Video game industry hit as THQ closes two Australian studios

The troubled Australian video game industry has suffered another blow, after international developer and publisher THQ confirmed it has shut down two local studios with 200 jobs lost, as the company moves to focus more on original IP.

The closures highlight just how much the local video game industry has suffered over the past few years, with the closure of several studios. A studio in Sydney, Team Bondi, which recently released one of the year’s most successful games, has reportedly been merged into a visual effects studio as well.

The closures have also dampened the hopes of local video game executives who said the recent passage of R&D credit legislation would help bring international development dollars into the country.

THQ confirmed the closure of Melbourne-based Blue Tongue Entertainment and THQ Studio Australia in Brisbane yesterday. Another development team has also been closed in the United States as the publisher undergoes a restructure of its business.

About 200 employees have been affected by the decision, but THQ has said they will be available to apply for other positions.

“With this realignment, we are narrowing our focus to high-quality owned IP with broad appeal that can be leveraged across multiple platforms, and to work with the best talent in the industry,” president and chief executive Brian Farrell said in a statement.

“By right-sizing our internal development capacities for our console portfolio, our five internal studios are focused on delivering high-quality games with talented teams driving the execution of those titles to market.”

Blue Tongue, which has produced the internationally successful De Blob games, was acquired by THQ in 2004. Prior to that it had worked on a number of titles with other publishers. THQ Australia was started in 2003 by the company and has mostly worked on licensed titles.

The Game Developers Association of Australia was contacted this morning by SmartCompany, but chief executive Tony Reed was not available prior to publication.

While the video game industry is set for massive growth over the next few years, (PwC expects it will be the largest growing entertainment and media sector through 2015), the Australian industry is suffering. Several medium-sized studios have closed, as work dried up during the financial crisis.

Part of the problem is that many Australian studios rely on work from international publishers, instead of original IP. Many of those publishers, located in the United States and Europe, have held back from dolling out work over the past few years and have only just started to hand out more projects. The Australian dollar has also made them hesitant.

While developers praised the introduction of R&D legislation earlier this year, it has come too late for some. Recent figures from a survey conducted by the Interactive Skills Integration Scheme found the number of developers within Australia has decreased significantly over the past few years.

Team Bondi, a Sydney based studio which developed the internationally successful and critically acclaimed LA Noire title, is also tipped to have sold its assets to production company Kennedy Miller Mitchell after a damaging report blasted the studio’s working conditions.

It is unknown whether the company’s future in games will be affected.