Video game innovator Infinite Interactive is facing multiple challenges, including funding, the erosion of revenues through piracy, and plain old geography. Principal Steve Fawkner tells how he is meeting these head-on.
A global recession, the plunging value of the Australian dollar and a lack of investors – these are just a few of the problems faced by the Australian video game industry.
But Steve Fawkner, chief executive of gaming designer Infinite Interactive, says the biggest challenge isn’t the economy, but the consumers themselves.
“Australians are the biggest bunch of pirates I have ever seen,” Fawkner says.
“The piracy scene here is just absolutely atrocious, and it’s known amongst international publishers. It’s certainly been a problem for us.”
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But rather than try to stamp out illegal copying, Fawkner says developers just need to become more innovative at marketing their products.
“You can try to put anti-piracy measures on your software, but the guys out there are way better at cracking your software than you are at defending it. Besides, I’ve never liked disadvantaging paying customers just because of a few pirates,” he says.
“It’s just something you have to live with – and you design your game around it. You can create a game that encourages people to buy it by giving a full game away, but only enabling certain features to paying customers or enabling add ons for paying customers.
“You combat piracy through marketing and design – those are the most effective means.”
From hobby to real job
Infinite Interactive began after Fawkner started thinking seriously about taking his hobby full-time.
“When I first started writing games I treated it as a pleasure thing. It wasn’t until 1989 that I really saw some real money and realised ‘I’m actually making more money out of my games than I am in my real job’.
“I didn’t know very much about the games industry. So I attached myself to a games company in 1983 called SSG. Infinite Interactive pretty much became their Melbourne office until 1999, and a few years later we just went our separate ways. Being able to do that really got me started well.”
Infinite has released several hit games, including Puzzle Quest, which has won a number of “Game of the Year” awards including the IGN E3 2007 Best Puzzle Game award. Infinite also develops games across all platforms – including the iPhone, which Fawkner says has helped boost sales.
Infinite Interactive recorded a revenue level of around $4 million in the 2007-08 financial year, and predicts 25% growth for the next three years.
The challenge of distance
Fawkner also says there were a number of different challenges in starting a video game company thousands of miles from the industry’s biggest market – the US.
“Proximity to business is our biggest problem. When publishers want to put money into something, it’s nice for them to just hop in a car and kick a few heads if the person is running a bit late. It’s very different for them if we’re in Australia. They don’t have the same control.
“So they’ll often go with the local developer where they can visit on a regular basis. We have to convince them that we’re worth the extra travel and we’re going to give them a product they don’t have to micro-manage – we’ve really got to put all our ducks in a row when we’re doing a pitch.”
While Fawkner says he doesn’t regret starting the company in Australia, there are a number of things he would do differently if given the chance.
“What I wish I would have learnt earlier are just a few simple lessons in business. Those include learning that maintaining a business is really about maintaining relationships with clients and publishers,” he says.
“It’s very easy to become complacent to deal with one publisher and rely on them for all your work. And if anything happens there, its easy to fall out of favour and have no work and have to downsize – that was one lesson we learnt the hard way.
“And as a one-project-at-a-time company, there’s this horrible dead space between projects. And if that stretches out too long, once again you have to downsize – another lesson we learnt the hard way,” Fawkner says.
“So we’ve learnt to deal with multiple publishers because that just means we have more relationships and deal with more projects at once, even if they’re smaller projects. It means that if anything happens to one you can absorb it into the costs of another.”
Getting ahead of the downturn
Despite the downturn, the video game industry posted record sales in the week before Christmas at $100 million – up from the previous year’s $84 million, according to research firm GfK. But Fawkner says he is still bracing Infinite Interactive for the impact of the global downturn.
“The sales last year were great. They call it a recession proof industry because it’s a real value for money industry, so when people don’t have much money they will play games.
“However, games get made because investors put money into them, and if they don’t have money those games aren’t going to get made. What is on the shelf will sell, but getting money to put your game on the shelf is going to be harder,” he says.
“To shield ourselves against that, we’re looking to sign up the work now before everybody else. This year will be fine, but 2010 is going to hurt, and it’s really important to get work in place nice and early.”
Fawkner also says the firm is noticing where the market is heading, with more consumers looking for family friendly entertainment.
“Three games a year at the moment is where we’re at, going down the cross platform casual games path – we’re enjoying the broad audience and using it.”