Potential billion dollar NZ video games trade being poached by Australian tax breaks, insiders say


Wellington video games makers PikPok employed more than 200 people in 2023. Chief executive Mario Wynands.

Wellington video games studio PikPok employs more than 200 people, but is considering a future across the Tasman, chief executive Mario Wynands says.
Photo: Supplied

Video games might be our subsequent billion-dollar trade, but Australian tax incentives threaten to stunt the expansion of the sector in New Zealand.

The rapidly rising industry has stalled as some of the nation’s greatest sport makers eye up alternatives throughout the Tasman.

New Zealand Game Developers Association chairperson Chelsea Rapp stated game development was shortly turning into one of many country’s most dear industries.

“We grow, on common, between 20 and 30 p.c yearly,” she stated. “We’re on observe to be a billion greenback business by 2026.”

Video games have been rapidly overtaking a few of New Zealand’s biggest exports.

“I assume we’re the fastest rising export in New Zealand over the last two years,” Rapp said. “As of final year we truly bring in more income than wool.”

NZ Game Developers Association chairperson Chelsea Rapp

New Zealand Game Developers Association chairperson Chelsea Rapp.
Photo: Supplied

RocketWerkz is one of Auckland’s largest recreation developers. Its chief operating officer Stephen Knightly said the trade’s large success had flown beneath the radar.

“I think the video games trade is certainly one of our hidden gems,” he mentioned.

“It earns [more than] $400 million a yr, it wins international awards, it is larger than Australia’s whole games business.”

“If we can just give it the assist it needs, it’s an absolute winner for the New Zealand economic system.”

But he feared that gem could probably be stolen.

“The business had been rising fairly properly, however within the final two years we have seen that growth just stop and plateau. Largely as a outcome of Australia is coming in with crazy salaries and poaching the senior employees from those groups,” he said.

Australia provided an industry-wide tax offset of 30 p.c. That was an enormous incentive by itself, however some states pushed it even additional, returning 45 cents on every greenback.

That incentive, Knightly said, was a large drawback.

“Every main game studio in New Zealand is complaining about Australians approaching their workers and attempting to poach them,” he stated. “That’s been happening for greater than a yr now.”

Screenshot from Icarus by Auckland games studio RocketWerkz

A screenshot from Icarus, by Auckland games studio RocketWerkz
Photo: RocketWerkz

Wellington studio PikPok employed more than 200 individuals. Chief executive Mario Wynands mentioned some of his most experienced workers had been poached.

“We’ve lost, just to Australia alone, 15 folks for the explanation that start of last yr,” he stated.

“That’s pretty important.”

The competitors for senior employees also made it tougher to foster younger expertise.

“For every senior person you have, it makes it so you presumably can hire between three and five junior folks underneath that person,” Rapp stated.

“So not with the flexibility to find senior talent also means [you] cannot tackle some of these recent graduates.”

It was not just workers being tempted over the Tasman. PikPok itself had been approached to open a new workplace in Australia.

“I love New Zealand, the final couple of years have been actually powerful though,” Wynands mentioned.

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“Now, looking at what Australia is offering, we’re speaking to the different states about what the alternatives could be.”

A shot from PikPok's recent game Rival Stars Horse Racing

A screenshot from PikPok’s recent sport Rival Stars Horse Racing.
Photo: Supplied/ PikPok

Knightly advised a similar story. “We met up with them when we visited Queensland and Brisbane, checked out places, visited a college.

“We completely want to keep the team we’ve right here in New Zealand, however our choice nows the following 50 jobs we create – we have the power to choose the place we put them, and if [Australia] provides us 45 p.c again … it simply is smart.”

Rapp stated the tax incentive was strangling New Zealand’s games business.

“Because New Zealand and Australia essentially have a shared labour market, the Australian incentive has a really large negative impact on the New Zealand games industry,” she mentioned.

“If we don’t do one thing this year, for the first time in its historical past the business is going to contract, and people jobs will not come again.”

She said it was frustrating to see the film business receive incentives, because it had so much crossover with the video games industry.

“You’ve received writers, artists, creative administrators, the VFX artists, and the designers,” she mentioned.

“You’re seeing things like The Last of Us being was a critically acclaimed TV series, they share lots of the identical skills and talent pool.”

But Knightly stated the games trade had one necessary distinction over film and tv. “It’s New Zealand owned. The headquarters are here, not in Hollywood,” he mentioned.

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“So the profits get recorded in New Zealand, and that just makes the enterprise case a lot stronger.

“It’s not just concerning the jobs, it isn’t just in regards to the economic exposure, it is about creating long run worth.”

With higher incentives, Rapp mentioned the trade may soar.

She said other countries had already seen that potential.

“We’re light years behind, a really good example is Finland. They created the primary game development incentive and now their games trade is value $5 billion yearly,” she stated.

“They’re about the identical measurement as New Zealand, so think about the distinction it will make if our trade was worth $5 billion instead of half a billion.”

Rapp hoped a aggressive incentive can be part of Budget 2023, which will be announced in May.


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