Games industry weathers COVID-19 ahead of tax relief

Joseph Brookes
Senior Reporter

The Australian video games industry has largely withstood the economic impacts of the COVID-19 pandemic, with most businesses reporting either increased or stable revenue over the last year and nearly two-thirds planning to bring on more staff, according to a survey of studios.

However, nearly a third of the companies reported a loss in contractual revenue and most experienced some negative business impacts, with smaller studios suffering much more.

The industry is eagerly awaiting its first major federal government support package, in the form of a 30 per cent tax offset on qualifying expenditure from next July.

A survey of local studios conducted by the Interactive Games and Entertainment Association (IGEA) found 62 per cent of respondents reported stable or increased revenue, compared to 33 per cent for the same period last year.

Only 4 per cent said they were planning redundancies and 63 per cent said they planned to increase staff.

IGEA chief executive Ron Curry

“IGEA’s latest survey findings confirm that the Australian industry is experienced and well positioned to take advantage of the increasing global popularity of games,” IGEA chief executive Ron Curry said.

A 30 per cent Digital Games Tax Offset (DGTO) was included In the May budget and will come into effect from July 2022.

The measure, Australia’s first federal tax incentive for the video games sector, will allow eligible games businesses that spend a minimum of $500,000 on qualifying Australian games expenditure to receive a 30 per cent refundable tax offset.

The government will consult this year on the criteria, including what counts as eligible expenditure.

“The introduction of the DGTO in July 2022 injects certainty and confidence to our talented local market and those companies looking to invest in Australia,” Mr Curry said.

“The DGTO enables Australia to build a complete thriving local games ecosystem and ensure game developers both lead and shape the new digital economy.”

According to the survey, revenue increase corresponds to studio size, with larger businesses reporting more stable or increased revenue compared to studios with less staff. Only 33 per cent of studios with less than 14 staff reported stable or improved revenue in the last year, compared with the overall figure of 62 per cent.

Small independent studios were also more uncertain about their hiring decisions.

The IGEA survey revealed games studios had stuck with the hybrid work model with 60 per cent now balancing time between the office and home. Half of respondents said remote work had impacted productivity and 10 per cent said it was a significant  impact.

The remote work change also appears to have had had flow effects for employment opportunities. A third of studios said they are hiring talent interstate, and more than a quarter are hiring overseas.

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