Australian games development industry doing it tough

It has been a tough 12 months for the Australian game development industry and, as the Australian dollar reaches parity against the US currency, consolidation in the market looks set to continue.

Earlier this month, Melbourne-based Transmission Games cut more than 25 staff, citing the difficult economic climate. The company has since gone into receivership.

Micro Forte also significantly downsized its workforce before moving to the Big World headquarters at Wentworth Park in Sydney. And EA Pandemic’s Brisbane studio was also forced to close early this year.

As a result, games developers are finding it increasingly difficult to get work in their preferred fields and the strong Australian dollar has seriously eroded the attractiveness of the local market for US companies as contracts dry up.

“It has been a tough year for the industry, but it has come off the back of some really good years” said Tom Crago, CEO of development studio Tantalus Interactive and president of the Games Developer’ Association of Australia.

Crago said about a lot of the problem could be attributed to the lack of titles being put into production at the moment.

“A year and a half ago our biggest battle was attracting talent,” Crago said. “Now, that has turned on its head and the struggle is more about winning work.

“We recognise times are tough, but the potential silver lining is it is an opportunity for businesses to look at the way industry is changing and come up with new business models around that.”

However, not all companies are struggling. Last month, Melbourne-based mobile phone game development company, Firemint, announced that its iPhone application, Flight Control, had reached more than 1.5 million sales.

And Tantalus has just released Cars: Race-O-Rama, which is based on Pixar’s popular Cars franchise, on the Nintendo DS and Sony PSP.

The studio is also behind Pony Friends 2, the sequel to Pony Friends, which sold millions of units. Tantalus has developed Pony Friends 2 on the Wii, DS and Windows PC platforms and the games will be out for Christmas.

Crago said in this sort of climate developers need to understand their strengths and try not to compete based on cost.

“Clearly, the dollar is a factor. It really hurts — it erodes our margin and makes us less competitive as compared to other studios overseas,” he said.

“We want to have a model where you’re not getting the gig because you're the cheapest, but because you have a good offering and strong relationships."

In a stark contrast to 18 months ago, the number of experienced developers in the market is at an all time high.

“There is a lot of great talent on the market right now,” Crago said. “Some people will go overseas, but Australians who go abroad generally return and that experience is invaluable. Another group of people, I think, will go out on their own and start their own businesses, which is a really positive thing.”

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