Labour leader Chris Hipkins tries his hand at Into the Dead: Our Darkest Days. Photo: RNZ / Samuel Rillstone
A leading New Zealand video game developer has praised a rebate scheme introduced by the previous government, but says the cap may need to be increased, if firms want to keep their operations in New Zealand.
The gaming industry, which is aiming for $1 billion in export revenue by 2028, is one of New Zealand's fastest growing sectors, with a recent industry report showing it grew by 26 percent in 2024, compared to the global average of 2.1 percent.
In 2023, the Labour government introduced a 20 percent tax rebate scheme for video game developers, which the current government has kept.
Studios that met the minimum $250,000 expenditure threshold per year could receive up to $3 million a year in rebate funding.
The Game Development Sector Rebate (GDSR) was designed to ward off overtures from overseas developers, and keep more staff and operations in New Zealand.
Developers were losing staff to Australian firms, which receive a 30 percent rebate (up to AU$20m), with some states adding their own rebates on top of the federal scheme.
Registered developers are currently applying for the 2025 round, which is administered by NZ On Air. Applications close on 9 May, with decisions due by 14 July.
Wellington-based developer PikPok said the GDSR was the difference between them staying in New Zealand and moving offshore.
"There were a lot of challenges coming through and out of Covid," chief executive Mario Wynands said. "In particular, it made a lot of sense on paper for us to move some portion or all of the studio to Australia.
"We were actively investigating that and the GDSR is a big part of why we chose to remain in New Zealand."
Budget 2023 contained funding of $40m per year for four years to deliver and administrate a rebate scheme for the gaming sector. The coalition has kept the rebate scheme and will review it after two years.
In its first full year, about $12m was paid to 32 studios, with an initial pilot phase, bringing the total payout to $23m.
PikPok was one of two companies to receive the full $3m allocation in the first year, along with Grinding Gear Games, but PikPok financial officer Lance Burgess said the claim cap may need to be increased.
"The two largest studios in New Zealand are at that cap now, so there needs to be some thought around whether that cap is appropriate," he said. "Otherwise, there is a risk that the two largest studios may look to put some of their talent offshore."
Wynands said PikPok had acquired a company in Colombia three years ago, which opened up expansion opportunities, and there remained an incentive to open some sort of on-the-ground footprint in Australia.
"It's a combination of, 'Where does the market go? What benefits the business? What can we grow here? What can't we grow here? What skills do we need to access to that we otherwise can't build the capability for?'"
Visiting PikPok's Wellington headquarters to hear from the company's leadership - and try out its latest game, Into the Dead: Our Darkest Days - Labour leader Chris Hipkins touted the scheme's success.
"We did realise, back in 2023, we were going to lose businesses in this industry, if we didn't do something to encourage them to stay in New Zealand, which was why the gaming rebate was introduced," he said. "As a result, not only are we keeping them, but now the sector's growing and it generates good, well-paid jobs for New Zealand."
Hipkins said the funding envelope set aside was "reasonable" as the industry grows and expected there would be more calls for the envelope.
He said he would await the outcome of the current government's review of the scheme to decide whether to extend it, should Labour return to office, although early signs were encouraging.
PikPok chief executive Mario Wynands. Photo: RNZ / Samuel Rillstone
"They're exactly the sort of thing that we were looking for, so we've got now an industry here that's growing healthily and that was what we were aiming to achieve. If you look at the big indicator that's available at the moment, it's a very, very good start."
Some developers that claimed the rebate are owned by overseas firms, but continue to operate in New Zealand.
Grinding Gear Games - developer of the Path of Exile series, which counts Elon Musk among its fans - was acquired by Chinese holding company Tencent in 2018, while developer Ninja Kiwi has been owned by Swedish company Modern Times Group since 2021.
Burgess said there was no reason to restrict the scheme to New Zealand-owned companies.
"While these companies still develop games in New Zealand and employ people here, and pay tax here, I can't see why they should not be included."
Hipkins said the alternative was these businesses would do their business elsewhere, and New Zealand would not benefit from their economic activity or the tax take that came with it.
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