The game sector is one of the unsung success stories of the Irish economy. Games have come a long way from humble beginnings as little more than electronic toys. The industry now has annual sales in excess of €50bn. The largest game release in history, “Call of Duty: Black Ops” made over $650 million in sales in its first five days, more than any movie or book has ever achieved.
The games industry can be broadly segmented into two distinct markets. One market is for “hardcore” games. These are the big ticket, graphics-intense and expensive products which are designed to be played on dedicated games consoles such as Microsoft’s Xbox 360 and Sony’s Play Station 3.
Hardcore games tend to cost in the region of €50 to purchase and are often launched to much fanfare as part of expensive marketing campaigns. Ireland plays a key support role in this sector.
• Activision Blizzard, makers of the famous “World of Warcraft” multiplayer game, have a significant presence in Dublin and Cork.
• The graphics found in many blockbuster games are powered by a renowned physics simulation engine created by Havok, a Trinity College spin out.
• Bioware, the makers of the popular Star Wars online multiplayer game provide global customer support from Galway.
• Demonware, an Irish company specialising in the technology required to facilitate multiplayer gaming across the internet, was acquired by Activision Blizzard in 2007 and now provides the technological backbone to the multiplayer aspect of the recordbreaking ‘Call of Duty’ franchise.
The other market, the one which is driving the increasing prominence of gaming as an entertainment medium, is for ‘casual games’. These are games which tend to be relatively economical to make and are usually played on either mobile phones or via online platforms such as Facebook. Key examples here would be “Farmville”, an online farming simulator played on Facebook and “Angry Birds,” a puzzle game played on smart phones such as the iPhone. These casual games are either provided free of charge and supported by advertising or sold at low price and high volume (€1 would be typical).
Ireland is quickly establishing itself as world leader in this sector. Zynga, the makers of Farmville, along with many other Facebook-based games, have opened a Dublin office. PopCap, the makers of many bestselling and critically acclaimed casual games such as “Bejeweled” and “Plants v Zombies” has a Dublin-based development studio. Jolt Online, an Irish casual games development studio was acquired by GameStop, one of the world’s largest ‘bricks and mortar’ games retailers in 2009.
Reviewing the current state of play, we can see the emergence of a game industry “ecosystem” in Ireland. A number of factors suggest that this industry is likely to see increased success in the coming years:
1. A good balance has been struck between encouraging world leaders to establish their European base in Ireland and promoting homegrown talent. The Industrial Development Agency Ireland has targeted this sector and has played a key role in promoting Ireland globally. Enterprise Ireland has devoted much effort to promoting and developing the domestic sector. Both bodies should be congratulated for their work in this regard.
2. The recent disruption to the Irish economy may provide a boon to this sector. Casual game development does not require large up-front capital costs. It is, however, affected by the cost of office space and relevant talent. The broad reduction in the Irish cost base will likely improve our competitiveness in this field.
3. Ireland already has a flourishing technology sector which can provide broad support to the games industry. The key platforms, such as Facebook, have large Dublin offices. Infrastructure, in the form of server farms provided by companies such as Amazon, is available locally. These businesses are, in turn, supported by a wealth of quality graduates and research being produced by third-level institutions. The universities have long realised the importance of this sector. Trinity College has arguably led the way with a dedicated MSc in Interactive Entertainment Technology.
At Mason Hayes & Curran, we expect this sector to continue to develop and to go from strength to strength. In this regard, the recent Forfás report “The Games Sector in Ireland: An Action Plan for Growth” provides much food for thought. The proposals to provide additional R&D tax breaks to the industry and to reduce the income tax paid by employees in this sector could help stimulate growth, but it remains to be seen how feasible such proposals will be in the current environment. However, the mere fact that the games industry is beginning to get the high-level recognition it deserves is encouraging. It may well be that fun and games, rather than toil, will drive the Irish economy forward.
Attribute to Philip Nolan, Partner, Mason Hayes & Curran and Oisín Tobin, Trainee Solicitor, Mason Hayes & Curran.
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Philip Nolan is a Partner and Head of the Commercial Department at Mason Hayes & Curran. For more information, please contact firstname.lastname@example.org or +353 1 614 5078. Oisín Tobin is a trainee solicitor at Mason Hayes & Curran. For more information please contact email@example.com or t: +353 1 614 5270.
The content of this article is provided for information purposes only and does not constitute legal or other advice. Mason Hayes & Curran (www.mhc.ie) is a leading business law firm with offices in Dublin, London and New York.
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