Booming NZ games sector earning more than Australia’s

New data shows New Zealand's interactive games industry earns a third more than its Australian counterpart while employing half as many people. 

However, trans-Tasman competition is hot, with local industry heads warning of a looming crisis as Aussie studios poach Kiwis on the back of Australian government incentives.

Australia earned AUD$284.4 million (NZD$300 million) from digital games in the last financial year, while New Zealand's fast-growing games sector grew 47% to earn $407 million. The figures come from the Australian Game Development Survey released this week and the New Zealand Game Developers Survey released just last month. Both are for the 2022 financial year.

Buoyed by new Australian government incentives, the Australian video games industry added 770 new jobs in 2022. This brings the total number of people working in the industry in Australia to 2104 professional developers compared to 1070 in New Zealand.

Included in Australia's growth are jobs poached from New Zealand, sparked by the introduction of Australian government incentives. The results are alarming for the New Zealand digital games sector, and for the prospects of retaining high-value tech jobs here in general.

"Australia's industry expects to create at least 300 new jobs in the coming year and with our open labour market with Australia we know where they'll get them from," says Lance Burgess, CFO of Wellington-based PikPok, NZ's largest game studio.

"We have already seen our industry hit hard in recent months, with a significant proportion of our most experienced people offered jobs with Australian studios. We are losing the very talent that manages our projects and develops other workers and it is causing a crisis here with major projects being slowed or postponed."

Australian industry body Interactive Games Entertainment Association (IGEA) attributes Australia's growth to government support and incentives, noting that since the announcement in May 2021 the impact of the Digital Games Tax Offset (DGTO) has been immediate. The Australian game development industry quickly saw increased interest from international business, local developers confidently opening more roles, and increased investor engagement. 

The DGTO can be coupled with 10-15% rebates in many states. Every $1 million of qualifying expenditure could see a $400,000 cash benefit to New Zealand companies that move resources to Australia rather than stay in New Zealand. This is particularly attractive for startups and companies investing in growth, as every dollar goes so much further.

Burgess says Australian studios have been pre-spending their incentives for months now, and he expects New Zealand's advantage in both talent and revenue to be short lived as new projects come on stream across the Tasman.

"We desperately need incentive reciprocity with Australia to save the local industry, but so far our government's response has been insufficient," he says.

"The video games industry is a gem in the New Zealand economy with its low carbon footprint and high-paying tech jobs," notes Burgess. "If the Government doesn't move immediately we will not only see more employees poached, and revenue fall, but studios will make a sensible business decision to move to Australia. 

"Companies like ours would be millions of dollars better off annually over there. Governments for years have been saying we are doing well and we don't need help, and come back to us when there is a market failure. Well, that time is now."