“There are more opportunities than there have been for a decade.” – How a 30% tax relief has boosted the Australian games industry

This feature was made in collaboration with Global Business and Talent Taskforce Australia.

For our latest industry spotlight, we’ve gone a little further than usual. While we’ve taken a look at the games communities across the UK and elsewhere in Europe, this time we’ve headed all the way to Australia (it’s all the same when you’re on Zoom after all), to get a better understanding of the nation’s burgeoning industry.

Despite our countries’ close relations, we don’t seem to talk about the Australian games industry much. But maybe it’s time for that to change – it’s a time of enormous growth for the Australian industry, now supported by its government Which has recently ramped up its efforts to help businesses flourish across the country.

Looking back a way, the industry took an enormous hit during the 2007 financial crisis, and has had to rebuild itself in the years since. However, following an advocacy campaign from IGEA and the Australian industry, the Government has stepped up its efforts. In May this year, it unveiled its Digital Economy Strategy, which offers 30 per cent tax relief. Additionally, game developed in New South Wales will soon be eligible for the state’s 10 per cent post, digital, and visual effects (PDV) tax rebate.

As a result, the industry is booming, and only set to improve further once the tax relief comes into effect in the next financial year. Sledgehammer Melbourne launched back in 2019, bringing enormous triple-A attention to the country. On top of that, Mighty Kingdom stands as the largest independent developer in the country with 50 games, that have been played by 50 million players, under its belt.

LIVING BY THE PACIFIC

Greg Palstra, Sledgehammer Games

And so who better to proclaim the benefits of working in Australia than Mighty Kingdom’s own executive director and COO, Tony Lawrence?

“The quality of life here is second to none,” says Lawrence. “It has four of the world’s top ten most livable cities. As a country, Australia is highly educated, creative, and pragmatic which means its talent pool is pretty deep in terms of potential developers. So we have the skills and the quality of life down pat. We’re close to many asian countries which makes it easier to collaborate in the region.”

“The Australian games community is filled with wonderful people and there is a lot of incredible talent both here in Victoria and across Australia,” adds Liam Esler, managing director of Summerfall Studios – a narrative driven indie he founded with Bioware and Beamdog veteran David Gaider. Which is working on its first title, Chorus: An Adventure Musical.

“We briefly considered starting the studio overseas,” Esler explains. “But when it came down to it, ultimately, there really was only one choice: Melbourne is one of the world’s most liveable cities, with kickass coffee and a vibrant arts scene. Why would you start a company anywhere else?

“In terms of benefits, there is a massive pool of great creative talent, and the tight-knit community, coupled with the generous nature of Australian game developers is a huge asset to anyone looking to start a studio here.

“Melbourne International Games Week is also a big draw, with both PAX Australia and Game Connect Asia Pacific (GCAP). The latter is run by the Interactive Games and Entertainment Association (IGEA) for which I am content director. Plus there are many other events for both game developers and players.

“Finally, in Melbourne we have Film Victoria, who have been building out their games grant funding programs for many years. Film Victoria’s constant support of the games industry has been crucial not only for the state of Victoria but for the whole of Australia, and for a long time has made Victoria one of the best destinations for starting or running a studio.”

“We’re based in Melbourne, which we believe is such a great place to be when you create anything related to the arts,” says Margarita Torres of Cocodrilo Dog, which specialises in music titles such as Moana: Rhythm Run and current tin development title Boom Fighters.

“Melbourne is the capital city of Australia for video games because of the culture of the city,” Torres continued. “People are very interested when it comes to artistic and technological innovation and video games are at the same time technology and arts. It’s a great place to be when you’re creating this kind of content. The programs of some universities confirm the devotion of the city to arts, science and technology.

“We are also located within one of the biggest markets of the industry. Not only that, but we’re very close to Asia which has China, Japan and Korea, the biggest markets in the world.”

“Australia, and particularly Melbourne, has a long and strong history of game development,” says Greg Palstra, studio GM at Sledgehammer Games, Melbourne, which is currently putting the finishing touches to Call of Duty: Vanguard.

