Lack of capital holds back games industry

Lack of capital holds back games industry

Despite establishing a growing industry where about 90 per cent of its earnings are exports, Australian electronic games developers are being held back by a lack of venture capital.

That was a major finding of the recently tabled parliamentary report From Reel to Unreal: Future opportunities for Australia’s film, animation, special effects and electronic games industries.

Chair of the House of Rep­resentatives Standing Committee on Communications, Information Technology and the Arts, Bob Baldwin, said that due to a lack of local interest, many Australian firms had been forced to sell their intellectual property (IP) rights to international publishers in order to fund games development.

“Australia is at the cutting edge of digital production and electronic games,” Baldwin said.

“[However], the amount of audience-focused investment in these industries continues to reduce the ability to produce skilled, talented people.

“As long as this discrepancy remains, we will continue to lose our best people to offshore competitors.”

Companies needed more support from local financiers in an industry that, in comparison with film, made more business sense but was less glamorous, he said.

The president of the Interactive Entertainment Association of Australia (IEAA), John Watts, said much of the IP could be retained if the Government focused on assisting domestic talent.

However, he insisted IP going offshore did present financial benefits to the Australian development community.

“Products based on this IP are released around the world and local developers in many cases are earning royalties from them,” Watts said.

“While there’s export IP going out there’s a revenue stream coming in.”

The report made a number of recommendations based on its findings, which included the suggestion that the Government extend Division 10BA of the Income Tax Assessment Act 1936 to the electronic game industry. This would see the same tax incentives available for investing in Australian films extended to Australian electronic games.

Watts said there seemed to be a significant level of convergence between the industries of film, animation and games from a technology point of view which was beginning to be reflected in terms of audience appeal.

“I think it’s great the Government is now focusing on what benefits the film industry is getting in this country and how that can be extended to the games industry,” he said. “They’re at least looking at it now.”

The report also suggested the Government should work with education providers and industry to ensure training courses included significant business skill components, such as intellectual property management.

“The idea would be a major step in educating the youth on the value of IP,” Watts said.

A creative industries think-tank, investment seminars and the investigation of funding models to attract venture capital into the creative industries were also suggested.

The games industry should look to work with Australian film bodies to exploit films by spinning-off games titles wherever possible.

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