Austin continues to be a leading hub of video game development, but it faces challenges in meeting its full potential.
That was the consensus of industry and city representatives last week at a panel discussion led by state Rep. Mark Strama at DeVry University, a technical school with a campus in Austin.
The past several years have been good for the local gaming industry, said Stephen Kreher, director of economic development with the Greater Austin Chamber of Commerce.
He pointed to a report by Austin economic consulting firm TXP that found gaming and digital media grew faster than any other creative industry in Austin from 2005 to 2010.
The industry employed 2,848 people in 2005, with an economic output of almost $390 million. In 2010, those numbers had soared to 7,274 jobs and an economic impact of $991 million.
That growth came despite "some of the worst economic times we ever saw," Kreher said.
"I think it really shows how Austin came out on top there," he said.
That growth was aided by Austin's historical strengths, including a deep pool of gaming talent and low cost of living that attracts big studios and startups alike.
But Austin still has some obstacles to future gaming expansion.
For one, the industry can be mercurial because it's driven by hit games, said Jennifer Bullard, the local chapter chair of the International Game Developers Association, a nonprofit industry advocacy group.
A few flops can destroy a company, leading to layoffs and staffers who start new companies, she said.
"It's a somewhat healthy cycle," Bullard said. "But if there isn't a support system, if there isn't an economic backbone that people can rely upon from different cities and states, then they're going to flee and you're going to have an exodus and you're going to lose that creative talent."
Bullard said she's working to help gaming entrepreneurs in starting new companies or getting new jobs, rather than leaving town.
Others spoke of the difficulties of accessing West Coast venture capital, which can be a vital lifeline to startups.
Frank Coppersmith, chief operating officer of GameSalad Inc., which helps people create and publish games, spoke of his own challenges in that department.
While GameSalad started in the Austin Technology Incubator and raised its initial money from connections at the South By Southwest festival, Coppersmith said he eventually made a foray to the West Coast.
"Was it a disadvantage to you in raising (Los Angeles) money, that you were based here?" Strama asked him. "Did they try to move you?"
"I think it was a very significant barrier to our ability to raise money on the West Coast," Coppersmith replied. "Though I think not so much because we're far away, but ... when a (venture capital firm) looks at the value that they bring to a company, it's because they don't just bring money. They bring networks of people, and expertise. And if you're in Texas, those networks don't necessarily extend to Austin, so they don't know how to optimize you."
Coppersmith also admitted that GameSalad moved its corporate headquarters to San Francisco – although the majority of its operation is still local.
"It was just essential to get that on-the-ground visibility in California," he said. "I'm sorry to say that."
Others pointed to the prevalence of game publishing headquarters in California as a negative for Austin. In a letter, Austin gaming godfather Richard Garriott said establishing a base of those headquarters are essential to Austin's long-term gaming health.
"When company headquarters are somewhere else, during periods of economic downturns, it is the satellite offices that get laid off first," Garriott wrote in a letter that was read by DeVry faculty member Bruce Naylor. "Austin and Texas (have) become the land of satellite offices."
But others noted that with the advent of digital distribution through the Web and mobile platforms like Apple's App Store, a lack of publishing headquarters might not be as big of a stumbling block any more.
Bullard pointed to KingsIsle Entertainment, which has most of its operations in Austin, as an example. Its popular flagship game "Wizard101" can be played online for free.
"They have a total self-sustaining model that they've been managing," she said.
Incentives like the Texas Moving Images Industry Incentive Program — which gaming companies can apply for — also won praise.
The full article written by Brian Gaar, can be viewed by visiting the Austin American Statesman's website.