“There is a depth of experience and passion for making great games here that goes back decades. “And Melbourne is often voted the most liveable city in the world. The city has a great combination of diversity, talent, culture and lifestyle that has enabled us to quickly grow an incredibly strong multidisciplinary team.”

Of course no region is without its challenges – and with much of the English-speaking global games industry being based in the US, dealing with timezone headaches can be a concern.

“One of the challenges is the time difference between the United States and Canada,” agrees Cocodrilo Dog’s Torres. “To maintain business with these countries, which are very important in the industry, the developer must have discipline to serve customers early in the morning and late in the night.”

GOVERNMENT SUPPORT

Margaritta Torres, Corocodilo Dog

Challenges aside – this moment of enormous growth for the industry seems to be offsetting any other concerns right now. And while of course, credit for the industry’s success goes to the wealth of talent at home in the country – the recent push of support from the Government certainly hasn’t hurt either.

“Government support has been patchy over the years… based on one-off grants,” says Mighty Kingdom’s Lawrence, “But right now, things have changed dramatically.

“Over the years, we’ve advocated for a whole of industry approach to government funding, and in a way that fits with Australia’s system of government. That has broadly been broad based tax offsets at a federal level, and top funding through broad based rebates and one of grants from State Governments. And as of FY22, that system will be in place for the first time. In three Australian states, game developers will have access to tax offsets and rebates that will be 40 per cent
of their qualifying expenditure, and also have access to federal R&D tax incentives and state-based payroll tax incentives.

“For the first time in a long time, Australia won’t be an expensive place to develop games. There’s also many government programs that developers can take advantage of, through export related grants, or education and employment related grants, there’s now a lot to support game development here,” concludes Lawrence.

“For me personally, I’m not sure I would even be in games if it were not for Film Victoria’s support of my career through various stages,” adds Summerfall’s Esler. “Between them and Creative Victoria, I have been able to attend GDC, PAX West, PAX East, visit and work at US-based game development studios, and bring that knowledge back home to start my own studio.

“Summerfall’s, and my own, experience of local government support in Victoria has been nothing short of phenomenal – in fact, we were just the recipients of a production funding grant from Film Victoria. Federal support is another topic entirely – but that is starting to change, with the introduction of the DGTO (Digital Games Tax Offset) promised next financial year. We are all holding our breath to see the specifics of what it looks like, but it has the potential to massively impact the Australian game development industry.”

HIRING BOOM

Tony Lawrence, Mighty Kingdom, executive director and COO

The DGTO promises to offer more job opportunities in games than ever before.

”We’re gearing up for industry growth after the announcement of a 30% tax offset,” says Mighty Kingdom’s Lawrence, “where I think Australia will see the return of triple-A and publisher-owned studios. For the last ten years though, the industry has been made up of mostly smaller independent studio’s, with less than 10 studios with more than 50 people.

“Mighty Kingdom has always had a growth mindset and is continuing to grow, and this is also the case for several Australian studios seeking to scale – so I really think there are more employment opportunities in the Australian games industry then there has ever been, and I’m really looking forward to being part of it and watching it grow. When I talk to my peers in other game development centres, they’ve all said that the growth and establishment of larger studios has been a boon for the industry, and I’m looking forward to the same result in Australia.”

Of course, as things heat up in the industry, so does competition over the best talent. While there’s never been a better time to find work as an individual, how are companies managing to fill their studios with the best developers the country has to offer?

“We are very lucky in that we have not had too much difficulty securing talent,” says Summerfall’s Esler, “but broadly speaking, competition for candidates is really heating up in Australia and it is definitely becoming harder. IGEA is working with the government to simplify and strengthen visa processes to help bring talent into the country, and studios like Mighty Kingdom are building pathways for graduates and early career developers to train and join the industry which definitely helps as well.”

“Generally, we don’t have too much difficulty in finding junior and mid talent,” adds Mighty Kingdom’s Lawrence. “We do hire a little differently though – we hire as much for potential than we do with attained skill level, and often take on people from adjacent industries such as VFX. That being said, there are some skill sets that aren’t prevalent in Australia, such as publishing related skill sets, and some senior developer skills that you’d tend to see in AAA studio’s that are more difficult to find.”

