New Zealand’s booming video games sector exports digital innovation to the world and is poised to become a billion-dollar industry.
Investment is heralded as the key to upscaling the sector, which has seen record growth in the last few years. It has the potential to be worth around $1 billion a year by 2025, according to a 2019 government-sponsored Interactive Aotearoa Report.
Levelling up
The Kiwi success story mirrors a wider trend, with global revenues from video games around US$167 billion (NZ$234 billion) in 2020 – more than the movie industry and professional sports combined. A December 2020 report from NZGDA (New Zealand Game Developers Association Te Rōpū Waihanga Kēmu o Aotearoa) revealed the country’s interactive sector earned over NZ$323 million in the 2019–2020 financial year – an increase of over 30 per cent, and almost all of it based in digital exports, and despite the COVID-19 pandemic.
According to Chelsea Rapp, Chair of NZGDA, “Games and interactive media have given so many people the opportunity to come together when lockdowns and border closures have kept them apart.” She spells out New Zealand’s strengths and opportunities in the sector: “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.”
That support will come from ready access to ‘smart’ early-stage capital by which investors can support the most promising companies through their expansion stage.
Investing in gaming
Funding, both in early-stage growth and later to assist in global reach, is seen as critical to boosting gaming startups. Investment from overseas companies has seen some major milestones:
- In 2018, Chinese giant Tencent invested at least NZ$100 million in Grinding Gear Games. The west Auckland company is best known for its role-playing game Path of Exile, which won a BAFTA in 2020. The release of the much-anticipated Path of Exile 2 is currently tabled for 2024.
- Tencent has also bought progressively into gaming company RocketWerkz, which was founded in Dunedin but moved to Auckland in order to expand. RocketWerkz’s first big-budget game, Icarus, topped the global PC gaming sales charts on its launch weekend in August 2021.
- In 2021, Swedish e-sports company MTG acquired Ninja Kiwi for NZ$271 million. Upon its launch in 2018, Ninja Kiwi’s Bloons TD 6 game became the world’s most-bought iPhone game app.
The payoff can be seen in New Zealand gaming’s strong links to the rest of the world, with ‘96 per cent of revenue earned overseas’ and ‘65 per cent [of our studios] reporting significant income from North America, 41 per cent from Europe and 21 per cent from China’ (NZGDA, 2020).
Tapping into Kiwi talent
What is it that helps us punch above our weight? Michael Brook, Manager Creative Industries at Tātaki Auckland Unlimited, says New Zealanders “can demonstrate a track record in producing successful games”, noting that screen and digital content have been “really well placed to earn export dollars”.
Key, says Brook, is our wide skill set and proficiency in creative development, thanks in large part to the New Zealand education system where “people are learning much more holistically, across technical, creative, narrative and character.”
This point is echoed by Sam Ramlu, Founder of Auckland game studio M Theory. New Zealanders, she says, have a natural ability to cater to a multicultural audience. She points out, we consume media that is primarily targeted at American and British markets, and that can govern how we create content while also creating content specific to Aotearoa.
Sam also credits the way we can wear multiple hats. “In New Zealand you can play a few roles, which translates into how we work and develop and create – we jump in and figure it out.” She cites as an example the VR game Wanderer, an M Theory and Oddboy collaboration funded by Sony PlayStation: “Right from the beginning we knew it was a good idea; we were determined to do it. It took three years to get funding, but we were in at the finish.”
Stephen Knightly, chief operating officer at RocketWerkz, adds geo-economics to the mix: “We are equidistant between Asia and North America, with a time zone beneficial to international collaboration.” New Zealand innovators’ proven ability to work well with partners in both regions gives investors additional confidence around development, delivery and support.
The unique Kiwi flavour of our output is another selling point. Metia Interactive, founded in Auckland in 2003 by Maru Nihoniho, has won international awards for its products including Kupu Puku, which helps users learn te reo Māori, and Sparx, an online therapy tool that helps young people deal with stress and depression.
Auckland: Gaming central
On top of its widely known selling points – a great lifestyle, good schools, ultrafast broadband, ease of doing business – Auckland is particularly well placed to grow gaming in New Zealand. The city is currently home to 40 per cent of the sector.
Knightly lists the city’s credentials: “It has a fantastic creative tech talent pool,” he states, adding that “we benefit from spill over from the screen industry” in areas such as animation and virtual production. He credits the education sector – naming AUT (with its Bachelor of Creative Technologies and Motion Capture lab), the University of Auckland, Massey, Unitec, and the Media Design School. Internships, specialist gaming degrees, and collaboration with industry all add value.
Not only are homegrown companies like RocketWerkz settling in Auckland, but overseas investors are also choosing or assessing the region. Russian games giant Mytona has set up a Takapuna office and the billionaire US businessman Gabe Newall, co-founder of Valve, rode out the 2020 pandemic lockdown in Auckland. He liked it so much, he gained residency. In his interview at the Auckland’s Future, Now 2021 summit, Newell said, “New Zealand has proven that it is in the top three places in the world for hosting high-tech workers where you are going to be able to distribute risk . . . This is a great place to have a part of your labour force to offset any potentials down the road.”
The road ahead looks promising right now, with gaming’s potential to become a homegrown industry on the scale of our film and music industries, offering investment opportunities in an innovative and high-growth sector.
Find out more
Contact our investment specialists to find out more about opportunities in the gaming sector in Auckland, New Zealand.
This article provides general information on potential investment opportunities in Auckland and is not intended to be used as a substitute for financial advice. The views and opinions expressed are those of the relevant author, and do not necessarily reflect the views of Tātaki Auckland Unlimited. Tātaki Auckland Unlimited and the author disclaims all liability in connection with any action that may be taken in reliance on this article, and for any error, deficiency, flaw or omission contained in it.