The iGEA is an industry body that represents the Australia and New Zealand games publishers and distributors. Currently, it represents 14 organisations in Australia, and nine in New Zealand, who combined account for around 95 per cent of the local games traffic.
With partnerships with the likes of Activision, Namco Bandai, EA, Sony, Nintendo, Microsoft, Sega, Take Two, Disney and Warner Brothers, the company is right in the centre of the industry’s concerns and opportunities. CEO of iGEA, Ron Curry, sat down with Matthew Sainsbury to discuss what are the critical local concerns right now, and some of the things we can expect into the future.
What are the main issues in the market at the moment that iGEA is looking to build awareness around?
There are a few areas we work on. One is classification, and that’s broken up into R18+, which is an ongoing issue, and the general classification of day-to-day stuff that we work with the classification board on where we look at fees for classification, classification guidelines that are relevant.
Then we take a bigger picture on what does classification look like into the future. For instance - online classification, what is our industry doing, how are we changing, and whether legislation is keeping up with us? Which it’s not. We’re continually engaging with Government and that will be a big focus over the next 12 months with us.
Finally there’s cyber safety, which is the hot button at the moment with the Government, and cyber bullying, because of online gaming.
Are the cyber bullying concerns particular to the games business?
They’re a wider concern in the online environment, and given that the big focus on cyber safety is on young people, and the majority of those are engaging with gaming and social networking sites, automatically the Government is looking to us as being at the forefront of that issue, so we need to ensure that a) we’re practicing good cyber safety principles, and secondly that we’re engaging with the Government to create good principles – whether that’s through regulation or legislation.
One of the things I know the smaller developers and publishers in the market struggle with for digital downloadable games is the cost of getting them rated in Australia is quite high. Is that something you’re looking at?
That’s a conversation we’re currently having with the Government. The way the system is set up at the moment is it doesn’t recognise games by size, it just recognises that a game is a game, and part of our education of the Government is that a game isn’t just a game.
Starcraft 2 is much deeper and involved than Flight Control, so why should Flight Control, which you can probably classify in 30 seconds, even though it’s a great game, cost the same amount of money as the very different Starcraft 2 or Modern Warfare?
It’s the same with add-on packs. If you’re going to have a map pack, why should that cost the same as a full game?
Are those costs stifling developers in the country?
I don’t know whether it is at the moment, but as more and more content is offered online, rather than in the box, and the obligation to have it classified is perhaps applied more deeply, than it’s going affect them, yes. Ultimately they’ll just say “forget it we’ll just release it somewhere else.”
Do you see digital distribution as being a big opportunity for Australian developers?
With something like what Firemint is doing for iPad or iPhone, it’s fine because it’s a small download, but you’re not going to get that same success in Australia at the moment with larger games with our download costs and speeds, so that’s certainly holding it back.
Music has had success both digitally and still in retail, so they do co-exist. I think the main thing is our broadband landscape is just not healthy to a good digital market.
How have you found the landscape changing over time? Is it becoming easier for games companies to operate here?
I think entering into it is more difficult now. The whole landscape has changed, and the distribution model with it – how you take product to market has changed over the last 20 years. Originally it was only into toy stores, then it went into mass merchants, and now it is in specialist stores and the mass merchants.
The obligation of shipping stock into those outlets is greatly different these days. There’s a greater width of product, so shelf space is much more difficult to obtain, and it’s much more expensive to put your product in a mass merchant than it ever used to be, so the margins are much smaller.
The cost of distribution is horrendous in Australia. They assume you have to get every product to every store on the same day - logistically that’s a nightmare and very expensive.
I don’t know whether doing business is any easier from that position. The flip side is games are now a mass-market product, so we actually have volume now, which we haven’t had in years gone by.
From the R18+ perspective, how do you consider that’s costing the industry?
Right now I don’t think it is overall – it’s probably costing them marginally. We know that to have a game changed to MA15+ incurs a cost - you’re having a game skewed for Australia, and the sales are much lower than if it had of stayed an R18+ product.
Take for example Left 4 Dead 2. We know what percentage Australia usually represents for global sales, and Left 4 Dead 2 was smaller, because it was modified and because people are just ordering it from offshore – buying it from New Zealand and so on.
The irony of the R18+ rating is, however, if we do get it, it might have a negative impact on the sales, because the products that will sit there won’t be sold in the mass merchants any more – Kmart, Target, Big W don’t sell R18+ rated products. In some ways it might limit the sale of some of those products.
Is the body of organisations in Australia growing?
It doesn’t grow greatly, because there’s a finite amount of overseas publishers that control the flow of product into Australia, so there are a finite number of members we can get. We’ve already covered 95 per cent of the market.
If you start growing it you start to move away from purely games distributors, and you start to move to people like Apple, and Telstra or Optus, the business changes.
So Apple and Telstra are taking a bigger role in the games industry?
Apple definitely is, and you look at Telstra who as well as an ISP have a game site, and they publish a couple of their own games. We’re seeing ISPs turning into content owners and publishers, but their core business isn’t gaming, and that’s where our focus is.
How do publishers manage logistics is such a difficult environment?
Most of the guys are using third party specialists to assist with the logistics. As you know when you use a third party there’s an extra cost – it’s possible to get product into shelves across the country, but it’s more expensive than in the US or UK.
It’s that why the costs of games is higher here than in the US or UK?
That’s one of the reasons. Other reasons include a fluctuating dollar, the cost of employing people is more expensive here - there’s a whole number of reasons.
How do you see the games industry developing over the next few years?
It’s hard to predict. Two years ago we didn’t predict the rise of social gaming - the Wii and Guitar Hero and those products – and it’s completely changed the landscape. There’s a couple of things happening at the moment – motion controllers and 3D, and I think the market will level out somewhere – the question is can they all co-exist nicely, or is one going to be a winner?
3D is interesting, but I would have thought the marketing push for games and the like would be difficult, because you haven’t got the visual element in terms as video and screenshots?
It would be hard to sell the concept without someone trying it. But I don’t think it’s and more difficult than trying to sell the concept of Kinect, once they’ve experienced what 3D or motion sensing is, then they can extrapolate that thought process out.
I think the 3D TV and movies are teaching people what it’s all about. But you’re right; it will be difficult to capture that 3D essence if looking at it on a regular TV or in a magazine.
Are the conditions in overseas markets similar to Australia, or do we have a separate set of concerns?
Once you sit down and really look at the core issues than anywhere else, and those issues are issues of classifying games – we have a different regime to the US or Europe but essentially there’s a concern that that needs to be done right. There’s a global issue with what do we do with online content – who is responsible? Because unlike a box that gets delivered to each territory, once its online, and it’s global distribution, the question is: who does own the responsibility?