Will Video Games Become New Zealand’s Most Important Export Product?

Will Video Games Become New Zealand's Most Important Export Product?

An industry that has come a long way

There was a time, not so long ago, when video games were regarded as being a poor relation in the entertainment sector, often dismissed as child’s play and, in their earliest incarnations, glitch-laden and prone to freezing.

They had weak narratives and plinky-plonky soundtracks. However, today’s video game industry is a far cry from that, and it is a bit like comparing today’s movie industry with the early silent black-and-white ones.

Video games have truly come of age, are highly regarded, and attract the crème de la crème in terms of designers, producers, and content creators.  Many have narratives that rival the best novel or box set, contain stunning animations and real-life action, and feature headlining artists on their soundtracks.

The place to be

Therefore, is it any wonder that production companies and studios want to get into this space? The market is still relatively young, and entrepreneurs since there is plenty more growth to come. The global market was estimated to be worth USD 224.9 billion in 2022 and is expected to almost triple in size by 2032 when it is estimated it will hit around USD 611 billion.

Our growing acceptance of Virtual and Augmented Reality will accelerate this growth, which will extend gaming into an even more immersive experience.

Playing and making in equal measure

New Zealanders love to play video games, and it is reported that almost 80% play regularly; the average age of a Kiwi gamer is 35, and nearly half of them are women. This might not be the statistics that you would expect when the words video game are mentioned. All forms of gaming are widespread, including iGaming, meaning hunting down the best casino bonuses on offer for the pokies can really be worth someone’s time.

We often see savvy gamers using casino comparison sites like Casino.org in NZ for this. Whatever genre gamers prefer, from role-playing and mass participation games to hyper-casual, first-person shooter, or social casino, the choice of games on offer is so vast that there really is something to suit everyone.

The government has also recognized the genre’s popularity and understands that New Zealanders are not just keen players but also good at making and exporting games. They recently introduced tax breaks and incentives for gaming companies, including a 20% tax rebate for game development studios in its 2023 budget. The rebate will be available for studios that reach a minimum expenditure threshold of NZD 250,000 a year (equivalent to around USD 150,000).

Bigger than the wool industry

The gaming industry provides excellent employment potential, too, and it has recently been reported that the industry is worth more than the country’s wool industry. Wool exports in 2023 amounted to NZD 400, while gaming industry representatives are talking of being a billion-dollar industry by 2026, and revenues are growing between 28% and 35% annually.

The games industry hopes to follow in the footsteps of the film industry, where the country has provided the backdrop for some of the cinema’s biggest-grossing movies like Lord of the Rings and Avatar.

The importance of exporting

The market is growing apace, and its main success is from exports. With a relatively small domestic population, export markets are vital to the success of New Zealand game production companies. The ten largest studios account for over 90% of the revenue earned and more than 75% of the people employed in the industry.

The most successful companies are sticking around and continuing to thrive. On average, the big hitters have been in business for more than ten years, but there is a constant stream of new contenders joining the market, too.

Interactive media is the fastest-growing tech sector in the country. It is also the fastest-growing creative industry, and over half of the studios questioned in a recent survey said they expected to grow by more than 10% in the year ahead.

Will Video Games Become New Zealand's Most Important Export Product?

An industry that punches above its weight

The country’s gaming industry certainly punches above its weight, and eight New Zealand-made apps were featured when Apple launched its all-new Arcade Service. NinjaKiwi’s Bloons TD6 was at the top of Apple’s paid-games charts, and Path of Exile by Grinding Gear Games was one of the world’s top ten most-played PC games.

Rocketwerkz, whose titles include the survival game Icarus and the space station construction title Stationeers, opened a second studio in Auckland and is currently hiring for roles across the company. Meanwhile, Little Lost Fox’s Valleys Between won the International Mobile Gaming Award for Best Feel Good Game. Those are hardly accolades you could bestow upon the wool industry.

Challenges to overcome

However, while there is no shortage of sheep in the country, the same cannot be said about skilled talent. Almost half of New Zealand’s game studios reported skill shortages were affecting their growth potential. The most serious deficit was amongst experienced art and technology senior personnel, so people with these skills and relevant experience can demand extremely attractive remuneration packages.

The other big challenge for the industry is being able to access early-stage development and expansion funding. Hopefully, the government’s recent policy changes will help ease cash flow, oil the wheels, and mean the industry can continue to thrive.