Australian Incentives Continue To Threaten NZ’s Interactive Video Games Sector

Aggressive Australian incentives to attract New
Zealand’s digital video game developers across the Tasman
are having an impact.

Earlier this month over 60 New
Zealand digital game developers attended Melbourne
International Games Week to exhibit products to customers,
publishers and investors. Many also meet with Australian
government agencies to discuss incentives to create jobs in
Australia rather than locally. One of Australia’s flagship
economic development initiatives is a 30% Digital Games Tax
Offset which can be coupled with 10-15% rebates in many

In a major coup for Australia, Victoria’s
Minister for Creative Industries Steve Dimopoulos announced
that Wellington games studio A44 Games will open an
Australian headquarters in Melbourne. Victoria’s Minister
for Economic Development Tim Pallas said: “We are
supporting games studios like A44 to come to Victoria
because it creates jobs, expands the capabilities of our
local talent and enhances our culture of

A44 Chief Executive Derek Bradley says
that while A44 will continue to keep its team in Lower Hutt,
the incentives mean it makes clear commercial sense for any
new jobs to be created in Melbourne.
presents a huge opportunity for A44 and we’re thrilled to
announce our expansion to Melbourne. We feel incredibly
welcomed and supported in Melbourne and we’re looking
forward to growing a team in Victoria.”

Rapp, Chairperson of the New Zealand Game Developers
Association (NZGDA), says A44 is not the only New Zealand
business planning to expand, or even fully relocate, to

“Every $1 million of qualifying
expenditure could see a $400,000 cash benefit to NZ
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. 
“The competitive threat to the NZ
games industry comes just when we were experiencing growth,
and have had successes attracting investment. The shame is
that promising New Zealand businesses may now create those
jobs offshore rather than locally.”

The world’s
largest games investor, Tencent Games, recently invested in
Christchurch games studio Digital Confectioners, taking a
minority stake for an undisclosed amount. Digital
Confectioner’s latest release, Dread Hunger, reached
number two on Steam’s Global PC Games Top Sellers list
this year, selling 1.4 million copies within four

The investment means Digital Confectioners has
a choice of whether to expand its team in Christchurch or
offshore. Director James Tan says he would prefer to remain
in New Zealand but, like others, is tempted by Australia’s

“Our earlier successes got us a foot in the
door. Then Dread Hunger really just proved what we’re
capable of. It’s a huge step forward – allowing us to
work on two new projects, as well as explore ways for the
company to grow and evolve.”
Ms Rapp called on the New
Zealand government to make urgent policy changes needed to
retain and grow the sector here.

“We have provided
the government with a pragmatic solution that would make a
difference, asking it to implement a 30% Interactive Digital
Media Grant here. This should be coupled with an Interactive
Industry Development Programme to grow skills and startups,
similar to the successful Centre of Digital Excellence
(CODE) pilot in Dunedin.

“But announcements must be
made soon so the sector can make business decisions knowing
where the government stands. Our suggested solutions have an
estimated cost of around $35 million to the taxpayer but the
sector already returns over $75 million in employment and
income taxes, which would continue to grow if we can
introduce a similar scheme here.
“It’s not too late,
but time is running

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