Cashing in on the billion dollar app market

AUSTRALIA'S game developers will be pulling in $2.3 billion by 2016 as part of a global $80.3 billion app market.

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WHETHER you are suffering from a zombie attack or wondering whether a freeze spell will slow a dragon, you can be sure of one thing someone, somewhere is making a buck out of your quandary.

PwC's annual Australian Entertainment and Media Outlook forecasts Australia's game developers will be pulling in $2.3 billion by 2016 as part of a global $80.3 billion market based on annual growth of more than 7 per cent.

But the businesses behind fruit-slashing and block-stacking have competition. Serious competition.

The emergence of mobile gaming has shaken up the industry, the bulk of which are turning to discounting to grab market share.

And Australian developers have another challenge - the high Aussie dollar means even less of every valued US sale is coming back into Australian developer hands.

PwC's Megan Brownlow says the successful players are developing their own intellectual property and a healthy forward pipeline to create a stronger future.

And they are also looking beyond Australian shores to make it.

"The best (developers) are travelling and forming international relationships  - that is absolutely crucial," she says.

"They are also looking to partner with other sectors in the entertainment and media area ... to build on brands that audiences are already familiar with.

"And the really smart developers are making connections with people in other industries about applying their skills ... in marketing, training, education and engagement of loyal users and customers."

The better developers are also researching their fan base to build future audiences, using website analytics and beta testing to latch on to established fans' social networks.

Extra lives

Brawsome founder Andrew Goulding made a "swashbuckling sausage-dog", Jolly Rover, alternating coding contracts to keep cash flowing.

This diversification helped plug some finance gaps but also developed key contacts.

Pushing a brand in an international market is a business in itself, Goulding says, so it's best to go in with eyes wide open.

"It is easy to think it will be 10-20 per cent of how you spend your time but it is closer to 50 per cent," he says.

"That can be difficult for game developers  - you think you'll be developing games but the time you spend on the business can be a real shock."

Funding international trips can impact cash flow for new businesses, he says, but there are state and federal government grants that can help defray the cost.

The Game Developers' Association of Australia and the Interactive Games and Entertainment Association can help guide the way. 

Goulding says budding businesses also need to avoid skimping on legal fees.

One contract was turning over 95 per cent of his income -  leaving another eight doing very little but create paperwork.He says timely legal advice helped him escape those unproductive contracts.

The right moves

Brisbane game developer Halfbrick Studio is best known for its global success story, Fruit Ninja, which is a fruit-slicing game reportedly making $1 million a month in revenue and has been downloaded more than 350 million times.

Chief creative officer Luke Muscat says Halfbrick's prior offering was right for serious gamers but then it went down a different path for a more simple game.

Even using that success to drive the company's next offering, Jetpack Joyride, didn't give it easy answers. 

"We launched at 99 because we felt it was in that category ... but then everything changed," Muscat says.

"We set it to free as part of a special and it took off."

The back-end revenue  -  including in-app purchases of coin packs  - was more than enough to make the game work without further changes, he says."We are not going to change the game to support a business model," he says. "As long as we're making a high quality product, everything will come along naturally."