If Austin wants to grow its significant but mercurial gaming industry, it could offer economic development deals to smaller companies and try to lure publishers to headquarter in the capital city, Fred Schmidt said.

Schmidt was an executive partner in Origin Systems, the company that produced "Ultima," "Wing Commander" and "Omega." He is the co-founder/CEO of Portalarium, a company that makes games for mobile and social networks, and CEO of Wild About Music Galleries, a store on Sixth Street.

He spoke during "Building Headquarter Gaming Companies in Austin," a panel held on March 12 during the South by Southwest Interactive festival.

The creative industries—everything from video games to the arts—have a $4.3 billion economic impact on Austin, Schmidt said.

While Austin game developers have had a hand in producing successful titles such as "Epic Mickey," the city has not generated a blockbuster hit the way that "Angry Birds" has benefited Finland's Rovio Entertainment Ltd. or "World of Tanks" has benefited Belarus' Wargaming.net.

Austin is home to game development and various studios, but the publishers and parent companies are located elsewhere, Schmidt said.

Schmidt said he believes that getting or cultivating an anchor company or long-term entrepreneurial effort would make it easier to recruit talent.

Gaming is a $200 billion global industry, Schmidt said.

2012 was a rough year for gaming nationwide, Schmidt said. Gaming attracted $835 million in venture capital, down 58 percent from 2011's record $2 billion, Schmidt said.

2012 was alsvvo a rough year for Austin game development, he said. Austin lost about 1,000 jobs in gaming; the total local industry has 7,000–8,000 jobs, he said.

Red Fly Studios, Heatwave Interactive, Zynga, Edge of Reality, LightBox Interactive and Portalarium had to lay off some employees in recent years, Schmidt said.

There are new companies arriving, however: Kabam, Bethesda Softworks and Cloud Imperium. Schmidt said it is easy to convince talent to relocate, settle or return to Austin.

Austin called an entrepreneurial hub

In a separate SXSW Interactive panel, two Austin startup veterans and representatives from the City of Austin and Greater Austin Chamber of Commerce said the city has a healthy environment that encourages entrepreneurship.

"This is one of the best entrepreneurial hubs in the country," said Susan Davenport, the chamber's senior vice president for Global Technologies Strategy.

Davenport said Austin added 5,500 new technology jobs in the first three quarters of 2012 and has more than 4,400 tech companies.

Jim Butler, creative industries development manager for the city's Economic Growth and Redevelopment Services Office, said the city partners with the chamber to offer a host of services for small businesses and to retain and help companies grow in Austin.

Bijoy Goswami, who founded BootstrapU as well as several startups, said Austin is about being yourself.

"What people are doing in Austin is all of us are working on that, figuring out our identity," he said.