­tive learn­ing curve, the duo’s rev­enue model re­fects two cru­cial mar­ket truths: that not ev­ery­one has a credit card, and that if you of­fer peo­ple value, they’ll choose to watch ads. Sure, each ad view only earns the de­vel­op­ers some­thing in the realm of a few cents, but thanks to Crossy Road’s colos­sal (and acutely en­gaged) au­di­ence, it’s meant some mon­ster re­turns. On Aus­tralia Day, 2015, the app brought in sin­gle-day rev­enues of more than $270,000, af­ter the duo re­leased an Aussie-themed char­ac­ter pack. Sum firted with the idea of buy­ing property and mov­ing out of his par­ents’ Can­ter­bury (VIC) home, but, he says, the pair were too busy cod­ing and de­sign­ing new char­ac­ters to spend any of their newly earned cash. (Con­so­la­tion prize: Sum and Hall took the time to cre­ate them­selves as hid­den, un­lock­able char­ac­ters for au­di­ences to fnd.) Ul­ti­mately, Hip­ster Whale can be con­sid­ered the gold-plated feather in the cap of mod­ern Aus­tralian video game de­vel­op­ment – the pix­e­lated front­man of what could be a re­nais­sance that ex­tends well be­yond game­play and which opens up Aus­tralia as a fu­ture tech hub. If only polit­cians could see the im­por­tance of the in­dus­try, of this (cur­rently) rag-tag col­lec­tive, and the cen­tral role it can play in lur­ing global stu­dios and lu­cra­tive in­ter­na­tional in­veste­ment.

Let’s be clear, video gam­ing, both cul­tur­ally and com­mer­cially, is no longer ‘kid’s stuff’. Glob­ally, the video game in­dus­try is ex­pected to gen­er­ate more than $125bn in an­nual rev­enues by 2019, while this year alone, Aus­tralians will spend $2.5bn on video games. In 2013, the run, gun and loot phe­nom­e­non, Grand Theft Auto V, made $1bn in sales in just three days. That’s more than the to­tal box of­fce gross of the lat­est Avengers, Hunger Games and Mis­sion Im­pos­si­ble movies com­bined. Lit­tle won­der A-list ac­tors are scram­bling to get in­volved – the likes of Michael Fass­ben­der, Kevin Spacey, Si­mon Pegg, Liam Nee­son and Christopher Walken, among many oth­ers, con­tribut­ing their voices and some­times mo­tion-cap­ture act­ing. It’s not just rev­enues that are broad­en­ing – de­mo­graph­ics are also ex­pand­ing. The pubescent-male-in-need-of-proac­tiv gam­ing stereo­type is dead, the av­er­age game player now 35. Fur­ther, fe­male gamers over 18 now out­num­ber un­der 18 male gamers, two-toone. Those folk you see, hunched over and mes­merised on the train, swip­ing fruit and tap­ping birds? They each make up a tiny frag­ment (a pixel?) of Aus­tralia’s $700m spend on mo­bile gam­ing. Then again, maybe you don’t see them on the train – there’s a 47 per cent chance you’re one of Aus­tralia’s 10 mil­lion-plus mo­bile gamers. But what of our de­vel­op­ers? The Aus­tralian in­dus­try, which once housed a stu­dio for more or less ev­ery ma­jor in­ter­na­tional pub­lisher, was rav­aged by the GFC. Once viewed as an at­trac­tive des­ti­na­tion for top-fight Amer­i­can com­pa­nies, the fuc­tu­a­tions of the Aus­tralian dol­lar saw the stu­dios shut down one by one, and an es­ti­mated 70 per cent of the Aus­tralian work­force scat­ter over­seas for work. “Back in the late noughties, most ma­jor game stu­dios in Aus­tralia got fund­ing from US pub­lish­ers,” says Sud Ab­bas, an Aus­tralian de­vel­oper who once worked on big ti­tles in Aus­tralia, in­clud­ing video game adap­ta­tions of Star Wars and Trans­form­ers. “As soon as the Aussie dol­lar gained against the green­back, fund­ing Aus­tralian stu­dios didn’t seem to be such a lu­cra­tive in­vest­ment any­more. “Those were some grim times. A lot of us were just start­ing out when it hap­pened, so it

