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NZ game developers double exports

On the morning a couple of NZ Game Development Association board members were lending the Green Party a hand to launch its ICT policy in Auckland, the organisation put out the results of its 2014 survey.

The Greens’ policy includes establishing a $5 million Game Development Fund; reducing barriers to local companies competing for government contracts; and spending $15 million over three years on internship programmes.

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The very good news in the NZGDA numbers was that the sector’s revenue continued to grow. Having passed $35 million for the first time last year, this year’s numbers grew by over 100%. In the year to 31 March 2014, NZGDA members coined $80.2 million, of which 90% (a similar proportion to last year) came from digital software exports, primarily internet/app stores.

“Interactive entertainment software is a hi-tech weightless export industry that creates New Zealand-owned IP and competes on a global scale,” said NZGDA Chairperson Ben Kenobi. “With smart digital exports there is no upper limit on how many copies you can sell.”

The good and bad news was in the patterns that are emerging. This is the fourth year the NZGDA has conducted the survey, and some of the trends should be cause for concern.

While the revenue growth by a factor of two is great, the number of full-time equivalent jobs in the sector grew by an actual two this year, from 448 to 450 (although the survey did acknowledge there were hundreds of non-NZGDA member one-person-bands developing games in their spare time). Clearly, #s449 and #450 didn’t deliver the sector’s extra $40+ million of revenue on their own. Much of it did come from a small number of titles, however, as direct sales, advertising and – impressively – 9% from licensing and royalties.

Kenobi explained, “The growth reported in our survey comes from a cluster of studios who are now well-established with global reputations and are six years old on average.”

NZGDA infographic

Source: NZGDA

Kenobi did express “at a lack of new globally-successful studios and the next generation of startups”, citing it as the motivation behind Kiwi Game Starter. The $25,000 startup competition will see finalists pitch at the New Zealand Game Developers Conference later this month.

“With the right infrastructure and support, New Zealand’s interactive entertainment sector could be far larger again,” said Kenobi, comparing NZ with Finland, whose interactive game development industry was worth over three billion US dollars last year. Again, a lot of that is down to one stand-out success (Supercell’s Clash of the Clans).

The challenges facing the industry are, in some ways, nice ones to have. There is no shortage of content creators in other fields who’d like to crack the export market, no shortage of producers who’d like to see potential income diminished by piracy as rarely as game developers do.

However, while the sector is building great growth and income from creating its own IP, there should be concern that earnings from service work are falling year by year. There is money to be made from service work but, more importantly, there are skills and knowledge easily learned from it. Learning those lessons cheaply while being paid by someone else, rather than when developing one’s own IP in a garage with limited cash, is not a bad way to start and certainly worked for PikPok.

The NZGDA release cited a number of highlights from the past year, including:

  • Grinding Gear Games’ Path of Exile has over 7 million players;
  • PikPok’s Into the Dead has over 30 million downloads, its Dreamworks licensed title Turbo FAST over 50 million; NinjaKiwi’s Bloons TD Battles and Majic Jungle’s The Blockheads both passed 10 million downloads;
  • Outsmart Games’ social game Smallworlds grew by 6m registered users; and
  • Runaway’s Flutter: Butterfly Sanctuary was the #1 top grossing iPhone educational game in 38 countries.

The NZGDA Conference runs 18 and 19 September at AUT.

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