Chantelle Cole: NZ on Air's Director of Game Development Sector Rebate on studio revenue increasing 17% in the year to July
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What is the main topic discussed in this episode?
Now, for all your dairy and farming export success, let us not forget the tech sector, and they're booming. So tech within tech is gaming.
How much did New Zealand game studio revenue grow to in the year to July?
The gaming industry, new stats yesterday, revenues up 17% to a record $829 million. 98% of that, of course, is offshore. So they're now on track to hit a billion two years ahead of schedule. Chantelle Cole is with New Zealand On Air. Chantelle, good morning. Good morning Mike. And people who don't follow this should know your job, which is the Director of Game Development Sector Rebate. So are the rebates, from my reading, the rebates clearly work?
Yes, I think even if we just look at the track record of New Zealand game development, it took around 20 years for our game developers to reach a revenue of about $400 million. Then Australia introduced a really competitive tax rebate and we started to see a big brain drain over the ditch to Australia and a lot of our really established studios starting to look to move offshore. So the New Zealand game development sector rebate was introduced and up and running in 2023. And within three years, we've more than doubled that revenue. And for context, the revenue figures that came out yesterday are just from 43 studios that go through our program. But the industry is actually 200 studios strong.
What role does Chantelle Cole hold at NZ on Air and what does the rebate program do?
So when the figures come out in September from the New Zealand Game Developers Association, I think we'll see that their growth hit maybe 30, even 40%.
Is the rebate stable, because this is movies and Lord of the Rings all over again, is there a race to the bottom? Do we go at X and then Australia goes at Y and then we go at Y plus?
No, because ours is actually at quite a lower rate than theirs. It's about 30% plus an additional 10% from a lot of federal states. Ours sits at 20%, and what it does that's different from theirs is it actually rewards development activity. So what most people don't realise is that it actually takes about two to four years to make a gain before you'll receive the profits of that activity. So there's quite a lot of time spent paying for staff, rent, all of the tech needed for these sorts of endeavours. And so there's essentially the rebates there to help give a little bit more stability so that they can hire more specialised rolls and release a more polished product out the door. And we can see that with this rapid revenue growth.
By having a bit more stability during development, they're actually able to do better at the other end for New Zealand.
Do they get to double dip, triple dip, whatever? I mean, is there a cutoff point where you go, you're too successful now, you've made too many games, making too much money, go away?
How did Australia’s tax incentives influence New Zealand’s game industry and prompt the rebate?
No, they don't get to double dip. So if they have got a grant from somewhere else in the New Zealand government sector, we deduct that from their rebate amount. And essentially what we are really doing is encouraging their R&D, their investment in new products and encouraging them to invest in their teams. And that's actually what we're seeing this year. We did a new bit of data analysis and we looked at the average growth rate of staff per studio, and it's actually 14%. So they're reinvesting a lot of their rebate into hiring staff.
That's encouraging. So you're bullish on this. I don't know if this is in your wheelhouse. Is the gaming industry beyond the economic cycle? In other words, they just carry on and do their thing and there's a growth path there and it doesn't matter what's happening in the rest of the country?
It is a good question. I think they are their own little ecosystem. But that being said, all industries can be impacted by the economy and by what's happening around the world. And we do see that sometime in games. But what makes them special, I think, is the fact that 85% of them are developing original IP. And so they're not competing with each other. And that means that they actually really support each other. They all share network connections with, say, Apple, Google, different countries around the world who have developers we can learn from.
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:00–0:08
2
How much did New Zealand game studio revenue grow to in the year to July?
0:08–1:10
3
What role does Chantelle Cole hold at NZ on Air and what does the rebate program do?
1:10–2:28
4
How did Australia’s tax incentives influence New Zealand’s game industry and prompt the rebate?
2:28–4:10
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