Tax Relief and Carmen Sandiego: Boosting Australia’s Former Video Game Industry

The perception that video games lack seriousness fails to recognize the benefits they provide to gamers who often feel disconnected.

“During the Covid pandemic, I realized that games serve as a vital means for people to connect and maintain relationships.”

Ross Simmons, CEO of Big Ali Studios, a Melbourne-based game development firm, recalls Tony Abbott’s dismissal of the national broadband network in 2010 when he referred to it as merely “internet-based television, video entertainment, and gaming.”

Simmons asserts that the industry’s marginalization has not endured over time.

Data from the Interactive Games and Entertainment Association (IGEA) indicates that Australians invested $3.8 billion in video games in the past year. Although this sector remains smaller compared to major development countries like Canada, it is gradually evolving.

In 2023, the Australian government introduced the Digital Game Tax Offset (DGTO), enabling local developers to claim a 30% refundable income tax offset for creating or porting games in Australia. This policy is applicable to companies that spend a minimum of $500,000 on development in Australia, with a cap of $20 million per company.

Ron Curry, CEO of IGEA, reports that the Australian gaming industry employed approximately 1,300 individuals between 2020 and 2021.

The Game Development sector in Australia now employs 2,465 full-time staff and generated $3399.1 million in revenue for the fiscal year 2023-24. “This reflects nearly a 100% rise in employment and an approximate 85% increase in revenue,” he notes.

“The DGTO has activated numerous avenues. Previously, Australia was one of the most expensive places to develop games and the only developed nation lacking rebates or offsets. We have corrected this to align ourselves with other developed nations.”

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Curry expresses confidence in the industry, indicating that government support, along with state and territorial grants, has signified Australia as a “healthy environment for operation,” fostering trust among investors, game publishers, and prospective employees.

Interstate Competition and Legacy Building

Serge Xebian, a partner at Playlight Consulting which advises gaming firms on financial matters, states that the offset has substantially benefited companies hiring in Australia, spurring momentum in the sector.

“International studios are increasingly aware of this, particularly those with existing ties to Australian vendors. Now, many are actively looking toward Australia. My clients’ suggestions are rapidly moving up the agenda.”

Xebian notes that while New South Wales was once a film haven, Victoria now stands out as a game development center, although competition is intensifying. Queensland offers a 15% rebate in addition to the federal benefits, with a threshold set at $250,000, while Victoria’s rebates range from 10% to 15%, based on investment level, with a $500,000 threshold.

“We are seeing many independent game studios relocating to Queensland,” observes Xebian.

French game developer Gameloft inaugurated a studio in Brisbane in 2014, responsible for reviving the famous character Carmen Sandiego on Netflix, Xbox, PlayStation, PC, and Nintendo Switch this year.

Manea Castett, head of the Brisbane studio, reminisces about playing Carmen Sandiego games with his father, describing the character’s persona as both thrilling and adventurous. He appreciates the opportunity to reimagine the game and provide players with a “fun twist” on Sandiego’s adventures.

Castett mentions that their Brisbane studio stands out within the company for its rapid growth, expanding from 55 staff two years ago to 217 today. He highlights their ability to develop two games simultaneously, enabling a more comprehensive approach to game design, technology, audio, quality assurance, and marketing.

“Globally, the landscape is shifting… there remains significant revenue potential. The Australian video game industry is on the rise.”

Development challenges

Big Ali’s studio became the center of a controversy during the launch of Rugby League 26 in July when users reported game bugs, which included incorrect jersey numbers and server issues that hampered gameplay.

Simmons described the day patches were deployed to enhance the game as “very satisfying,” explaining that the near deadline for release aligned with the NRL season forced hasty changes.

“In the week prior to the release, we implemented 1,200 changes, many of which involved alterations due to sponsorships related to betting, alcohol, and other elements,” he explains, describing the challenges involved.

Logos of gambling and alcohol companies present on player jerseys in real life were removed from the game due to increasing concerns about promoting these products to underage audiences. Simmons believes that they underestimated the game’s demand on launch day, which sold six times their initial projections, causing server issues they eventually addressed.

Before the tax offsets were introduced, Big Ant had around 50 employees; now, with the growth fueled by these initiatives, they expanded to 147. Simmons states, “This enables us to compete globally.”

The tight job market, wherein game development skills are sought after across diverse sectors including artificial intelligence, further complicates their growth trajectory.

Curry notes that while the industry boasts transferable skills that participants take pride in, it must vie for talent. Ensuring safe jobs, competitive salaries, and an immigration framework that attracts skilled professionals will aid in recruitment, he adds.

“Integrating senior talent into the country serves as an accelerator for the people they mentor,” he remarks. “In Canada, you can bring developers into the country in as little as two weeks. We’ve witnessed instances of individuals taking over two years to enter Australia.”

“In a fast-paced industry, such delays are problematic.”