FutureFive NZ - NZ video games growth continues

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NZ video games growth continues

The Kiwi gaming industry has nearly doubled in the last two years, employing 380 full-time equivalent game developers in the process.

According to a survey of NZ Game Developers Association members, New Zealand game studios released 73 commercial video games in the last year, primarily selling digitally on iPhones, websites and Android smartphones.

The report says 39% of those people are artists, 39% are programmers, with additional roles mainly in marketing and management.

“Gaming is a high tech, high growth industry that is at the forefront of digital business models,” says NZGDA chairperson Stephen Knightly.

“We’ve learnt how to make money from business models like digital distribution, freemium, virtual goods and crowdfunding.

"Exporting and acting global from day one have been key to the industry’s growth.”

Nearly all of kiwi games (97%) were digital downloads with low distribution costs and higher margins with 99% of sales revenue coming from exports as the USA and Europe continue to be the country's largest markets.

“As the kiwi games industry matures we’re seeing that games studios are very good creators of intellectual property,” says Knightly.

“A successful game franchise can be ported to other game platforms, sell merchandise, sell music and have multiple sequels.

"The shelf-life of a game can be much longer than a movie franchise in many cases.

"After a few years that investment really begins to pay off.”

Only 32% of the industry’s revenue came from contract work, with the balance being made on direct sales, subscriptions, royalties and advertising while oyalties from intellectual property made up 13% of the local games industry’s revenue.

In general New Zealand screen production companies earn 2.7% of their income from royalties as passive revenues are forecast to grow as studios continue to expand their portfolios.

“Any entertainment sector is a high risk but high reward industry," says Knightly.

"You can’t bet on being a one-hit-wonder, but with the right business plan you can become a sustainable business with great potential for growth and high margins.

"The games ecosystem in New Zealand has real depth and world-class talent.

"We now have specialist degrees and conferences.

"There are now lawyers, investors, public relations agencies and business consultants with experience in our sector.”

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