Senator the Hon Helen Coonan
Minister for Communications, Information Technology and the Arts
Playing for keeps—commercial investment in the electronic games industry
Launch of the
Electronic Games Investment Fund
Canberra
7 November 2005
Thank you, Tom [Parkinson, Chair EGIF].
I am pleased to be with you this morning and to join with invited guests live over the Internet at functions in Melbourne, hosted by the President of the Games Development Association of Australia, Evelyn Richardson, and in Brisbane hosted by Nigel Sandalford, founding President of Electronic Arts Asia-Pacific.
It is clear that there are some exciting opportunities for Australia in the electronic games industry—both domestically and overseas.
The industry is an important creator of content—which we all know is driving the take up of a range of new digital platforms.
Because it can integrate so readily with other forms of media, a well-designed electronic game can also launch or emerge from a raft of associated products and activities from merchandise, movies, television productions.
The growth in the market for games is being driven by the introduction of new consoles such as the X-Box 360 and Playstation 3 – but there are also important developments in areas such as hand-held devices, and the huge and growing potential of online gaming.
As an indication of the potential for online gaming – the recently launched game World of Warcraft has four million players worldwide and analysts estimate that the game is taking in more than $30 million per month, just in basic subscription fees.
Markets in the US, Europe and North Asia have demonstrated a huge and growing appetite for online games – providing a massive export opportunity for Australian developers.
Importance of the digital content industry
Games are an important component of the broad and fast growing digital content industry.
The total value of the digital content industry in Australia today is estimated to be around $21 billion and to employ more than 300,000 people.
The potential for innovation in one area of digital content to lead to impact other sectors is amazing.
I was pleased to hear the other day that an Australian-developed game, the Railroad simulation from Auran – Trainz – has been modified to provide training for commercial train drivers in the UK and Germany.
Work in the health, minerals, architecture and spatial industries have also been transformed by the visualisation capability that digital content provides.
Government policy development
The Government recognises both the economic and social opportunities that growth in the electronic games industry and the digital content sector can deliver.
The Australian Government is listening to the digital content industry and working with you to develop the most productive policy.
In the Government’s 2004 IT Election Policy we made a commitment to develop a comprehensive Digital Content Strategy, to accelerate the production of digital content, including games.
This strategy is currently being developed and will be informed by the issues raised under the industry-led Digital Content Industry Action Agenda process.
The games sector has been an active participation in the development of the Action Agenda.
The Action Agenda Leaders Group is finalising its report to the Government, detailing a two year strategic plan for the industry.
A key issue put forward by the Leaders Group is the need to attract more commercial investment for digital content production.
That is why today’s announcement is particularly important.
Government Assistance
For some years now the Government has assisted the Games Developers’ Association of Australia (GDAA) to establish and expand its overseas presence at key international trade events such as this year’s major E3 Expo in Los Angles.
This is delivering tangible results. 41 Australian companies attended this year’s E3 – generating business and deals worth an estimated $92 million over the next two years – which is a really good outcome.
Growth projections
The time has come to build on this reputation and develop a truly world-leading sector. The Games development industry in Australia employs around 1000 people with an expected doubling of this number over the next five years.
Games exports are estimated at over $100 million a year and expect to reach $500 million by the end of the decade, provided investment growth can be secured.
Recent research by PriceWaterhouseCoopers indicates that the electronic games industry is experiencing double digit growth globally.
To put this growth in context - global games revenues are already larger than the film box office take.
Revenues are projected to more than double over the period from 2004 to 2009—increasing from almost $35 billion in world-wide revenue in 2004 to $74 billion at an annual rate of almost 16 per cent.
Key challenges and opportunities
Like the broader digital content industry, there are some major challenges for the Australian games industry to remain globally competitive.
Private sector investment is critically needed to enable Australian firms to develop products and services that attract a greater share of global revenues.
There will be increased competition in overseas markets, especially from countries such as Canada, Korea, Malaysia, the UK and France.
The Australian industries need the capability to produce products which take advantage of new technologies as they come to market.
The Electronic Games Investment Fund
The Government welcomes the strategic commitment of the finance and games industry to establish the Electronic Games Investment Fund registered under the Australian Government Pooled Development Fund scheme.
I’d also like to acknowledge the Queensland Government who provided seed funding to get this project off the ground.
This is an important industry-led response to those challenges.
The Fund will establish a much-needed pool of capital for early-stage investment in the development of new games titles.
If Australian game developers are to maintain their successful reputation and market share in the world-wide market, it is essential that the financing and investment of the industry operates on a sound commercial basis.
While the risks can be high, games development is very commercially-focused and for discerning investors there is the potential for good returns – but there is very little experience of investing in games by Australian markets.
The establishment of the Games Investment Fund will play an important role in establishing a track record and providing some benchmarks for this sector with the finance industry.
Conclusion
The Government recognises that we live in a world in which the electronic games industry is rapidly overtaking older forms of media, such as film, in popularity and rate of industry growth.
The marketplace is making its preferences known, and today the success stories in media include the whole package—the film, the game, the soundtrack and the merchandise.
In this context, the Electronic Games Investment Fund is an important step to building stronger relations between Australian developers and the finance industry to support the future export potential of this sector.
The Government is impressed with the initiative shown by the industry in establishing this fund and I am very pleased to join you for this occasion.
So let me now declare the Electronic Games Investment Fund officially launched.
I wish you all the best and look forward to meeting again quite soon.
Thank you.