GDAA's Tom Crago
The Australian trade organisation president explains how the country's business is surviving a tough economy
As we continue our look at the videogames business around the world, and particularly the impact the economy slowdown has had across the globe, here we take a look at Australia.
Tom Crago, the CEO of developer Tantalus and the president of the country's trade organisation, the GDAA, explains how the national industry has fared in the last twelve months, and looks ahead to the future.
Q: How has the Australian market fared in the past 12 months?
Tom Crago: We've been relatively resilient - certainly we've felt the effects of the downturn, and I'm sure most Australian companies are finding it more difficult to procure pay-for-service work than in the past. But we're weathering the storm - with the exception of Pandemic closing, there have been no casualties in the Australian market.
From the perspective of a lot of companies I know it's been an opportunity to fine-tune their sales processes as they've had to become more competitive, in order to win the types of jobs that they've become accustomed to.
So absolutely a tougher time, but ultimately we're hanging in there.
Q: What's the local market like at the moment, in terms of numbers?
Tom Crago: We've not surveyed the market this year, but we anticipate that it will be a year of growth in terms of employee numbers within the development community, and also in terms of revenue. But moderate growth - and certainly not at the levels we've become used to over the past few years.
Q: Are you expecting to track the US and Europe on that basis?
Tom Crago: We're probably travelling a little better, actually, although it must be remembered that we're a much, much smaller market.
Q: Sidhe's Mario Wynands talked about the challenge for the smaller markets in terms of the distance to where a lot of work comes from - it's perhaps a little easier for Australian companies, but has it been more difficult to do those deals?
Tom Crago: Absolutely - for Australian developers, all of our income is from overseas. I've been in the industry for ten years, and I've never once done a deal in Australian dollars. We deal exclusively with North American, European and Japanese companies.
When times get tough the inclination of those companies is to bring titles closer to home in order to do what they see as mitigating risk. That means that companies in Australia have to work that much harder again to convince those publishers that we can manage that risk ourselves on the other side of the world. It's a tougher battle than ever.
Q: Do you see that changing?
Tom Crago: If you're Activision and you're sitting in Santa Monica with a studio a mile down the road, there's going to be an in-built inclination to work with that company, versus one that's on the other side of the world. I don't think that will change.
Now we can put a strong case in Australia for placing games in the region - there are a lot of arguments that we mount, but you can't do much about geography. It will continue to be a struggle for us, and we'll continue to need to be even more competitive than companies who are based closer to publishers.
Q: How would you rank development costs in Australia, compared to the rest of the world?
Tom Crago: Unfortunately we're not subsidised at all. We try not to compete on price - we try to compete on another set of criteria, but yes, it is cheaper to make a game in Australia than it is for the most part in North America, Europe or Japan.
We have that in our favour, but it's not the differentiating factor in our comparative markets that we try to leverage exclusively.
Q: From the GDAA's perspective, when other governments are more aggressive in the tax breaks front, do you lobby the Australian government? Do you hope to see progress?
Tom Crago: The Australian film and television industries get a very good deal. We would like to see the programmes and initiatives... the incentives... that are offered to those industries applied to videogames. That's the battle we're waging at present with our federal government.
To date we've had limited success, but we remain optimistic that they'll see the light.
Q: From the perspective of Tantalus, I'm guessing that reputation for quality is crucial when you're looking for deals?
Tom Crago: It certainly has been a tougher 12 months than the 12 months before - of that there can be no doubt. But we've managed to win work in the genres and on the platforms on which we're strong. It's just been much more difficult to do that, and certainly there have been times when we've had to dig a lot deeper than previously in order to get those titles through the door.
That said, we're encouraged - we feel we're in the right part of the industry, they types of games that we're making and the platforms that we're on... it's arguably been easier for us than for some studios who have chosen to have a different focus.
Q: A lot of studios are looking at some of the digital platforms, and taking on more of the publisher roles - how do you see the business landscape changing, and what sort of opportunities does that bring?
Tom Crago: Our core business remains work-for-hire - we continue to try to develop titles with top tier publishers on that basis.
However, we are beginning to experiment with new distribution models - and it's really, from our perspective, about doing that from a position of strength, and getting to the point where we can afford to make an appropriate investment in that.
And we're at that point, so we're starting to take those first steps.
Q: Original IP is riskier than work-for-hire in some senses... but it must be tempting?
Tom Crago: Yeah - I think most independent studios who have had a few good years, and we count ourselves fortunately in that category, are doing exactly that. They're making an investment in trying to commercialise an original concept, or taking a concept and putting into a new space in terms of distribution.
We're doing that. It's scary, but exciting at the same time.
Q: What platforms are the most appropriate for that, do you think?
Tom Crago: We've had a good deal of success on DS and PSP, so we're interested in the digital distribution opportunities that those platforms are starting to provide. That's a very natural space for us.
But similarly we recognise the need at some point to move to PlayStation 3 and Xbox 360, and a natural avenue there is through PSN and XBLA.
Q: The PSPgo is an interesting move, and from a consumer perspective the opportunity to be able to download all your content is enticing...
Tom Crago: Well, it's the future, no doubt about it. The PSPgo is an important step along that road. There's not a great deal that can be done to turn that tide, and as a developer we're extremely excited to be able to get that one step closer to the consumer.
It doesn't mean that retailers or publishers are going to go away, but it is the start of a new model.
Q: How do expect to see the next 12 months go? I assume you're hoping for a strong Christmas?
Tom Crago: Absolutely, we hope that will be the case. From our point of view we're heavily dependent on the processes of publishers. We hope their outlook is rosier, particularly into 2010 and 2011, and that the volume of titles that are being commissioned increases.
Q: That's a concern I've heard from a lot of developers - that the 2010-11 slates are looking pretty bare.
Tom Crago: Well, they must be, because there hasn't been a great deal of discussion about titles for that period.
Q: Do you think people are waiting to see how Christmas goes, so they can make decisions based on that?
Tom Crago: Partly, yes.
Q: But isn't there a danger that more companies will go under while decisions are being deferred? That wouldn't be a good thing for the industry.
Tom Crago: No, exactly, and similarly you get into this cycle of titles starting too late, not having enough time to do the job that you'd like to do on that game. We'd like to prevent that.
But from a publisher standpoint you can understand the wait-and-see approach, but there needs to be a meeting in the middle.
Tom Crago is CEO of Tantalus and president of the GDAA. Interview by Phil Elliott.