New Zealand stands to lose video game development companies to Australia as studios seek to take advantage of a new tax incentive there, according to the New Zealand Game Developers Association.
Association chair Chelsea Rapp has said New Zealand game studios should be eligible for a 40% tax incentive if they move their businesses to Australia, and several have already started the process.
The government should take action to protect the sector, which is growing at 34% a year, by introducing a reimbursement system, she said.
A New Zealand survey of interactive games in December found that more than half of New Zealand’s top 12 studios were considering moving to Australia.
* Growth in the video game sector is slowing due to the shortage of talent
* Kiwi game developers risk mass exodus to Australia due to talent poaching and tax breaks
* Video game developer Wellington joins the collective in a $175 million deal
Lower Hutt’s A44 Games studio had already expanded into Melbourne, and other studios, including RocketWerkz, Runaway Play and StaplesVR, were also planning to move operations across Tasman, she said.
Last year, the Australian government announced a 30% tax offset for digital games which began on Friday, she said.
This was on top of a 10-15% discount from several Australian states, she said.
“The reality is we’re going to lose this talent and these businesses because we just can’t compete with the offer of a 40% discount to move to Australia.”
Locally, interactive media has received no significant government funding, she said.
“This is a time of crisis for our high-tech economic development aspirations,” Rapp said.
The interactive media industry was fast growing, sustainable and well paying, she said.
“These are exactly the kind of jobs we need to grow and diversify New Zealand’s economy, but Australia could benefit if we don’t act now.”
The Australian incentive highlighted the value of the industry, she said.
“They go for interactive media because they understand its growth potential.”
The government needed to accelerate proposals in its digital technology industry transformation plan, including responding to Australian incentives and establishing an industry development agenda, she said.
New Zealand could survive on a lower 30% discount, if supplemented by an industry development program for training and startups, she said.
“It will give us a solid base to be competitive in the long term.”
With a rebate in place, the industry is expected to create 300 new high-tech jobs by 2025.
In 2021, New Zealand employed just under 1,000 professional game developers compared to just over 1,300 in Australia, she said.
On average, each job in New Zealand’s games industry generated more than $285,000 in economic activity, she said.
Globally, the interactive media and video games industry was worth more than $250 billion, more than movies and music combined, she said.