New Zealand’s Video Game Developers Are Looking To Australia

From today, 1 July 2022, New Zealand video game studios
are expected to be eligible for a 40% tax incentive if they
move their businesses to Australia, and several have already
begun the process.

This will halt the growth of what
has been one of the New Zealand economy’s fastest growing
and most promising sectors, which previously reported
growing 34% each year.

In last year’s budget the
Australian Government announced a Digital Games Tax Offset
of 30% with an eligibility date from 1 July 2022. This is on
top of a 10-15% rebate from several Australian states.
Locally, interactive media receives no significant
Government funding.

Lower Hutt studio A44 Games has
already expanded to Melbourne, while Wellington’s PikPok
has expanded offshore with a new studio in Medellin,
Columbia. New Zealand’s other leading studios including
RocketWerkz, Runaway Play and StaplesVR are also making
plans to move their thriving businesses across the
Tasman.

“This is a crisis moment for our high-tech
economic development aspirations,” says New Zealand Game
Developers Association chairperson Chelsea
Rapp.

“The interactive media sector has been one of
the New Zealand economy’s rising stars. It is high-tech,
fast-growing, clean, green and pays high-wage salaries.
These are exactly the type of jobs we need to grow and
diversify New Zealand’s economy, but Australia could
benefit from them instead if we don’t act
now.

“These are New Zealand-created and owned jobs
that we’re allowing to move offshore, when we’d prefer
to keep them here. This investment by Australia demonstrates
the value this industry has – they’re going big on
interactive media because they understand its growth
potential.”

Globally the interactive media and video
games industry is worth over $250 billion, more than film
and music combined. It is already a major portion of New
Zealand’s software exports.

Industry surveys make it
clear that with borders opening, jobs will flow one-way to
Australia. In 2021, New Zealand employed 969 professional
game developers while there were only 1327 in all of
Australia.

The Game Developers Association is calling
on the Government to fast-track proposals in its own Digital
Technology Industry Transformation Plan, which include
responding to the Australian incentives and establishing an
industry development programme. “We believe New Zealand
can survive with a lower 30% rebate, if it is complemented
with an industry development scheme for training and
startups. That will give us a strong foundation to compete
long term.”

Interactive media is currently excluded
from existing Government screen and R&D programmes, but
the Association believes that creating an incentive scheme
for the game industry will not only pay for itself, but will
also result in positive gains for the Government. On
average, each job in the New Zealand games industry
generates over $285,000 of economic activity, making it one
of our most productive sectors. With a rebate in place, the
industry expects to create 300 new high-tech jobs by
2025.

Over 20 similar schemes with 25% to 40% rates
exist worldwide, and now next door in
Australia.

“Our interactive industry is small in
comparison to North America and Europe, but it has a proven
track record of success that depends on being able to hold
onto the senior-level, skilled talent that we have spent
decades cultivating,” says Rapp.

“The reality is
that we will lose that talent and those businesses because
we simply cannot compete with the offer of a 40% discount to
relocate to Australia. Any chance we had of attracting
overseas studios to set up shop in New Zealand ends in 2022,
and some New Zealand studios are already looking at
expanding into Australia instead of
locally.”

© Scoop Media

 

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