was quite the wake-up call: ‘Hey kid, you’d bet­ter have a fall-back plan!’” Ab­bas, like so many game de­vel­op­ers of his gen­er­a­tion, har­boured an am­bi­tion to work on so-called ‘AAA ti­tles’ – the big bud­get, zeit­geist-al­ter­ing block­busters of the video game world. When de­vel­op­ment of those shifted over­seas, so did much of the tal­ent – in­clud­ing Ab­bas, who set off for Mu­nich’s lively gam­ing hub. “A part of me thinks that we were over­re­liant on be­ing ‘hired guns’ for game de­vel­op­ment. Aus­tralia sold it­self on sup­ply­ing ‘value’ game de­vel­op­ment, and not on be­ing a pow­er­house of unique tal­ent – which we are ab­so­lutely ca­pa­ble of be­ing.” The Aus­tralian sec­tor that was left be­hind, post-gfc, was bare bones, if un­mis­tak­ably re­silient. It adapted and shape-shifted in the way that nim­ble, cre­ative in­dus­tries of­ten do. In Mel­bourne, two small in­de­pen­dent stu­dios, Firemint and Iron­mon­key, man­aged to sus­tain a good chunk of in­ter­na­tional con­tract work. The two stu­dios would be­come friendly, boot­strapped ri­vals, whose work was in­creas­ingly thought to be among the in­dus­try’s best mo­bile games. Buoyed by mi­cro­scopic grants from the Vic­to­rian Gov­ern­ment (think air­fares to at­tend in­ter­na­tional con­fer­ences), both stu­dios then tapped fur­ther gov­ern­ment fund­ing to cre­ate IP – that is, new ti­tles. Not all were suc­cess­ful, but the fund­ing al­lowed them to make a name away from con­tract work, even­tu­ally hav­ing their orig­i­nal creations fea­tured by Ap­ple as fag­ship games in ad­ver­tis­ing and at in­dus­try events. The ex­po­sure caught the eye of EA – yes, those ‘in-the-game’ FIFA guys, Elec­tronic Arts, aka an an­nual $6bn in­dus­try mono­lith. Hav­ing long con­tracted both stu­dios for mo­bile gam­ing projects, EA de­cided to ac­quire the two com­pa­nies, merge them, and form the mega-pub­lisher’s largest mo­bile de­vel­op­ment stu­dio, Fire­mon­keys - now re­spon­si­ble for the de­vel­op­ment of fag­ship EA mo­bile ti­tles like Need for Speed and The Sims. “You can draw direct cor­re­la­tion be­tween the fund­ing and sup­port we got from the Vic­to­rian Gov­ern­ment and where we are to­day,” says Tony Lay, the gen­eral man­ager of the merged stu­dio. “As Iron­mon­key, we had fund­ing to go over­seas, to net­work and to de­velop IP that we even­tu­ally sold.” Fire­mon­keys is Aus­tralia’s largest de­vel­op­ment stu­dio – hav­ing cre­ated 200 jobs and em­ploy­ing tal­ented, young Aus­tralians who’d have oth­er­wise sought work over­seas. It’s the kind of pos­i­tive statis­tic that at­tracts fur­ther fund­ing – at least for a seem­ingly pro­gres­sive gov­ern­ment like Vic­to­ria’s, which in 2013 fa­cil­i­tated the cre­ation of The Ar­cade, a not-for-proft cre­ative shared space for de­vel­op­ers in Mel­bourne. The space is an unas­sum­ing mess of mon­i­tors and key­boards, of ink-stained white­boards and play­ful ban­ter – some­thing of a Sil­i­con Val­ley- style in­cu­ba­tor. Around ev­ery cor­ner are work­ers guid­ing a vir­tual char­ac­ter through a map, blast­ing down in­com­ing tanks and rac­ing at high speeds. On frst in­spec­tion, you’d be hard-pressed to be­lieve that mil­lions of dol­lars in rev­enue is be­ing pro­duced from this space, but it is. Aside from hot-desks-for-rent, The Ar­cade houses key in­de­pen­dent de­vel­op­ment stu­dios such as Hip­ster Whale, and the Aus­tralian gam­ing in­dus­try’s peak body, the Game De­vel­op­ers’ As­so­ci­a­tion of Aus­tralia (GDAA). Though the State Gov­ern­ment doesn’t di­rectly fund the space, po­lit­i­cal mem­bers, more of­ten as­so­ci­ated with sight­ings in and around the wood-pan­elled bars that pop­u­late Spring Street, are be­com­ing a much more reg­u­lar pres­ence. And they’re not the only ones at­tracted to the space.

