Indigenous games sector still questing for that lucrative breakthrough
A growing number of plucky Irish start-ups are engaged in mortal combat to secure a share of the booming $80bn global digital games market.
But the games industry, just like the music industry, is a hits-driven business - and Ireland has yet to produce a home-grown hit that could worry the bean counters behind blockbuster games such as Grand Theft Auto and Call of Duty - the gold standard for games franchises worldwide.
Despite receiving millions of euro in State aid from development agencies over the last five years, the sector is still struggling to reach the next level and Government job-creation targets appear to be based more on virtual reality than the real world.
Four years on from Jobs Minister Richard Bruton's ambitious Action for Growth plan which aimed to double employment to 4,500 and make Ireland a global games hub, the sector employs just 2,500 today, with the IDA describing the sector in less than glittering terms as "broadly stable".
Indeed, rather than thousands of new jobs being created since 2011, employment levels have remained static or may have even declined slightly in the past four years.
Since the Action for Growth plan was launched, games firm Activision Blizzard has slashed 200 jobs at its Cork operation, PopCap Games closed its Dublin office with the loss of 96 jobs, and Cork-based firm Big Fish had to accept it was game over in 2013, with the loss of almost 90 jobs.
While some of those losses have been offset by the ongoing success of Irish firms in the middleware sector - the vital software platform used by game developers - it is localisation and outsourced customer services for multi-national games firms that remains the backbone of the industry here.
US games giant Electronic Arts, for example - the publisher of best-selling games such as FIFA Soccer and Star Wars - has created more than 270 customer service jobs at its call centre in Galway with the aid of IDA grants worth an estimated €3.4m in 2013 and €1.1m in 2012.
However, few indigenous high-value content creation roles have been created in the industry, despite ambitious growth targets and a large bill for the taxpayer.
But industry experts say it's too soon to write off the games sector. Many insist that it's still all to play for. Insiders point to the recent success of Ireland's biggest game developer, Digit Games Studios, which spent €1m creating and launching medieval fantasy epic Kings of the Realm last year.
The Dublin-based games firm, which employs 20 developers, programmers and artists, said it was targeting five million app installs within the first three months of its launch. Since then Kings of the Realm - a cross-platform game available for free download - has clocked up an impressive 100,000 downloads on Google Play.
Digit's success is the envy of many start-ups. But determining what is a success and what is a failure in the games market is an inexact science. Downloads do not automatically equal dollar signs. And competition is fierce.
While Digit is certainly breaking new ground, what is less certain is the revenue model for online games as their profitability is premised on first attracting a massive number of users who download the game for free.
As opposed to so-called triple-A PlayStation and Xbox console games where there is a one-off purchase, the business model with online gaming is based on enticing a small percentage of the millions playing the game for free to pay for items as they progress. The most popular games generate revenue by selling virtual items such as 'weapons' and 'shields' or real-world merchandise to avid gamers, and by generating revenue through in-game advertising.
To date global online games firms have been able to build billion-dollar empires upon this model - but an Irish analytics firm has discovered something fascinating: just 1.35pc of players spend money in mobile games. And in a further worrying development for the mobile games industry, researchers at Dublin-based firm Swrve found that 62pc of all mobile game revenues come from just 0.13pc of all players.
It was also found that the average age of gamers is 30 and, surprisingly, 47pc of all gamers are women.
Clearly, creating a game that users want to play is only half the battle. Making money out of it is the hard part. This is the biggest challenge facing Irish games firms, says industry expert Jamie McCormick.
"Irish games developers have to learn how to make money out of what they're making. This is the difference between a game and a product. You can make a game but if you want to be able to feed yourself you need to make a product.
"It's very difficult. People put in lots of hours of work and they put out a game but they don't make any money and it's heart-breaking. And half of that is because they never learned how to make money out of it to begin with. Making the game is one thing but you've got to go out and sell it. That's the hard reality that every game developer isn't prepared for."
But if Irish games developers can crack the code of what makes a successful game, then they're one step closer to hitting the commercial jackpot, says McCormick, who has worked in the industry for over a decade.
The next biggest hurdle is stumping up the money to market a game. The sums involved in developing and marketing a hit game are astronomical.
The firm behind Grand Theft Auto spent $260m on developing and marketing GTA Five, while Blizzard Activision is estimated to have spent $500m on its new shoot-em-up game Destiny - Activision's hoped for successor to its billion-dollar cash cow Call of Duty.
But the rewards are equally astronomical. The most recent version of Grand Theft Auto broke all industry records by making €1bn in sales in its first three days on sale. Call of Duty has topped $10bn in worldwide sales since its creation more than a decade ago by publisher Activision Blizzard, the games giant that acquired Dublin-based multiplayer technology firm Demonware in 2007.
The fact that the gazillion-selling Grand Theft Auto franchise was first created in a poky studio in Dundee must be a glimmer of hope to Irish developers striving for success.
If Scottish games developers can take on the world and win with Grand Theft Auto, industry experts are asking why Ireland can't do the same.
Enterprise Ireland - which has pumped €6m of seed money into 55 home-grown games firms since 2010 under its Competitive Start Fund for small and high-potential start-ups - is hopeful that some of its investments will come good.
Moreover, with the growth of the GameSpace incubation hub in the IFSC and the presence of homegrown middleware firms like Demonware, Havok and mobile games analytics firm Swrve, the elusive hit that the Irish games industry craves surely can't be too far away.
When that happens, it'll be game on.
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Sunday Indo Business