Ireland’s opportunity to regain position as a major player in the games business

17 Dec 2009

Video games are now a bigger industry than Hollywood or Bollywood. Is Ireland ready to play?

You don’t have to be a genius to figure out that video games are now pretty much one of the biggest media industries on the planet. Last year, sales of video games topped $40 billion, towering over global cinema box-office takings of $28 billion.

If the success of the recent member of the Call of Duty franchise, Modern Warfare 2, is anything to go by, this is an opportunity we can no longer afford to ignore. The game grossed more than $550 million in its first week and, within a fortnight, amassed $3 billion in sales.

Irish gaming background

Few people realise that Ireland was once the epicentre of global gaming activity. In the Seventies, it was one of the world’s biggest exporters of video-gaming products, with Atari in Limerick and Tipperary manufacturing consoles and arcade systems.

The return of the gaming industry to prominence in the Nineties up until recently appeared to mainly pass Ireland by, due to the fact that popular console games for the PlayStation, Nintendo and Xbox markets were big-budget affairs, demanding a minimum of $3 million to design, create and sell a popular high-street game.

But in a uniquely Irish way, we continued to play a role. In the late Nineties, a group of Trinity College Dublin (TCD) graduates created Havok, a physics middleware firm that powers the special effects and reality in top-budget games such as Assassin’s Creed and movies such as The Matrix. Havok was bought three years ago by Intel for more than $100 million.

Another company, DemonWare, also started by TCD graduates, made software that allowed developers to make games that could be played by multiple players over the internet. It, too, was acquired, this time by the world’s biggest games maker, Activision, for $15 million in 2007.

While much of the game publishing activity takes place in places such as Scotland and Canada, the axis of opportunity is shifting in Ireland’s direction.

Job creation

Gala Networks, maker of the popular gPotato franchise, employs 100 people in Dublin with another 50 on the way. GOA, maker of the popular Warhammer online games series, is creating 400 jobs in Dublin. Activision Blizzard, the firm behind the popular World of Warcraft brand, is creating 100 jobs in Cork. Also in Cork, Big Fish Games, which distributes games to 1 million people every day, is creating 100 jobs.

Jamie McCormick, European marketing manager at Gala Networks, which is based at Dublin’s Digital Hub, says Ireland could really thrive in the web-based gaming business that derives its income from micro-transactions and online advertising.

“We publish eight games across six different markets. In terms of registered users, we have just under 3 million people playing games online. We derive seven-figure sums from all of the games in all the markets we cover.”

Facebook games

Anyone familiar with Facebook would realise there’s a bit of a revolution under way in terms of web games, such as Café World, Mafia Wars and Farmville. McCormick points out that, globally, there are 140 million people currently playing games by console, but in terms of web-based gaming the market opportunity is vast – 2 billion out of the world’s 6 billion population access the internet.

“All of our revenue is derived from micro-transactions. We have a virtual currency on the gPotato website. If anyone is familiar with the points system on the Xbox, you can lodge money onto your account and get points and redeem those points for in-game items.”

Dylan Collins, the entrepreneur who, three years ago, at the age of 26, sold DemonWare to the world’s biggest computer-game firm, Activision, for $15 million, has built up JOLT Online to be one of the most pioneering free-to-play browser games firms globally.

In recent weeks, one of the world’s biggest games retailers, the $8.8 billion-a-year GameStop, acquired a stake in JOLT because it sees the rise of free-to-play browser games as an emerging market too hot to ignore.

An Irish hotbed

Explains Collins: “A lot of people don’t seem to realise that Ireland is now one of the bigger online gaming hubs in the world. We have companies such as Activision, JOLT, Gala, Blizzard, Facebook, GOA, Pocket Kings and Full Tilt here. We have the two biggest games companies in the world here right now.

“We need to make people realise that we’re on a par with the likes of Montreal, Vancouver and other gaming centres.”

He says the steps to take are straightforward. “We need to get grant packages that are ‘specifically’ focused on internet start-ups, which need the least capital of practically any industry.

“The Government needs to get more businesspeople involved in fine-tuning their strategies for supporting sectors such as this one. In general, support policies are well-meant, but they are let down by the fact that there is not enough input by people who have managed companies.”

Senior positions

McCormick agrees. He says that in overseas locations, such as Scotland and the US, Irish people hold many senior roles – all that’s missing, he argues, are tax breaks for investors and the very necessary expedient of viewing game prototype development as R&D.

A recent survey on the computer-games industry in Ireland conducted by researchers from National University of Ireland, Maynooth, and University of Limerick shows the industry is on the move, with a complement of multinationals and indigenous companies operating here. Of the 21 firms that responded to the survey, in total they employ 1,469 people in the sector across Ireland.

Academic Aphra Kerr of says there are new opportunities for the Irish games sector that can’t be ignored.

“Less companies in the gaming space here are involved in console games, but more so in social and downloadable games.”

Compared with the UK, particularly Scotland, which has developed a considerable gaming industry in the past 15 years, Kerr says Ireland’s games-industry development has every opportunity to be different.

She points to France and Canada, where film-support programmes have been opened up to support gaming firms.

“One of the problems facing the industry in Ireland right now is that there hasn’t been a lot of support financially for local firms. France recently introduced a tax-credit system.”

Irish talent

Philip Bourke, who runs the ground-breaking games course at Tipperary Institute, with an intake of 45 students a year, believes that with Ireland’s obvious talents in the areas of writing, music, art and more, the opportunities in both console and web-based gaming can’t be ignored.

“One of the interesting things we could do as a country is target it as an intellectual-property opportunity.

“The important thing to look at is to have those tax incentives in place, especially when you see what’s happening in Canada. They have brought out preferential rates to both bring games studios to Canada as well as develop their own indigenous industry. That is a model we could follow.”

All that’s stopping us, Bourke concludes, is our imagination.

By John Kennedy

Photo: The leading lights of Ireland’s unfolding video-games landscape – entrepreneur Dylan Collins of JOLT Online, academic Aphra Kerr of and Jamie McCormick from Gala Networks. – Digital 21 is a campaign to highlight the imperative of creating an action programme to secure the digital infrastructure and services upon which the success of the economy depends.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years