“We’ve managed to significantly exceed growth expectations,” says Sledgehammer’s Palstra, “even while creating that growth during a pandemic. There is a rich and diverse talent pool, and the draw of Melbourne, Sledgehammer and Call of Duty has enabled us to attract and retain great talent from Australia and around the world.”

So what do you do when you need skill sets that are less prevalent in Australia? With the country so far removed from the US and Canada, how easy is it to attract outside talent? In normal times, that is – obviously there’s very little globe trotting going on right now.

“In our specific case, having an office in Latin America, we have mostly worked with people from the region,” notes Cocodrilo Dog’s Torres. “However, we have worked with talent from Spain, Canada, the USA and Malta. We have also worked with clients and publishers from the USA, Canada and Europe. This has provided us with very good communication skills in both English and Spanish. Thanks to this we have expanded our cultural awareness. At Cocodrilo Dog, we believe that the more you can communicate with other cultures, the better the odds of attracting talent become.”

“It’s been rare that we’ve targeted talent from outside of Australia, but when we have (before COVID), it hasn’t been too difficult to get people to work in Australia,” adds Mighty Kingdom’s Lawrence. “We currently have a few members of our team on working visas and we actively help them on their path to permanent residency if that’s what they choose. It’s been made easier recently with an update to the skills which qualify for visas now relevant to game development, and new visa’s that we’ve worked closely with the government that make it easier for game developers to work in Australia.”

GAMING COMMUNITY

Liam Esler, managing director, Summerfall Studios

While Australia is, obviously, an enormous country, there nonetheless exists a vibrant community of studios there. This is aided by, in normal times, a whole host of annual gaming events – with the likes of Melbourne International Games Week, PAX Australia, Game Connect Asia Pacific and The Australian Game Developer Awards giving plenty of networking opportunities. Does our panel have close ties with the rest of the industry in Australia?

“Yes!” says Summerfall’s Esler. “And I would credit those relationships with much of our own success. Being able to openly and honestly talk with other studios in Australia for feedback, advice, and strategic help has been very important in our journey. We hope to do the same for other studios as we grow.”

“Because Australia has a small and isolated industry, it’s pretty collegiate,” notes Mighty Kingdom’s Lawrence. “If we really need some help, a contact, some insight or some advice, we really are able to get on the phone to most of Australia’s studios and have a chat.”

“While we don’t have formal relationships with other games studios, the local games industry is close knit and there is a large degree of cross pollination between the studios,” says Sledgehammer’s Palstra. “I maintain good relationships with the other studios I’ve worked for, and the people I’ve worked with, and there is a common goal across the industry to strengthen and broaden the local ecosystem for the good of all of us developing games locally.”

That collegial atmosphere is the result of both Australia’s success, and its historical challenges. It’s one that speaks to the innovation at the heart of the country’s industry.

“The Australian game development industry is pretty unique,” says Summerfall’s Esler, “in that it suffered a huge setback where after the Global Financial Crisis in 2007-2009, the industry more or less collapsed and had to rebuild. That created a sense of shared purpose and community, which persists even today. Australian studios tend to focus on their own IP, and for a long time have been experts in mobile IP (think Fruit Ninja and Crossy Road), which has created a fascinating ecosystem that spans everything from mobile to console to PC and everything in between.”

The Australian industry may have a painful history behind it – but as Esler tells it, the future has never looked better.

“I’m not sure there has ever been a better time to work in games in Australia, with the opening of Sledgehammer Melbourne, with Mighty Kingdom in Adelaide continuing to grow as the largest independent developer in the country, and Wargaming in Sydney moving from strength-to-strength, not to mention the many small-to-midsize studios constantly looking for talent.

“Right now, if you’re a mid to a senior, there are many opportunities available—and even if you are a junior, there are more opportunities than there have been for a decade.”

About Chris Wallace

Chris is MCV/DEVELOP's staff writer, joining the team after graduating from Cardiff University with a Master's degree in Magazine Journalism. He can regrettably be found on Twitter at @wallacec42, where he mostly explores his obsession with the Life is Strange series, for which he refuses to apologise.

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