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.
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.