Hamish Fletcher

Hamish Fletcher is a business reporter for the NZ Herald

Kiwi game makers target world

Mitch Olson says the mobile market is so strong that developers cannot afford to ignore it. Photo / Sarah Ivey
Mitch Olson says the mobile market is so strong that developers cannot afford to ignore it. Photo / Sarah Ivey

Mario Wynands admits video game designers may not have much in common with the hundreds of players who have touched down in New Zealand for the Rugby World Cup.

But although the 100-strong team at Wynands' gaming studio, Sidhe, may not be the quickest at the breakdown, their latest title, Rugby Challenge, has topped the New Zealand charts.

Rugby Challenge certainly mimics the look and feel of a real match, from the in-game commentary provided by Grant Nisbett and Justin Marshall, to the recreation of the All Blacks' haka.

The game's creators at Wellington-based Sidhe are some of the most talented in a small but booming industry.

Although it may fly under the radar, the country's gaming sector is gaining momentum and has grown by almost 50 per cent in the past year.

According to Game Developers Association chairman Stephen Knightly, more than 360 full-time game developers are spread around the country and another 80 to 100 industry jobs are expected to open up in the next 12 months.

With global games sales tipped to reach almost US$57 billion ($68 billion) this year and US$84 billion by 2015, there is ample opportunity for local developers to export their creations to the world.

Unlike other industries, the "tyranny of distance" poses little problem for the gaming sector, which can market and distribute products to customers around the globe via the internet.

For Sidhe, the ability to reach players directly was transformative.

"Once we were able to develop our own games into the online space, it was a big shift for us. We're very much moving away from the work-for-hire model to [one] where we are creating intellectual property and selling and publishing [our own] intellectual property," said Wynands, who founded the company with two friends in 1997.

"We still might do distribution deals so that we can pick up some retail revenue as well, but for us the focus is online where essentially there is no limit to the amount of copies we could sell."

Sidhe is understood to have an annual revenue of more than $15 million, with exports making up 99 per cent of the company's sales.

Although console and PC titles such as Rugby Challenge are still big earners, one of the fastest growing gaming platforms is the mobile phone market.

With the number of smartphone users increasing rapidly, game studios are finding a new avenue and audience for their creations.

"Over the last decade we've gone from a place where video games were a living room or bedroom activity to something where's everything's connected and people have phones capable of advanced games. There's been a shift to games being available everywhere," Wynands said.

Unlike releases such as Rugby Challenge, which retails for about $100, studios make money in the mobile space by selling large volumes of games, usually for less than $10 each.

Auckland game designer Mitch Olson said the mobile market is gaining such a critical mass that developers cannot afford to ignore it.

Olson's own creation, SmallWorlds, is an online environment where users can create and customise personal virtual spaces and share experiences with other players, such as watching YouTube videos or listening to favourite bands.

SmallWorlds was started with funding from Disney's venture-capital arm and since then has attracted investors such as Trade Me founder Sam Morgan, who now sits on the games' board.

It has scored 6.5 million registered users since it was launched in December 2008, with 600,000 playing at least once a month.

The online platform is free to play, but makes money by selling users in-game items, allowing them to make their online characters look unique and interesting.

This business model - known as "freemium" - is proving a popular way for game studios to attract players who would be scared off by an up-front purchase fee.

Although users still have the option of not paying a cent during game play, others are more than happy to put forward real money for these virtual goods - so much so that SmallWorlds hopes to draw in $100 million revenue by 2013. For Olson, the games industry could become a key driver of economic growth and help boost per-capita GDP. "There's a huge opportunity for New Zealand to be building the industry here ... we can combine creativity and technology to build valuable intellectual property," he said.

"The beauty of gaming is that New Zealand is positioned with a well-educated and creative workforce, so in finding the people who can become great game developers, designers and artists,

we've already got a fantastic advantage in that respect."

Olson said studios here have the benefit of being able to create games for up to 70 per cent less than larger firms in the United States.

"If you're a gaming company over there, chances are you're placed on the West Coast. There's a massive fight for good people and that inflates the salaries [the studios need to pay]. People tend to shift around a lot in the US and that's a disadvantage for those companies as well because you're losing a lot of your expertise when people move on," he said.

Founders of the multimillion-dollar games studio Ninja Kiwi, Chris and Stephen Harris, agree there is more than enough room for other Kiwi developers to get off the ground.

The brothers hit the big time in 2007 with their online game Bloons, which has since been played more than a billion times. While Ninja Kiwi brings in revenue from the "freemium" model and mobile gaming, Chris Harris said online advertising still forms a big chunk of their earnings.

And while working in the gaming industry would be a dream come true for most, he said their success still relies on running Ninja Kiwi like any other business.

"It's not just about having a programmer and an artist and making a game and doing really well. There's lots of bad decisions that can be made. If you're running a startup, you still need someone with a sound business head. There are people who may be more talented than [us] but if they make the wrong decision they could lose any opportunity very easily."

Developer winning big

Wellington-based developer David Frampton was making up to $4000 a day from his helicopter game, Chopper, when it hit number one in the Apple store in 2008.

Frampton, who has no formal training in computing or animation, is behind Majic Jungle Software, a one-man company which has released half a dozen games for mobile devices.

"I have always enjoyed playing games, so at some point I guess I decided I'd like to learn how to make them too. Then about a year or two later while I was a struggling artist on the dole I thought I'd give it a crack," he said.

Frampton has gone on to sell millions of mobile games, retailing between 99c and $5.00 each.

"I've mostly stuck with the paid model, I did make a lite version of Chopper to help sell it in the early days," he said.

He has since created sequels to Chopper, which sold thousands of copies last year.

Frampton has been helped along by the rapid rise in smartphone users which has opened up a huge market.

But Frampton says the business can be a bit hit and miss.

"[Some apps] don't really sell well at all and it's months of work down the drain."

- NZ Herald

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