More than half of the $33.8 million will be allocated in this financial year.
"Global demand for movies, TV shows and games continues to skyrocket and we are ensuring Victoria is ready to capture our share of that huge market," said Minister for Creative Industries and Assistant Treasurer Danny Pearson.
"This will support thousands of jobs in an industry that's been hit hard by the pandemic – and create a pipeline of work for the future."
The Interactive Games and Entertainment Association welcomed the news, but called for federal support.
"The Victorian state government has reaped the rewards of supporting the video games industry, with Victoria being home to the majority of game developers in Australia" said CEO Ron Curry.
Examples include the support given to The Arcade – Australia's first collaborative working space for game developers – and the Melbourne International Games Week held each October.
"This boost in funding ensures that the tremendous contribution that Victoria's games sector makes to the state's cultural, social and economic landscape will increase and pave the way for the rest of Australia to follow. With numerous international games studios looking to establish bases around the world, the attraction fund is an important step in making sure they consider Victoria a real and viable option.
"However, despite the Victorian Government's visionary policies announced today, which come on the heel of the South Australian Government's introduction of Australia's first ever game development rebate only a few months ago, Australia has a long way to go to meet the incentives provided to games studios in other countries like Canada and the UK.
"We again ask the Australian Government to do its part by providing a federal tax offset for game development, just like it does to the rest of the screen production industry, and to restore Screen Australia's previous game development fund. It is only through federal, state and territory screen policies working together that we can exponentially grow the local game development industry and attract the hundreds of millions of dollars, if not billions of dollars, that is waiting to be invested in Australia.
"Australia has the ability to create a $1 billion industry in game development, providing much needed export revenue and the creation of 10,000 new highly-skilled and innovation focused full-time jobs. We are seeing Australian states like Victoria take advantage of this growth industry and it's time for the federal government to step in and reap the rewards for Australia."