Taking Aussie gaming to the next level

Summary:Australia's history as a game developer outsourcing hub has positioned it to take a slice of the next generation of social and mobile games, and now venture capital firms need to step up.

Australia's history as a game developer outsourcing hub has positioned it to take a slice of the next generation of social and mobile games, and now venture capital firms need to step up.

The past decade has seen some of the big American game development houses abandon their Australian development outposts, which were involved in the production of a range of console and PC titles, including cult classic BioShock.

As this door was closing, a window was opening in the form of new distribution channels, such as social-gaming platforms on Facebook and mobile-gaming platforms such as the iTunes app store.

This confluence of factors meant for the first time, the Australian gaming community was liberated from the traditional structure controlled by publishers and traditional distributors.

And it couldn't have come sooner, as the Interactive Games & Entertainment Association (iGEA) announced earlier this week that the computer and video games industry has contracted by 12 per cent in 2011, to $1.5 billion sales.

These are figures for the traditional industry and exclude sales for emerging areas like online retail, downloadable content, online games subscriptions, in-game micro-transactions, and mobile games.

Innovative Australian companies have cashed in on this with the likes of Firemint (Flight Controller), Halfbrick Studios (Fruit Ninja) and Voxel Agents (Train Conductor) all producing top rating games on the iTunes app store and reaping the rewards.

But in a scene that's common across the local landscape, this thriving grassroots activity is not being matched at the top level by Australian venture capital firms and investors.

Firemint was snapped up by American gaming giant Electronic Arts last year and it's only a matter of time before Halfbrick, which has developed the wildly successful Fruit Ninja, takes investment from a Silicon Valley firm to bolster its international expansion.

These companies have demonstrated that they have an ability to deliver an engaging experience to consumers, and enjoy handsome profits for their troubles.

They don't need money from venture capital firms and investors. What they need is expertise that will help them achieve their next level of growth, which could involve hiring top industry talent, raising more money at a later stage or even selling the company.

This is why successful Australian companies continue to look overseas for venture capital, because their local counterparts simply provide "dumb money".

If Australian investors and venture capital firms can boost their value proposition beyond cash, they can ride the wave of success of Aussie game developers to make their mark on the world stage.

Topics: Start-Ups, Tech Industry

About

Mahesh Sharma earned his pen licence in his homeland, where he covered the technology industry for ZDNet, SMH, Sky Business News, and The Australian--first as an FTE, and later as a freelancer. The latter fueled his passion for startups and empowered a unique perspective on entrepreneurs' passion to solve problems using technology. Armed... Full Bio

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