Playing for Keeps Enhancing Sustainability in Australia’S Interactive Entertainment Industry © Screen Australia 2011 ISBN: 978-1-920998-17-2
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Playing for Keeps Enhancing sustainability in Australia’s interactive entertainment industry © Screen Australia 2011 ISBN: 978-1-920998-17-2 The text in this report is released subject to a Creative Commons BY licence (Licence). This means, in summary, that you may reproduce, transmit and distribute the text, provided that you do not do so for commercial purposes, and provided that you attribute the text as extracted from Screen Australia’s report Playing for Keeps: Enhancing Sustainability in Australia's Interactive Entertainment Industry, November 2011. You must not alter, transform or build upon the text in this report. Your rights under the Licence are in addition to any fair dealing rights which you have under the Copyright Act 1968 (Cwlth). For further terms of the Licence, please see http://creativecommons.org/licenses/by-nc-nd/3.0/. You are not licensed to reproduce, transmit or distribute any still photographs contained in this report. This report draws from a number of resources. While Screen Australia has undertaken all reasonable measures to ensure its accuracy we cannot accept responsibility for inaccuracies and omissions. www.screenaustralia.gov.au/research Cover picture: Gesundheit! Developed by Revolutionary Concepts and published by Konami Report design: Alison White Designs Pty Limited Contents EXECUTIVE SUMMARY 2 BUILDING A KNOWLEDGE BASE 4 ECOLOGY OF THE SECTOR 6 High-end console games 7 Games for digital distribution 8 Publishing and distribution 9 Creative digital services 10 Middleware and related services 11 FACTORS IMPACTING SUSTAINABILITY 13 Shifting demographics 14 Growth factors 18 Industry pressure points 20 OPTIONS TO SUPPORT SUSTAINABILITY 23 Current government support 23 Future support 24 Alternator character Courtesy: Alternator Pty Ltd 1 Executive summary The challenges facing the interactive INTERACTIVE INDUSTRY entertainment industry are intrinsically ENTERTAINMENT IS A PRESSURE POINTS linked to those of the broader screen MAINSTREAM ACTIVITY Despite growing participation, the sector. With this in mind, the fi lm, IN AUSTRALIA sustainability of our local interactive television and interactive industries entertainment industry is under threat. must work together to ensure that In 2011, 92 per cent of households These threats fall broadly into two the right supporting frameworks are have a device for playing computer areas: in place to address the threats and games. With greater accessibility opportunities that come from greater through mobile and tablet devices • Falling foreign investment: convergence around fast broadband. and the rise of family-friendly casual Due to the current hardware cycle gaming options, the average age and a diffi cult economic climate, Screen Australia believes that of people who play games is now many international publishers have targeted support will stimulate 32 years and women are increasingly focused their development strategies production activity to achieve future represented. on blockbuster franchises, trimming growth, both economic and cultural, medium-budget games and licensed maximising the industry’s strong Ninety per cent of people who play titles from their portfolios. Coupled export potential as well as the games believe that games contribute with tax incentives in other territories distinctive creative expression that can to culture. Importantly, this sentiment and an unfavourable exchange only be achieved through interactivity. is echoed by people who don’t play games, with 80 per cent agreeing. rate, this has limited growth among This discussion paper draws together Australian companies. In terms of consumer spending, the insights to assist the evidence-based Like other forms of screen content, global interactive entertainment development of public policy and games produced for the Australian industry is forecast to be the fastest- provides additional context to the market tend to be riskier investments growing entertainment and media options for government contained in for publishers given the population sector, expanding from $64.8 billion Screen Australia’s submissions to the size. Because of this, most local in revenues in 2010 to $90.1 billion Australian Government’s Convergence developers are primarily export- in 2015. In Australia the market is Review and National Cultural Policy in focused and the contraction in foreign expected to grow during this time at a October 2011. investment means there are now compound annual rate of 9.5 per cent even less opportunities to raise funds. to reach $2.5 billion. Melbourne-based start-up The Voxel Agents have found success with their self-published Train Conductor titles for iOS devices. The Train Conductor series has achieved over four million free downloads and over half a million paid downloads. 2 • Talent being driven offshore: The infl ux of • An Interactive Entertainment (Games) foreign investment into the local industry in Offset may assist in meeting the challenges the 2000s resulted in the industry acquiring a of sustainability in the screen sector. The talent pool of highly skilled and experienced proposal has two components: workers. However, the local talent pool has — Introduction of a new tax offset to assist been severely diminished as a consequence of with the production of stand-alone interactive recent studio closures, which resulted in the entertainment titles. loss of hundreds of jobs. — Expansion of the existing Producer Offset to allow for expenditure on interactive OPTIONS TO entertainment components of drama and SUPPORT SUSTAINABILITY documentary screen content. Achieving a healthy balance of fee-for-service Economic modelling of this proposed offset work and the creation of original content indicates that over a fi ve-year period there is critical to a more sustainable industry. would be an additional investment of $146 Australian interactive entertainment developers million, of which $100 million would come have the talent, skills and desire to create from foreign sources. In the medium- to high- original content, including for the local market, budget section of the industry analysed for but there has been some reluctance to invest this research, this would result in an additional in such content because of the relatively high contribution of $76 million to Australia’s Gross fi nancial risk involved. Enhanced government Domestic Product and a 50 per cent increase support would mitigate this risk and assist in the number of jobs. developers to retain intellectual property at • An additional option for government would be the same time as attracting private investment. direct funding through an Online Production Screen Australia believes the continuation Fund as a complementary initiative to the of current support measures as well as the Interactive Entertainment (Games) Offset. introduction of new targeted incentives would This Fund would support the production provide the foundation for growth. Two new of premium original content, including incentives are proposed: interactive entertainment projects, for online delivery. Sydney-based studio Nnooo’s highly acclaimed arcade game escapeVektor was released via digital distribution for Wii consoles. 3 PLAYING FOR KEEPS: 2011 | SSCREENC R E E N AAUSTRALIAU S T R A L I A Building a knowledge base Commission – the Broadband Screen Australia is the national funding agency for screen Production Initiative and Broadband Cross-media Production Initiative – production, charged with the development, support and a decade ago. Screen Australia has promotion of a highly creative, innovative and commercially funded interactive storytelling from sustainable Australian screen sector. its inception through the Innovation Program and its successor the All As part of its leadership objectives, Screen Australia plays Media Program, as well as other initiatives such as Serious Games. an important role in providing authoritative research and Beyond this, Screen Australia has also strategic analysis. This includes examining factors that advocated on behalf of the industry for greater recognition of its economic and infl uence the production and consumption of Australian cultural contribution. screen content and the role of the screen production sector As part of the Review of the in delivering the government’s cultural objectives. Independent Screen Production Sector in early 2010, Screen Australia raised two challenges facing local The challenges facing the interactive entertainment industry are intrinsically developers. First, was a need to sustain linked to those of the broader screen sector. Most notable among these are the Australia’s position as a preferred off- evolving ways that Australians are engaging with audiovisual content and how shore provider of production services this is being affected by the convergence of media and communications devices in light of incentives in competing around fast broadband. territories, and the second, was a lack A whole-of-sector approach is needed to ensure that the right supporting of retention of intellectual property in frameworks are in place to address the threats and opportunities that come from original ideas. greater convergence. With this in mind, this discussion paper draws together These challenges were further themes raised in several Screen Australia reports from the last two years and explored within the context of audience provides new insights to help inform the ongoing discussion. participation as part of Screen The linkages between interactive entertainment and fi lm and television Australia’s