Two Kiwi video game firms that have won backing from global giants worry that government incentives being offered in Australia and elsewhere may prove hard for the local industry and global investors to turn down
Sam Ramlu and her Auckland-based M Theory studio have had some serious profile with their soon-to-be-released Wanderer time-travelling, virtual reality adventure.
Marketed with the global punch of Sony, the independent game studio’s Wanderer product – produced jointly with fellow Auckland interactive design agency OddBoy – will be available on the biggest platforms, including PlayStation, Oculus and Steam when it launches later this year.
It’s a big deal in the big worldwide gaming industry, which is worth US$167 billion. In New Zealand, the industry has revenues of $329m, and 96 percent of its earnings are regarded as from exports. About half the industry is Auckland-based, and it has been growing around 40 percent a year.
Ramlu told an Auckland economic conference, Auckland’s Future Now, that even the already-released trailer for Wanderer represents New Zealand on the global stage. (The two-minute introduction video seems to use a silver fern as a prominent device at one point.)
But on the verge of this big release, Ramlu, M-Theory and their successful high-tech immersive story-telling face pressure not just from competitors but other countries now trying to lure VR and video gaming production with hard-to-resist financial incentives.
Video gaming, one of New Zealand’s shining, digital creative industries, received its latest, serious challenge after the Australian Budget announced a 30 percent tax rebate for businesses to base and make their games across the Tasman.
Ramlu said Canada, too, had been luring businesses, essentially to set up the same things that had emerged in this country.
The Australian move “is something too close to home and it cannot be ignored,” she told the 260 business, technology, local and central government, iwi, social impact and community representatives.
“We are not going anywhere … yet,” Ramlu said, with an emphasis on the final word. “Companies don’t want to leave, but they might not have a choice, soon.
“Investors are going to start to see, soon, Australia as an investment opportunity. We just do not have that same level of support.
“It’s an urgent call for us to up our game,” she said.
At a conference with a strong focus on technology and the creative industries as future strengths for Auckland and New Zealand, her worries resonated.
The issue had pushed its way front and centre early, as the first question submitted from the floor to Prime Minister Jacinda Ardern after her presentation was what New Zealand could do, in light of the Australian decision, to attract the investment we need and retain current investment for the video game sector.
She wasn’t giving anything away to Australia. “We tend to frame ourselves as somehow the recipient of whatever it is Australia chooses to do. I think we just need to turn on our heads some assumptions there.”
First, she believed Australian business leaders here recently under the reopened trans-Tasman bubble felt New Zealand was doing things “better”. “What I take from that is let’s not forget unemployment relative to Australia here is low. We have not had to deal with the significant impacts of that additional lockdown they had in Melbourne. We all felt desperately for Victoria during that. We’re not the poor cousins.”
“On the issue of incentives for the video space, and that industry, which is incredible, when you actually take the time to look at what’s happening there, you can rightly be proud. We’ve debated as ministers the extension here.
“The differentiation I would make though is internationally, it’s well established if you want to operate an energetic film industry that attracts international investment, you have incentives. If you don’t then you’re just not operating in that world. It’s a given. Not everyone likes it, but it is simply the way the international film industry works.
“Now we’ve opted into that so we have to retain our incentives to retain competitiveness. We have got an extra edge at the moment because actually we’ve been thriving all the way through, for the most part, Covid.
“The gaming industry does not have that precondition to compete in the same way, or hasn’t done. Now, of course, it’s dynamic. That may change.
“In parts of the world it may be a bit different but it is not quite the same as what we’ve had in the screen sector.
“Now, as those worlds blur, I expect that that will blur. And let’s keep up those discussions, but in the meantime it is an industry I want us to remain in front of.”
Ardern’s attempt at reassurance occurred ahead of Ramlu and Ninja Kiwi’s co-founder Chris Harris’ session on the creative industries.
Harris’ Kumeu-based company, formed in 2006, has recently been acquired by Swedish giant NTG. Ninja Kiwi has an operation in Dundee, Scotland, and employs a total of 70 people .
Harris told the conference the games industry globally was worth that figure of US$167b, compared with movies and services like Netflix valued together at US$130b and the music industry at US$55b.
“Games is expected to grow to US$300b by 2027. This is a huge opportunity.
“We’ve already spoken about what the Australians are doing. Governments around the world are doing things like that.
“For the time being, Ninja Kiwi has no plans to relocate to leave New Zealand. The games industry has a very bright future in New Zealand but this is potentially under threat, so we need to maximise all of the opportunities we have.”
Pam Ford, the general manager, economic development for Auckland Unlimited, said the Australian move had people in the creative industries asking ‘Crikey, what does this mean? … Everyone’s going to shift….’
“I’m not going to suggest incentives, at the risk of eyerolls from my mates at MBIE (the Ministry of Business, Innovation and Employment, which had officials in the audience]. “We have to shift the conversation.
“The global competition is absolutely intense… We need to focus on talent and investment and we need to act now,” Ford said, quoting the 42 Below founder Geoff Ross to say “Bugger the boxing, just pour the concrete.”
US billionaire Gabe Newell, head of game developer and digital distribution company Valve Corporation and the Steam games platform, has been in New Zealand since the major lockdown in 2020 and spoke separately at the conference. “It’s great to see the developments here and see people like Ninja Kiwi.
“It would be helpful for them to bring in senior talent, if you are trying to produce a Triple A title… people from the US or Japan.
“It seems like there are a lot of challenges. When I look at the businesses that are here, they seem like they would be attractive to businesses around the world and there seem to be some impediments to that happening,” Newell said.
“There are challenges to what look like, to me, highly successful video game businesses having trouble more than they ought to.”