NZ Video Games Industry Continues to Grow
11 September 2012

Kiwi game studios released 73 commercial video games in the last year, primarily selling them digitally on iPhones, websites and Android smartphones.

The local industry has nearly doubled in the last two years and employed 380 full-time equivalent game developers as of 31 March 2012, according to a survey of NZ Game Developers Association members. 39% of those people are artists, 39% are programmers, with additional roles mainly in marketing and management.

“Gaming is a high tech, high growth industry that is at the forefront of digital business models,” says NZGDA chairperson Stephen Knightly. “We’ve learnt how to make money from business models like digital distribution, freemium, virtual goods and crowdfunding. Exporting and acting global from day one have been key to the industry’s growth.”

97% of kiwi games were digital downloads with low distribution costs and higher margins.

99% of sales revenue came from exports, with USA and Europe being our largest markets. Local social game Smallworlds gained one million new users in less than three months after launching in Brazil in May.

Targeting global markets allowed role-playing game Path of Exile to ‘crowd fund’ over USD$1 million in pre-purchases during its Closed Beta development.

In the last year, 60% of Kiwi studios had released games for iPhones/iPads, while 40% had released Android smartphone games. 65% had published games that could be played in a web browser and 30% had made PC games.

Flick Kick Football by PikPok reached No. 1 on the US iPhone free game charts, and Major Mayhem by Rocket Jump reached No.5.

“As the kiwi games industry matures we’re seeing that games studios are very good creators of intellectual property,” says Knightly.

“A successful game franchise can be ported to other game platforms, sell merchandise, sell music and have multiple sequels. The shelf-life of a game can be much longer than a movie franchise in many cases. After a few years that investment really begins to pay off.”

Bloons Tower Defence 5 by NinjaKiwi has had over 60 million plays by itself, and encouraged over 2.5 million new subscriber accounts. NinjaKiwi has also have licensed previous games for other developers to release on different platforms.

Only 32% of the industry’s revenue came from contract work, with the balance being made on direct sales, subscriptions, royalties and advertising.

Royalties from intellectual property made up 13% of the local games industry’s revenue. On average, New Zealand screen production companies earn 2.7% of their income from royalties (according to Statistics NZ, Screen Industry Survey 2010). Passive revenues as a proportion of overall revenues are expected to grow as studios continue to expand their portfolios.

“Any entertainment sector is a high risk but high reward industry. You can’t bet on being a one-hit-wonder, but with the right business plan you can become a sustainable business with great potential for growth and high margins,” says Knightly.

Much of the local contract work has been from ‘serious games’, such as training, health or educational games, which were made for local businesses and other organisations.

Teenage depression management game SPARX by Metia Interactive and the University of Auckland Medical School had its successful clinical trials published in The British Medical Journal. The study was reported worldwide in media such as Time magazine, The Daily Mail and The Huffington Post.

“The games ecosystem in New Zealand has real depth and world-class talent. We now have specialist degrees and conferences. There are now lawyers, investors, public relations agencies and business consultants with experience in our sector.”

New Zealand’s first game development degrees, in Game Art and Game Programming, began in August at Media Design School. 220 people attended the NZGDA Conference in Auckland in May, and over 130 people got a taste of game making in the 48-hour Global Game Jam.

Ten New Zealand games have been selected for the ‘Arcade’ exhibition of New Zealand video game art at The Dowse gallery in Lower Hutt from 10 November, and Te Papa will host the acclaimed Game Masters exhibition from 15 December.

33 video game development businesses who are members of the NZGDA were independently surveyed for the survey, with figures as of 31 March 2012. Statistics New Zealand provided input into the questionnaire design.