Federal Budget 2014: what does it mean for games development?

The games development industry in Australia has long been a struggling one. After most of the major studios working here up and left, the local developers were left to fend for themselves. When the Australian Interactive Games Fund was announced in 2012 -- AU$20 million in funding for the local industry -- AIGF represented a light at the end of the tunnel, not just for the money, but for the recognition and legitimacy it represented from the Australian government.

Now, just a scant 12 months after the AIGF was implemented, with only half the money spent, with no consultation with the industry, the new Federal budget proposes to axe the funding, which went towards grants, loans and investments. "Money is returned to the fund by successful applicants -- so it was intended to be self sustaining," local industry veteran Morgan Jaffit of Defiant Development pointed out to CNET.

The abolishment of the fund has the local industry shocked, dismayed and bewildered. As the Games Developers' Association on Australia said in a blog post, "The decision is completely at odds with the government's claims of support for Australian culture and innovation."

According to GDAA CEO Antony Reed, a thriving games development industry is an asset to any country's economy. "There is no question that the games industry is a significant contributor to the economies of every country that has a thriving game development sector; adding billions to the GDP's of the US and Canada annually," he said. "Moreover, games are cultural products, developed by teams of highly skilled people across multiple disciplines; games now inspire other media sectors including film, television, music and literature."

The first stimulus package was only awarded in June of last year, which means the fund may be cut down before we even see any of the games it has enabled.

"[The Australian dev industry] has lost its largest source of government funding," Chris Wright of Surprise Attack said. "But, more importantly, it has lost the opportunity to prove how this funding could have paid economic dividends to the country since it was cut off before any results could be seen."

But, more than that, without the legitimacy offered by government funding, local developers may find it more difficult to secure funding from other sources too. "There are two issues here," Jaffit explained. "Firstly, it removes a key source of funding that would enable small scale practitioners to become medium scale practitioners. Secondly, it affects overall confidence -- people are less likely to fund early development without a clear path to full production."

Wright agrees. "What this does mean though is that the single largest source of non-corporate funding is no longer there and that will make it harder to build sustainable independent development companies," he said. "This is a hit-driven business and the funding helps reduce the risk and sustain your team long enough to become stable. Small teams that would have benefited from this fund to become mid-sized teams will lose out the most in my view."

He adds that the most important thing to note, however, is the loss of government support. "This fund was the first really important step towards the government supporting this industry properly. It put the industry backing on a path to increased funding and eventually tax rebates and by cutting off the fund now and the attitude that shows from the government, I am worried that it could set that back by many years."

According to Jaffit, the fact that we were only just starting to see the results of the first round of funding -- and the fact that they are very good results -- makes its potential removal so much worse.

"In the next year we'll see more of that, and realise exactly what we've lost in removing the fund," he said. "The goal is to build the games industry in Australia to the point where it's comprised of healthy businesses at all scales (small, medium, and large) who are contributing work that is internationally recognized commercially and critically. We already have shining examples of that, but there's not enough at each step to make us a truly viable industry. That was where we were headed, and that is where we (as an industry) need to focus from here. It's a longer road now, but we've faced long roads before, and built success from them."

On that last point, everyone seems to be in agreement: local developers have had to work hard before, and they will do so again. The removal of the AIGF is a blow, to be sure, but not necessarily a fatal one.

"It's important to note that developers were not reliant on this funding and this is not a killing blow. Games is not a 'welfare industry' in Australia," Wright said. "The fund represented a major stimulus to the community and development eco system and so removing it will slow it down for sure but the community are not quitters or bludgers."

Jaffit, likewise, places his faith in the community.

" We've been through worse and come out okay," he said. "The local development community is unbelievably strong. There's a lot of support and community here. We've been working in a pretty hard environment since the GFC, and we'll continue to make it work. With just a tiny bit of support and incentives, we can build a truly amazing industry over the next few years. It's just got a bit harder along the way."