14.1: Introduction
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- John Banks & Stuart Cunningham
- University of California Press
In this chapter, we pay full attention to the structural conditions and human cost of precarious labor in a particular local instance of the games industry. But at the same time, we attempt to shift the debate on precarity from the existential (the creative individual attracted to industries promising autonomy and meaningful work and finding only casualization, no work/life balance, and poor management) and the totalizing (all work under regimes of neoliberal hypercapitalism is increasingly characterized by precarity; indeed a whole new class—the precariat 1 —is posited as emerging) to a focus on analysis for actionable reform.
Significant “creative destruction” 2 through the global financial crisis (GFC) led to games industry restructuring and consolidation, including withdrawal of major publisher investment in many dispersed regional hubs of games production. More fundamentally, major platform shifts and new business models started before the global downturn and continue through this contemporary period of slowdown in the world economy. There has been major consolidation at the console production end of the games industry, with more expensive blockbuster or AAA titles, a hollowing out of the midrange games market, and rapid growth and proliferation of casual gaming and mobile applications with unprecedentedly lower production costs and barriers to entry.
What has happened to one such regional hub, the Australian games industry, spatially remote from the centers of publisher power and hubs of creative ferment?
A recent “perfect storm” of factors has arisen to change the face of the Australian games industry. The industry had grown on the model of work for hire producing “catalog fillers” for the major publishers; very little original IP was produced. And while very few AAA titles were made in Australia, games companies had a reputation for quality. However, the business proposition was buttressed by more than a decade of favorable exchange rates, which (literally) underwrote international investment. The industry by 2007 was structured around approximately forty-five midsize small businesses. 3 Notable companies included Krome, Pandemic, THQ StudioOz, Creative Assembly, Torus, and 2K.
The global financial crisis saw higher-end production scaled back, a withdrawal by the major publishers from spatially distended supply chains, and a new preference for formally affiliated production companies. At the beginning of 2007, the Australian dollar was 75 cents on the U.S. dollar. During the GFC, the Australian dollar became a “currency haven,” such that by the start of 2012 it was worth US$1.02, gutting the industry of its price advantage. Of even greater structural consequence for the industry was the simultaneous explosion of apps-based mobile casual games play based on the smartphone platform and later the tablet.
Official statistics tell a stark story of destruction of value. Of the 1,431 reported employees in 2007, only 581 remained by mid-2012, and reported game development income had dropped from A$116.9 million to just A$44.4 million. 4 The industry’s spatial pattern in 2007 evidenced a significant presence in Queensland and Victoria, with additional studios in New South Wales, the Australian Capital Territory, and South Australia. By 2012, the majority of the bigger studios had closed, and the industry had retreated to be concentrated in Victoria. Those whose doors had closed or who had radically downsized included Krome, Pandemic, THQ StudioOz, BlueTongue, Team Bondi, SEGA Creative Assembly, and Tantalus Media Brisbane. The major studios remaining included Halfbrick (Brisbane), 2K Australia (Canberra), and in Melbourne, Big Ant, Torus Games, Tantalus, and Wicked Witch. According to the Games Developers Association of Australia (GDAA), the main advocacy and professional association for the industry, somewhere between 60 and 70 percent of industry workers had either moved to another industry (many skills, preeminently programming skills, are very transferable) or had left Australia for more resilient industry locations or those better supported by government policy and programs. 5
In 2014, the GDAA characterized the industry as composed of two hundred formally registered businesses, of which 92 percent are considered to be independents. 6 It defines independent as a typically small-scale enterprise that concentrates exclusively on original IP and self-publishes on the new digital platforms (Apple App Store, Android, Steam). It estimates about eight hundred workers now in the industry. This is a recent history of an industry much reduced in turnover and traditional employment, but which has transformed its revenue base from 80 percent work for hire to 75 percent original IP—an almost complete reversal in the balance between business models. 7
But, invoking Joseph Schumpeter, how “creative” has this destruction been? A rigorous critical organizational-studies analysis of the Australian industry advances the argument that severe power differentials between publisher and producer/developer have persisted across this momentous industry restructure and continue to compromise local agency in global supply chains. 8 An equally rigorous media-studies argument anatomizing poor labor conditions in the industry globally is nevertheless clear that “the most plentiful and well-paying jobs in the video game industry continue to be those provided by major video game publishers either directly or indirectly.” 9 Neither view offers much comfort for the idea that this destruction could be in any way “creative.”
These perspectives, however, contrast with the self-understanding of many of those games workers (whom we have interviewed for the research that supports this chapter) who survived the shakeout or are sufficiently new to the industry to know no other conditions. Culturally and industrially, original IP—and the conditions under which it can be prioritized—tends to be championed by these developers against fee-for-service and as a normative aspiration. Industrially, a dominant narrative in the industry has been the desire to move from fee-for-service (where the company is a price taker and doesn’t control its own destiny) to original IP. Culturally, this aspiration also speaks to many developers’ creative impulse and is actually enshrined in the advocacy and the definition of indie established by the representative body, the GDAA. It is reinforced by normative criteria built into state policy and program funding support.
Given the degree to which higher-end fee-for-service business has dried up, while essentially self-publication on major digital distribution platforms (Apple’s App Store, the Google Play Store, Steam, and so on) has grown exponentially, necessity has become a virtue. Conditions have crafted an industry that is much reduced in terms of turnover and traditional employment but now operates within a disintermediated value chain that radically forces the pace of innovation. Despite much commentary that treats Apple, for example, as basically yet another global corporation “taking their (un)fair share of financial profits,” 10 near-global dissemination via the digital platforms on a 30/70 split of income derived represents an ostensibly better deal than the power asymmetries enshrined in dealing with the major publishers. 11
Australian companies, in particular Halfbrick after its huge success with Fruit Ninja (2010), made hay while the sun shone in the early days of apps-driven games and became a sort of template for national ruminations on how to succeed in the new environment. 12 It is distinctly harder now to capture attention: massively lower barriers to entry create conditions in which it is estimated that more than 1.3 million apps are now available on the App Store with duplication across the platforms, of which around 20 percent are games. 13 Mobile games production is markedly less driven by the crunch associated with games development under the dominant business model of fee-for-service work, in which development schedules were driven by milestones at the behest of large international publishers. This has led, Antony Reed suggests, to a situation where the industry has seen much less attrition in last few years. Furthermore, there is arguably a great deal more innovation activity in original IP. Indeed, there is runaway innovation, 14 with the rapid shift from games as a product to games as a service driving the mobile apps purchase price points to zero, accompanied by the proliferation of in-app purchasing. And these rapid shifts have in turn been challenged by a return by some to premium mobile app pricing as well as premium pricing for games released through Steam.