A still from Path of Exile 2, the global hit made by West Auckland's Grinding Gear Games. Inset: Science, Innovation and Technology Minister Dr Shane Reti.
The video game industry has delivered another boom year – but received only one of four items on its wishlist for further government support to accelerate its growth.
Total revenue jumped 38% year-on-year to $759 million, almost all of it in export receipts, according to the New Zealand Game Developers Association 20025 Industry Survey, released this morning.
Total staff employed by the sector rose 29% to 1418.
87% of NZGDA members think they will maintain or grow their income in the financial year ahead.
The sector has also been in the news, from Elon Musk apparently hiring a ring-in to boost his standing in Path of Exile, the mutiplayer fantasy game produced by West Auckland’s Grinding Gear Games (FY2024 revenue: $105.2m) to Splitting Point Studios - which founder Janzen Madsen started from his parents’ Auckland home – setting simultaneous player records for its “cosy game” Grow A Garden, outstripping the more rambunctious Fortnite.
And Weta Workshop drew global notice – if not all of it positive – for its Hobbit entry into the booming cosy game genre.
NZGDA executive director says a tax rebate for the sector, now in its third year, has fuelled the industry’s growth.
Keene says last year $22.4m was paid to video game companies under the scheme, but they returned more than $115m to Crown coffers through income tax and PAYE.
“The tax revenue paid by our industry represents a 474.31% direct return on that investment,” Keene said.
“For every dollar invested via the GDSR [Game Development Sector Rebate], the government has a direct return of $4.74, underlining the fiscal impact of the sector’s rapid growth.”
The scheme also achieved its aim to stop talent defecting across the Tasman (where a similar rebate had been introduced) and to encourage more local hiring.
![“Before receiving the GDSR [Game Development Sector Rebate], only about 5% of our workforce was based in New Zealand, whereas now it’s almost a 50/50 split as a direct result of the GDSR” - Janzen Madsen, founder of Grow a Garden owner Splitting Point.](https://www.nzherald.co.nz/resizer/v2/DMFAMRBQZVCF7E3KRTTJBSVENE.jpg?auth=4146a7ebd34450e37dad4cac2f5cd7529a45189353bba4ca45788066630ea2fe&width=16&height=16&quality=70&smart=true)
“Before receiving the GDSR, only about 5% of our workforce was based in New Zealand, whereas now it’s almost a 50/50 split as a direct result of the GDSR,” Madsen told the Herald in July. The 20-something Aucklander employs 20 for his firm, a kind talent-spotting outfit that buys makers of emerging hits on the freemium Roblux platform.
One fly in the ointment: After fiercely lobbying for a rebate for years, the industry claimed only just over half of the up to $40m on offer for the last financial year (unclaimed funds don’t roll over; the money is returned to Treasury).
NZ on Air, which administers the scheme, said it was not a matter of rebate claims being rejected. Nearly all who met the criteria were approved for the 20% rebate on game development costs. There were just not enough firms putting their hand up (in the context of a $3m cap per game studio).
It was a similar situation the previous year when $22.3m of the potential $40m was paid out.
Ahead of the NZGDA’s annual conference today, which was due to kick off with a keynote speech from the industry’s minister, Shane Reti, industry figure Lance Burgess put four ideas to the Herald – all of which he said would boost the industry by allowing it to claim more of the $40m per year allocated to the rebate, or could be accommodated by leftover funding.
Burgess is chief financial officer for one of the industry’s biggest player’s, Wellington-based mobile game specialist PikTok and a NZGDA director.
One was to make the rebate scheme permanent. The GDSR funded by the previous Government for four years. This is its third year after becoming one of the only tech-adjacent incentive schemes to survive post-election.
A second was to boost the maximum rebate to each gaming company to $4m from the current cap of $3m. Burgess mused it could even be raised to $5m or $6m for some of the larger firms while remaining under the $40m cap.
A third was to boost the rebate from 20c in every dollar spent on game development to 25c, which Burgess said would but it on a par with the film industry (with which it competes for special effects jobs), and bring it close to the A30c offered across the Tasman.
The fourth was to boost for the modestly-funded Centre of Digital Excellence (Code), the Dunedin-based hub that runs a grant programme for gaming start-ups.
In the event, in a keynote address to the NZGDA’s annual conference this morning, Reti only delivered on Code, announcing that its annual funding has increased by $2.75m to $5m.
“Code’s programmes currently receive twice as many applications as they can fund. By doubling funding for Code we’re backing our innovators to grow faster and reach global markets,” Reti said.
He added. “Code’s support for our gaming sector is highly successful. Typically, for every 1000 pitches to publishers, in recent years only 1.6% sign deals. Studios supported by Code have an incredibly success rate of 40%.”
Reti said the video gaming industry was on track to hit $1 billion revenue by 2027, most of it from export receipts.
His office confirmed there were no changes to the level of the rebate scheme.
But in a second win, Burgess said he had talked to Reti shortly before his speech and the GDSR scheme had been made permanent.
Reti’s office told the Herald it wold be “ongoing funding, not time-limited.”
The local gaming industry continues to skew white male (see graphic above), if less heavily than before.
For example. 2022, 22% of those employed by the sector were woman. In this year’s survey, it’s 28%. Over the same period, Māori staff have increased from 2% to 5%. LGBTQ and neurodiverse numbers also increased.
83% of video game companies in NZ are locally owned, the survey says – although by revenue, the (undisclosed) percentage would be higher given some of the largest players such as Grinding Gear Games (now 100% controlled by China’s Tencent) and Ninja Kiwi (owned by Sweden’s MTB) have been sold offshore in deals running into the hundreds of millions.
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.