New Zealand’s video game industry is at risk of losing its biggest game developers to Australia due to tax incentives that are attracting senior staff across the Tasman. The industry has seen a significant slowdown in growth as a result of the competition posed by Australia’s game industry, which offers an industry-wide tax offset of 30%, returning 45 cents on every dollar in some states. RocketWerkz, one of Auckland’s largest game developers, has expressed concerns that this incentive is causing a massive problem for the industry, with every major game studio in New Zealand facing a wave of poaching from Australian employers.
While the industry has been growing significantly in recent years, with an average growth rate of 20-30% every year, the tax incentive is causing a plateau in the industry’s growth. New Zealand Game Developers Association chairperson Chelsea Rapp said that video games were quickly overtaking some of New Zealand’s biggest exports, with revenues surpassing that of wool exports. The industry is on track to be worth $1 billion by 2026, but the threat of the loss of senior staff to Australia could stunt its growth.
The tax incentive is not only causing issues for the retention of senior staff but is also making it harder to foster young talent. With every senior person lost, it is estimated that studios cannot hire between three and five junior people to replace them. The situation is further compounded by the fact that some studios have been approached to open new offices in Australia, offering greater incentives for businesses. Wellington studio PikPok has already lost 15 people to Australian employers since the start of last year alone, making it harder to maintain and expand the team.
The New Zealand games industry is frustrated to see the film industry receive incentives, given that the two industries share many skills and talent pools. The video games industry is New Zealand-owned, with headquarters in the country rather than in Hollywood, which makes the business case much stronger. The industry hopes that competitive incentives will be announced as part of Budget 2023, which is set to be announced in May, to help the industry continue to grow and retain senior staff.
