Game Theory: Levelling up Australia’s Video Games Sector Engagement with Southeast Asia

There are more than ten times as many video gamers in Southeast Asia as there are people in Australia.

With a staggering 270 million gamers and a video games market worth around US$5 billion, Southeast Asia holds immense potential for Australia's flourishing video game industry.

With the opportunities in Southeast Asia, we should be capitalising more on our immense talent. So how do we make it happen?

A world class industry

I'll tell anyone – here or overseas - that Australia's video game industry punches above its weight.

Our industry's technical prowess, state-of-the-art facilities and creative flair has led to the production of world-renowned, critically acclaimed video games. I've spent many hours playing fantastic Australian video games with my family – games like Untitled Goose Game, Hollow Knight, Florence, Moving Out and Cult of the Lamb.

The economic case for video games is clear. Globally, the industry is worth approximately A$250 billion. You would either need cheat codes or hacks to grow the industry faster, and the potential of the industry to create high-skill jobs in Australia is why I co-founded the Parliamentary Friends of Video Games in 2020.

Australia is especially strong in the mobile games market. Many Australians have spent too much time playing Fruit Ninja over the years - one of the 10 most downloaded mobile games of all time - from Halfbrick studios in Brisbane.

Australian game development studios generated A$226.5 million in 2020/21, of which 82 percent was from overseas markets and investment.

But while we make good games and they sell well overseas, we're still leaving some money on the table. Or loot in the dungeon, as it were.

One reason is that we're not tapping into the Southeast Asian video game market as comprehensively as we could – even though it's right next door.

Southeast Asia

The opportunities in Southeast Asia are huge, something detailed extensively in Nicholas Moore's recent report to government, Invested: Australia's Southeast Asia Economic Strategy to 2040.

By 2040, Southeast Asia is projected to become the world's fourth largest economy. And 55 percent of the region's population – a staggering 380 million people - are under 35 years old. That is a lot of new potential gamers on our servers.

And it's not just about the economy. The region is undergoing a digital makeover. By 2030, the region's digital economy is expected to be worth up to US$1 trillion. And already in 2022, there were nearly half a billion internet users in the region.

Despite the potential, right now Australian investment in Southeast Asia is being outstripped by other countries at an alarming pace. Chinese investment stocks in Southeast Asia doubled between 2016 and 2020; Canadian investment almost quadrupled during that period.

With Melbourne's International Games Week 2023 and Games Connect Asia Pacific in full swing, and PAX Aus starting today, it is a good time to ask how we can level up our investment in Southeast Asia.

Our strategy

First, we back our local businesses.

Our National Cultural Policy, Revive, isproviding A$12.0 million to support digital games developers and small and medium independent games studios through Screen Australia.

And there's the Digital Games Tax Offset (DGTO), a 30 percent tax offset on eligible expenditure for businesses spending over $500,000 on games development.

Then there's the Southeast Asia Economy Strategy. It's all about taking our homegrown industry to the region and spreading the word about opportunities.

These policies are having an impact. The CEO of Ardacious, a games studio in Brisbane, says they have already been able to secure a significant contract from a Singapore firm due to the DGTO. According to CEO Dr Ralf Muhlberger, Ardacious has been able to increase the size of their team and will be scaling up further over the coming year.

Next steps

There is a lot going on in Australia's video games scene, and the government wants to help our industry do even more.

That's why I visited PAX Aus to speak with the Interactive Games and Entertainment Association and its members about their experiences investing in Southeast Asia.

Our government wants to help our industry to take the steps today to capitalise on the digital economic opportunities in Southeast Asia in the future.

As Gabrielle Zevin put it in her fantastic novel about video games: “What is a game?...It's tomorrow, and tomorrow, and tomorrow. It's the possibility of infinite rebirth, infinite redemption. The idea that if you keep playing, you could win.”

Video games are the industry of future. If Australia keeps playing, if our developers can capitalise on markets in Southeast Asia, we'll take the W.