“The in­dus­try, the scale of it from an eco­nomic point of view, isn’t really given the credit that it’s due.”

With a re­mark­able feel of non­com­pet­i­tive­ness and af­fa­ble cross-busi­ness col­lab­o­ra­tion, de­vel­op­ers and stu­dios are fock­ing to Vic­to­ria from across the coun­try, to be among the thriv­ing start-up cul­ture, and, hope­fully, beneft from the na­tion­lead­ing in­vest­ment pro­gram. In short, The Ar­cade has be­come the nu­cleus of Aus­tralia’s gam­ing resur­gence. “The de­clin­ing Aus­tralian dol­lar has been im­por­tant,” says Martin Fo­ley, Vic­to­ria’s min­is­ter for cre­ative in­dus­tries. “It’s been some­thing that’s helped fo­cus our in­ter­na­tional com­pet­i­tive­ness, big time, but it’s not enough. You can have a com­par­a­tive low dol­lar that makes you an at­trac­tive place for in­vestors and for­eign de­vel­op­ers, but un­less you have a vi­brant, well-sup­ported com­mu­nity, un­der­pinned by ed­u­ca­tion and com­mit­ted to de­sign and start-up as­sis­tance… well, you can have the low­est dol­lar you like, but it’s not go­ing to help.” Fo­ley, whose sil­ver-dot­ted hair and con­ser­va­tive suit­ing make him at odds with the as­sumed gamer profle, is a rare breed of bu­reau­crat – one con­verted to the eco­nomic wor­thi­ness of gam­ing. He ex­plains, proudly, that the in­dus­try’s three-year pro­jected growth rate predicts it sur­pass­ing cin­ema box of­fce, mu­sic and DVD sales, com­bined. “Look at the small amount of in­vest­ment that we made into Hip­ster Whale – that wasn’t much money. [But] it was one of the smartest and most strate­gic in­vest­ments that’s been made in the Vic­to­rian gam­ing in­dus­try.” It was an­other gov­ern­ment push that saw Hip­ster Whale’s cre­ators orig­i­nally meet, for­tu­itously, at an in­dus­try event (Sum re­ceived a free ticket through an ini­tia­tive). And the ne­ces­sity for, and suc­cess­ful re­sults of gov­ern­ment sup­port fos­ter­ing the lo­cal gam­ing in­dus­try and push­ing Aus­tralia for­ward as a de­sir­able tech hub are start­ing to be mea­sured else­where – for a sin­gle week in 2014, sev­eral de­vel­op­ers tell GQ, fve of the top 10 games on the App Store charts were Aus­tralian creations. Still, de­spite such wins and bur­geon­ing in­dus­try hubs, many re­main dis­ap­pointed by a per­ceived lack of Fed­eral Gov­ern­ment sup­port – point­ing to an ab­sence of tax in­cen­tives and a re­cent de­ci­sion by then-arts min­is­ter, Ge­orge Bran­dis, to gut a $20m, La­bor-ini­ti­ated ‘Aus­tralian In­ter­ac­tive Games Fund’. “To have that cut for peo­ple who could po­ten­tially be in our sit­u­a­tion, is short­sighted,” says Lay. What the small grants pro­vide, he adds, is the abil­ity to fail: a pow­er­ful gift for any­one work­ing in a cre­ative in­dus­try. “I know from a num­ber of dis­cus­sions we’ve been hav­ing, it really did take the wind out of the in­dus­try’s sail at a time when there’s so much op­por­tu­nity,” says Fo­ley. Re­fect­ing on the GFC, which saw he and his peers head over­seas to seek work, Ab­bas fur­ther ex­plains the dis­il­lu­sioned mood. “We defnitely felt un­der­sup­ported, es­pe­cially when there are so many great ex­am­ples of how much gov­ern­ment fund­ing helps de­vel­op­ers. Canada is a shin­ing bea­con of what could [and should] be done.” Antony Reed, who heads the GDAA, is even less for­giv­ing. Work­ing with the for­mer fed­eral La­bor Gov­ern­ment, Reed and the GDAA were cen­tral to se­cur­ing the pro­posed fund­ing. “Its pur­pose was to help grow what we had. We looked at where the in­dus­try would be in fve to 10 years, and the pro­gram was de­signed to be a self-sus­tain­ing model. It was ef­fec­tively a soft loan,” says Reed, who goes on to quote the ROIS as they re­late to the fund­ing of gam­ing. “It’s a min­i­mum of 40 per cent, which is far higher than tra­di­tional, legacy sec­tors.”

