Game changer: Studios warn NZ to match Oz tax break fast
The fast-growing video game industry says our Government must respond urgently to tax breaks introduced in Australia yesterday, or lose companies and talent across the Tasman.
Three companies are already moving some of their operations offshore or assessing a move to Australia, NZ Game Developers Association chair Chelsea Rapp says.
Lower Hutt-based, now Uk-owned studio A44 Games — like many of its peers, now owned offshore — has already expanded to Melbourne, while Wellington’s Pikpok has expanded offshore with a new studio in Medellin, Colombia. New Zealand’s other leading studios including Rocketwerkz, Runaway Play and Staplesvr are also making plans to move their thriving businesses across the Tasman, Rapp says.
“This is a crisis moment.”
In May last year, Australia’s Government unveiled a A$1.2 billion package to boost local industry and lure multinational gaming companies to set up shop in Australia.
Its central element is a 30 per cent tax break called the Digital Games Tax Offset, with those gaming companies in Victoria getting an additional 10 per cent tax break — meaning for every dollar they spend on developing a new game, they get 40 cents back.
The tax break comes into effect today. The NZGDA has been calling on Digital Economy Minister David Clark to counter it for 14 months.
The industry sees itself being hit by a double-whammy, with the Government failing to match the game development tax break across the Tasman, and offering large subsidies to the film industry — which competes directly with the video game sector for talent, in areas like special effects.
Earlier, Mario Wynands, CEO and founder of NZ’S largest game development studio, Wellington-based Pikpok, which employs around 200, told the Herald he was reluctantly looking at hiring offshore because of the lack of support and the barriers in NZ.
Shortly after, his firm secured new staff by buying a 20-person game development studio in Colombia.
And Rocketwerkz chief executive Dean Hall complained bitterly about Amazon negotiating a 25 per cent rebate under the Government’s NZ Screen Production Grant programme for filing its $650m Lord of the Rings series in West Auckland — a higher-than-usual rate for an international production.
Hall said he didn’t want a chunk of the screen fund. Rather, he objected to the fact our Government was subsidising Amazon, and other international players shooting films in NZ, when they were competing head-to-head with the local game development industry for the same staff in key areas like visual effects.
If there had to be a screen subsidy, the up-and-coming game developers should get a share.
Rapp earlier welcomed Clark’s move to expand funding for the Centre of Digital Excellence in Dunedin, set up in 2019 with a $10m budget, and which has received small top-ups since (including $1.2m) as it offers small direct grants to local developers.
The NZGDA chairwoman was looking for more big-bang moves, however, to support the video game industry that is estimated to bring in $1 billion in export revenue by 2025 — at least, if it can continue on its current trajectory and avoid an exodus.
She had not seen any in Clark’s draft Digital Strategy for Aoteroa or the thinon-tech Budget 200.
Clark has been asked for comment. “The interactive media sector has been one of the New Zealand economy’s rising stars. It is high-tech, fast-growing, clean, green and pays high salaries. These are exactly the type of jobs we need to grow and diversify New Zealand’s economy, but Australia could benefit from them instead if we don’t act now,” Rapp says.
In 2021, the local industry employed just under 1000 — making it much stronger per capita than the Australian video games industry, which employed 1327, according to the NZDGA.
Globally the interactive media and video games industry is worth over $250b, more than film and music combined. It is already a major portion of New Zealand’s software exports, Rapp says.