January 16, 2021

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Game development contributes significantly to NZ’s growing tech sector

According to NZTech Chief Executive Graeme Muller, the substantial $323.9 million earnings of the country’s game developers in the last financial year is indicative of the boom in the nation’s tech sector.

New Zealand’s interactive media and game developers made $121 million more in the current fiscal year. Interactive games grew $120 million-plus during the pandemic period. Video game developers. earned $323.9 million in the year to 1 April 2020, an increase of $121 million in one year alone.

The industry gained by being able to continue production during restrictions as well as skyrocketing demand as people globally had to stay at home, many of whom played digital and online games. Interestingly, 96% of domestic creators’ income came from overseas audiences.

The figures come from the annual New Zealand Game Developers Industry Survey of 42 interactive, gaming, virtual reality, augmented reality and education tech companies.

New Zealand Game Developers Association Chairperson Chelsea Rapp said, “The games industry has proven itself particularly resilient during the COVID-19 pandemic, both here in New Zealand and around the world. We are uniquely positioned to contribute to our economic recovery with weightless digital exports, but that growth will depend heavily on our ability to support young and emerging enterprises.”

Graeme was of the opinion that gaming development exemplifies the continued growth and success of the whole domestic tech industry. New Zealand tech firms have been incredibly resilient in the face of the COVID-19 pandemic that has severely impacted most sectors. Technology seems to have been fairly immune to devastation that COVID wreaked on other industries and has been a significant economic contributor.

Last year, the tech sector employed 114,000 people, was the country’s third-largest export and contributed 8% of the GDP. The country’s 200 largest tech exporters last year generated overseas sales of $9.4 billion with annual sales growing at 8.3% to $12.7billion.

He said that New Zealand exports in sectors like the game developers have been growing exponentially. National IT companies have been working to assist companies in other sectors with digital transformation. With this growth and the rising demand, there is a new wave of high growth companies raising funds to expand globally.

“In the past couple of weeks, we have seen two great New Zealand tech firms each raise more than $20 million dollars to support their continued development,” he confirmed.

The ten largest studios earned 95% of the sector’s revenue and are 11 years old on average. However, 75% of studios employ five people or less and the Game Developers Association is concerned about the lack of support to grow these firms to take advantage of the export opportunity.

Despite the survey being conducted in the middle of New Zealand’s second COVID lockdown, 49% of studios surveyed predicted significant growth (10% or more) this coming year. Only 17% of studios predict any decline in sales.

None the less, the sector is facing challenges. Tech firms are constrained to recruit the highly skilled specialist needed for their rapidly expanding teams. NZTech has asked cabinet ministers to urgently consider allowing more rapid entry of targeted candidates with these critical advanced digital skills.

Though stay-at-home directives and other restrictions have created an increased demand and opportunity, travel restrictions have made it harder to make publishing deals and secure funding. The top four challenges studios reported facing were a shortage of experienced staff, COVID related travel restrictions, attracting early-stage funding and attracting investment for expansion.

Last year’s Interactive Aotearoa report by the Game Developers Association recommended that the Government create an interactive innovation fund and industry development plan to grow the pipeline of new interactive firms. The Government is currently consulting on the Digital Technologies Industry Transformation Plan and the Screen Sector Strategy 2030, which these could be part of.