“The in­vest­ment in Hip­ster Whale was one of the smartest and most strate­gic in­vest­ments that’s been made in the lo­cal gam­ing in­dus­try.”

The Com­mon­wealth pro­gram only ex­isted for 12 months, un­til be­ing cut at the time of last year’s fed­eral bud­get. Many stake­hold­ers say that it wasn’t un­der­stood that the $20m fund was de­signed to cy­cle money through – a cost-neu­tral propo­si­tion for tax­pay­ers. (When con­tacted, Se­na­tor Bran­dis’ me­dia team would only re­fer to the de­ci­sion as a bud­getary con­sid­er­a­tion, and did not wish to make fur­ther com­ment on the is­sue.) “The fund was about how we bring those rev­enues back here. To grow the in­dus­try and get huge eco­nomic re­turns as a re­sult,” says Reed. “Cut­ting it was done with­out con­sul­ta­tion. That an­noyed us more than the scrap­ping of the fund – no­body both­ered to talk to us about why the pro­gram ex­isted. And it was cut by some­one who, I think, didn’t understand our sec­tor – and didn’t want to understand our sec­tor. “There’s no in­vest­ment in games here. We don’t have an in­vest­ment com­mu­nity that be­lieves in risk, or un­der­stands risk. Com­modi­ties? You’re laugh­ing. But in­no­va­tion? We strug­gle. Which is why most of our really in­no­va­tive com­pa­nies – not nec­es­sar­ily in games but across tech chan­nels – move to San Francisco. There’s only so far you can get here be­fore you hit a wall.” Deputy Greens leader, and self-con­fessed gam­ing fa­natic, Scott Lud­lam, is head­ing up a 2016 Se­nate in­quiry into the state of the Aus­tralian video game de­vel­op­ment in­dus­try. And he feels the cen­tral prob­lem re­mains one built on im­age, be­liev­ing that too many fed­eral politi­cians fall into the trap of see­ing gam­ing as “kid’s stuff”. “It’s ne­glect. And it’s right across the board. As a gen­eral rule, we’ve tended to ne­glect our cul­tural in­dus­tries. The gov­ern­ment has had its mind fo­cused, by and large, on bulk ex­ports of low-value com­modi­ties. They’re the big­gest lobby groups, they’re the ones that have a head­lock on the sub­sidy streams.” Lud­lam, like Reed, raises big-pic­ture is­sues around the Aus­tralian Gov­ern­ment’s non­cham­pi­oning of in­no­va­tion, of risk-tak­ing and of start-up cul­ture. “Nei­ther the eco­nomic or the cul­tural side is un­der­stood. The in­dus­try, the scale of it from an eco­nomic point of view, isn’t really given the credit it’s due,” says Lud­lam. “We’re for­tu­nate that the arts port­fo­lio has changed hands, though ob­vi­ously, (new arts min­is­ter) Mitch Fifeld is yet to prove him­self in that port­fo­lio... Maybe I’m be­ing naïve, but I’m tak­ing a lit­tle more hope from the wider fo­cus on in­no­va­tion and dig­i­tal trans­for­ma­tion