“Disastrous” Oz Gaming Tax could Force NZ Government’s Hand

New Zealand may not be the first country that springs to mind in any conversation about video gaming – and, in fact, its local industry has been referred to as virtually brand new in the press – but the country has recently begun to establish itself as the home to some up-and-coming studios. Grinding Gear Games, the developer behind the popular MMO Path of Exile, stands as a shining example.

So, the news that Australia will offer studios a 30% tax rebate to relocate across the Tasman Sea hasn’t been received well in New Zealand. The incentive has been referred to as potentially “disastrous” for Kiwi studios, which could face losing talent to their Australian counterparts. Only around sixty games have ever been made in New Zealand, mostly sports games and indie efforts, so the nation has no track record of success to poach its own developers from overseas.

Talent Exodus

The New Zealand Game Developers Association (NZGDA) isn’t optimistic. The organization notes that Australia’s tax rebate will only accelerate a talent exodus that has been happening for some time. The local government offers little support to video game developers, despite investing heavily in other media. Amazon’s new Lord of the Rings show, for example, was partly financed by the taxpayer.

In addition to Grinding Gear Games, New Zealand counts M Theory among its most successful development companies. M Theory is a VR and AR-dedicated studio that recently partnered with Sony to launch Wanderer, an adventure game about time travel. M Theory is based in both Auckland and over the water in Sydney so it’ll be interesting to see if the business remains local in the near future.

There are also a significant number of casinos that are licensed to operate in New Zealand. Among them are Voodoo Dreams and the retro game-inspired 7-bit, both of which offer progressive jackpot slots, whose payouts are sometimes fed into from players of the same game at several casinos. This can lead to pooled jackpots reaching up to NZ$32m, which in turn shows the demand for them in the country. Many of these platforms use overseas developers such as Microgaming and NetEnt for their games, but a lack of incentives almost eliminates any possibility of a similar online gaming company setting up in New Zealand.

Turning Point

While the Oz tax rebate seems to sound the death knell for New Zealand’s video gaming industry, it could also be a cause for optimism. New Zealand-based studios earned NZ$324m in 2020, an increase of NZ$121m over the previous year. This isn’t something that Jacinda Ardern’s Labour government can ignore. Stimulus programs in Australia could be the push that New Zealand needs to recognize the Kiwi gaming industry as a future source of talent and profit.

The NZGDA currently recognizes 108 interactive studios, including Space Crab Labs, Jump Punch Kick, and Gamefroot. These might be a little smaller than the likes of Valve and Ubisoft but the potential for local business is already evident. In hindsight, hopefully, Australia’s tax rebate could one day represent a turning point in the fortunes of NZ’s interactive studios – even if the road to get there is about to get a little muddy.

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