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Australian Video Game Industry Sees Growth Through Independent Studios and Government Support

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"Australian developers demonstrated creativity and unique talent" during a period of global "sameness" in the industry.

Australian Indie Games Hit $608 Million in Revenue, Marking a Major Industry Turnaround

The Australian independent video game industry has generated over $608 million in revenue during the 2025 financial year, according to the Interactive Games and Entertainment Association (IGEA). This remarkable growth follows a period of severe industry decline in the late 2000s and early 2010s, during which large-scale 'AAA' studios closed and smaller independent teams emerged.

The sector has achieved international recognition through several commercially successful titles and is receiving increased government funding, though challenges remain for studios seeking to scale operations.

Industry Transformation and Economic Performance

Past Decline and Restructuring

The Australian game industry faced a critical downturn between 2007 and 2011. International companies including Pandemic Studios, THQ, and Electronic Arts' Visceral Games closed their Australian operations, citing economic pressures, operational costs, and international tax incentives. Team Bondi, the studio behind L.A. Noire, entered administration in 2011 following allegations of poor working conditions, with over $1.4 million in debt.

By the mid-2010s, the industry landscape shifted toward smaller independent teams, many founded by developers from larger companies. Uppercut Games was formed in 2011 by former 2K Australia developers Ed Orman, Andrew James, and Ryan Lancaster, producing mobile titles like Epoch and exploration games Submerged (2015) and Submerged: Hidden Depths (2020).

Current Revenue and Market Position

IGEA reported that Australian video game studios generated over $608 million in revenue during the 2025 financial year. IGEA Chief Executive Ron Curry attributed the industry's recovery to developers' experimentation and creative freedom during the downturn. Curry noted that a period of global "sameness" in the industry allowed Australian developers to demonstrate creativity and unique talent.

Key Commercial Successes

Hollow Knight Series

Team Cherry, an Adelaide-based independent studio, released Hollow Knight in 2017, which received recognition for its world-building, hand-drawn art, and gameplay. Its sequel, Hollow Knight: Silksong, was announced in 2019 with limited updates before its release was announced with two weeks' notice. In September, digital storefronts including Steam, Nintendo's eShop, PlayStation Store, and Microsoft Store reported outages due to high demand for the game.

By the end of 2025, Silksong had sold over seven million copies worldwide and won Best Action/Adventure Game at The Game Awards.

Co-founder Ari Gibson stated that the small team's progress was consistent, noting that game development requires significant time.

Other Notable Titles

  • Untitled Goose Game (2019): Developed by Melbourne studio House House, this game sold one million copies within three months of release.
  • Unpacking (2021): Created by Brisbane's Witch Beam Studios, this puzzle game sold 100,000 copies in 10 days and one million within its first year, receiving multiple awards including two BAFTAs. Lead designer Wren Brier drew inspiration from personal experiences.
  • Cult of the Lamb (2022): Developed by Melbourne-based Massive Monster and published by Devolver Digital, this title sold seven million copies as of March 2026, generating approximately US$90 million in revenue by April 2025. The studio expanded from three to about 20 staff to support the game with updates and content.

Mobile Gaming Success

The mobile gaming sector saw success with titles including Halfbrick Studios' Fruit Ninja and Hipster Whale's Crossy Road.

Indigenous Australian Game Development

Aboriginal Australian creatives are developing video games incorporating First Nations cultural elements. Key projects include:

  • Arthur Ah Chee (Wankanurri man), founder of Cerulean Creative Studios in South Australia, is developing Cheeky Boy with Narungga and Kaurna theatre-maker Jacob Boehme, based on the Narungga Dreaming. The game features a child transformed into a dingo and aims to be accessible for school-age Australian audiences.
  • Ben Armstrong (Wiradjuri) is creating Buru and The Old People, a narrative game featuring an anthropomorphic white ibis as protagonist, intended to make Indigenous stories relatable to non-Indigenous audiences.
  • Kat Gledhill-Tucker (Noongar) is developing an unnamed rhythm game reflecting six Noongar seasons, and is also narrative designer for Wyrmspace Tactics, a science-fiction game incorporating First Nations perspectives on displacement.

In 2023, Screen Australia's First Nations Games Studio fund granted $300,000 each to Guck for Blaktasia and to Awesome Black. Ah Chee expressed interest in more grants targeting Aboriginal developers beyond one-off initiatives.

Government Support and Funding

Federal Incentives

The Digital Games Tax Offset (DGTO) was introduced in 2023, allowing eligible companies to claim 30 percent of qualifying Australian development expenditure.

State-Level Incentives

Victoria, New South Wales, Queensland, and South Australia offer rebates of 10 to 15 percent of in-state expenditure through state screen agencies. Victoria is considered to offer the most incentives.

Julian Wilton, co-director of Massive Monster, relocated from Sydney to Melbourne due to these incentives, noting that Cult of the Lamb received approximately $40,000 in early funding.

Recent Grants

In October, the South Australian government announced grants of up to $100,000 to support local video game creation.

Industry Challenges

Access to Funding

  • The DGTO's minimum expenditure threshold of $500,000 can be prohibitive for smaller studios.
  • Funding for games in Australia remains lower than for other screen industries such as film and television.
  • Arthur Ah Chee highlighted cash-flow constraints and the difficulty of building sustainable businesses without recurring sales.

Scaling Difficulties

  • IGEA identified a "missing middle" of companies attempting to scale up after initial success.
  • Uppercut Games addressed this by securing international investments, including a minority investment from Tencent in 2021 and a publishing deal with Focus in 2024, expanding its team to over 51 people.

Representation and Workforce

  • Ben Armstrong noted limited representation of Aboriginal Australians in the games industry and barriers such as short-term internship programs that do not accelerate skill development. He emphasized the need for better data collection and funding to support job creation.
  • Julian Wilton identified a lack of a broader development ecosystem in Melbourne.

Market Risks

  • Ed Orman acknowledged survivorship bias, noting that successful projects are prominently featured while many others do not find an audience.

Industry Support Initiatives

Massive Monster launched MASS, a co-working space for developers in Melbourne, supported by VicScreen and Creative Victoria. The initiative also includes Monster Fund, an investment program offering funding, mentoring, and access to the co-working space.