that’s com­ing out of the Prime Min­is­ter’s mouth.” Lud­lam points to Vic­to­ria and The Ar­cade “The wider per­cep­tion of video games – it’s legacy,” says Fire­mon­keys’ Lay. “Peo­ple haven’t move on from what games were.” Depiste Crossy Road’s suc­cess, life hasn’t changed much when we next sit down with Andy Sum. He’s still liv­ing at home, and while he ad­mits to pur­chas­ing a “few nice things”, such as a new com­puter, work re­mains the fo­cus – de­vel­op­ing Pac-man 256 for mono­lithic ja­panese pub­lisher Bandai Namco as well as work­ing on new char­ac­ters and con­tent for Crossy Road. “We’ve been work­ing so much that I haven’t had a chance to use the money,” he laughs. “But it’s cool to not have to have that worry – it’s nice to have fnan­cial free­dom.” Though Tony Lay now oc­cu­pies a glass­walled cor­ner of­fce at the Ea-owned Fire­mon­keys stu­dio in Mel­bourne’s CBD, the ear­lier days of his Iron­mon­key stu­dio mir­ror Sum’s rise: two guys, work­ing out of home of­fces, cob­bling to­gether clever lit­tle nuggets of en­ter­tain­ment. “And I prob­a­bly wouldn’t be here with­out gov­ern­ment sup­port,” states Lay. “The com­mer­cial suc­cess of what we’ve done here should be the frst thing peo­ple look at. Two men, work­ing from their homes, win­ning con­tracts, with the sup­port of the gov­ern­ment. I point to that and say, ‘Why would you cut that fed­eral fund­ing?’.” Adds Sum: “Look at what the lo­cal gov­ern­ment in­vested in me, and look at what we’ve given back in taxes... The re­turn on in­vest­ment? It’s way, way over and above.”

Though Crossy Road and Frog­ger share sim­i­lar­i­ties, there are a few cru­cial game­play dif­fer­ences. For one, the map is infnite: you could tap across roads, ponds, ob­sta­cles for hours; the game has no end. Se­condly, you can’t stay still and strate­gise for long – if your char­ac­ter re­mains static for more than a few sec­onds, a com­i­cally large ea­gle swoops in and kills you. In­ter­est­ingly, both points are key to the wider dis­cus­sion re­gard­ing the Aus­tralian Gov­ern­ment’s cen­tral role in defn­ing the fu­ture. Be­cause the pos­si­bil­i­ties pro­duced by a lo­cal gam­ing in­dus­try, as they ex­tend to the greater tech cat­e­gory, are infnte. As for any in­ac­tion in re­gards to what can be done through an Aus­tralian in­dus­try that’s recog­nised, sup­ported and, cru­cially, well­funded? That’s a killer for a sec­tor brim­ming with the ob­vi­ous po­ten­tial to un­lock bil­lions. It’s time we get in the game – be­fore it’s game over. n

Screen­shots from the Crossy Road video game, which to date has had 110 mil­lion down­loads.

Matt Hall and Andy Sum; Hip­ster Whale’s version of Pac-man.

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