New Zealand’s games industry grew its earnings by 86%, up to $36.3 million, in the last year. But the strong results come with a warning.
There is plenty to celebrate in the numbers released by the New Zealand Game Developers Association (NZGDA) from its survey of member companies. As well as the headline figure, there’s the good news that $31.4 million of that income came from exports of smartphone and online games.
Even better news was an increase in the number of jobs (up 18% to 448) and a continuation of the trend away from making revenue from service work, which now accounts for only 16% of that $36.3 million revenue.
It’s not that working on contract is necessarily bad. It certainly helped Sidhe/PikPok build its business and reputation, and the company still takes on occasional contract jobs. Its recent Turbo Racing League, made for DreamWorks to accompany the film Turbo, had over 30 million downloads.
DreamWorks isn’t alone in sending work here. Over the last year, Disney, BBC, Lionsgate and Hasbro have all worked with New Zealand studios to produce smartphone games.
However, there’s more money – especially longer term – in developing and controlling IP. Games become franchises, fans are loyal to companies whose work they like, and games can stick around earning money for a lot longer than most other types of on-screen product. It’s encouraging to see local companies achieving ever greater success in that area, especially since digital games are very easily exported.
That export opportunity is not lost on government, despite its refusal to give game development any real recognition within the recently-completed Screen Sector Review.
Government has today included game developers in the list of industries eligible (along with animation, post-production and VFX companies) to access its newly-minted $3 million fund, the Digital Technology High Impact Programme (DTHIP).
The scheme is designed to help further boost export earnings in an area already replete with success. As the government announcement of the fund today made clear, the top 100 performing companies in the digital sector earn some 75% (or $2 billion) of revenue from exports.
As NZGDA chair Stephen Knightly pointed out, because the game development industry produces digital exports, there is no upper limit on its potential earnings. Finnish company Supercell, which produces the #2 game on the app store, Clash of the Clans, was recently valued at $3 billion.
The DTHIP will have a focus on encouraging activity with three countries (US, Australia, Korea) and on helping to address issues facing local companies, such as skills shortages.
That aspect in particular will appeal to the NZGDA, with 44% of the 33 studios surveyed saying that skills shortages were constraining the growth of their business. Of those studios, 71% cited a shortage of programmers, 57% of game designers.
Despite all the positive growth numbers, Knightly warned, “There is a very real risk that the brakes may be applied in future … we’re attracting very bright and creative people to the industry, but we could do with more.”
Gameloft, which has 116 staff in NZ (and is still hiring), had 43 million downloads of its three most popular titles last year. The team lays claim to 24 different nationalities, with roughly 70% of the team coming from overseas. They’re filling roles at all levels across the company.
Gameloft’s Hannah Laird explained, “We would like to hire more local talent. However, the skill level just doesn’t compare in a lot of our required roles.”
Grinding Gear Games’ Path of Exile began life as the dream of three gamers. Seven years on, it came out of beta last week, has over 3 million downloads, and has this year doubled its workforce to 44 people. GGG founder Chris Wilson, noted, “The times we have hired, it’s taken a long time.”
The NZGDA works with the obvious suspects, such as tertiary institutions, to try to help increase the flow of talented locals into the industry. Media Design School this year started teaching game development degree qualifications.
Knightly reckons one thing the industry needs to help it grow is some talent development funding, to be employed in a similar way to the NZFC’s Fresh Shorts scheme: identify the good ideas and help the people behind them to make them and develop their skills along the way.
On the bright side, the problem of experiencing staff shortages is a nice one to have. The game development industry is clearly in far ruder health than other aspects of the screen production industry at present.