The digital games industry has seen record annual growth but fears Australian tax breaks and other industry incentives will draw the industry away.

NZ Game Developers Association estimated the industry's revenue grew nearly 50 percent to a record $407 million over the past year, employing more than 1000 people for the first time.

However, maintaining growth was proving to be a challenge with several of the industry's biggest studios looking to take advantage of tax incentives on offer across the Tasman.

Association chair Chelsea Rapp said the industry's rate of growth indicated it would be a billion-dollar industry by 2026, delivering high-value green jobs to New Zealand.

"These are exactly the type of jobs and businesses we want to grow in New Zealand," Rapp said, adding Australia could see also the potential.

"Australian government agencies had been actively courting New Zealand companies, offering incentives to create jobs in Australia rather than locally. "

The initiatives included a 30 percent Digital Games Tax Offset, which could be combined with a 10-to-15 percent rebates in many states, she said.

"This is particularly attractive for startups and companies investing in growth, as every dollar goes so much further.

"The competitive threat to the NZ games industry comes just when we were experiencing record growth, and have had success attracting investment."

One of New Zealand's biggest games studio, Wellington-based A44 Games, was opening an Australian headquarters in Melbourne.

Rapp said other studios such as PikPok, RocketWerkz and, Metia Interactive were also considering growing across the Tasman rather than at home.

"We have provided the government with a pragmatic solution that would make a difference, asking it to implement a 30 percent Interactive Digital Media Grant here," she said, but there needed to be urgent action.

"Announcements must be made soon so the industry can make business decisions knowing where the government stands.

"If we can keep this current growth trajectory going, there will be significant benefits to New Zealand, including significant creation of high-paying jobs with a low carbon footprint."

In the meantime, she said about 50 senior gaming experts had already left New Zealand for Australia, making it difficult for the industry to recruit or train junior talent.