Game On: New Zealand's next billion-dollar industry
Monday, 18 January 2021
Karah Sutton is on the move and a touch out of breath. Much like the industry she represents.
She’s been pursued by zombies, raced around the world as an agent of espionage and managed a stable of the world’s finest thoroughbreds.
Now she faces a new challenge.
Her company, PikPok, has created games downloaded more than 350 million times around the globe, and it is soon to release its latest offering.
So the Chief Publishing Officer is right in the middle of play-testing, marketing strategies and many meetings.
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PikPok’s success has been central to a surge in New Zealand’s gaming sector over the past eight years.
Revenues from the sale of games for PCs, consoles and mobile devices, and augmented and virtual reality programmes for education and training has grown 17-fold to hit $324m in the year to April, according to figures released by the gaming industry.
Covid-19may have been ‘’game over’’ for some industries, but the gaming sector emerged stronger: developers were able to work right through the lockdowns and picked up many new players, thanks to the extra time many people had on their hands.
The global gaming industry is now worth more than the film and music industries combined.
Now Sutton and many others believe it could be a billion-dollar industry in this country by 2025 – sooner if the Government supports it with investment, tax incentives and other initiatives. An industry that could add even more jobs for programmers, designers, artists, storytellers, and composers, on top of the 142 created around the country last year.
As Sutton takes a moment between meetings to pause and then point out, Wellington is at the heart of that growing success story.
Capital-based developer PikPok, established almost 24 years ago, is comfortably the country’s oldest studio and one of the top 10 that account for 95 per cent of the industry’s revenue and 78 per cent of its workforce.
Not only has the studio created globe-spanning franchises featuring zombies, car-racing spies and horse-racing, it has helped write the code for others to follow, and trained many of the staff and leaders in new independent studios being set up around New Zealand.
“A lot of the studios that have been successful in New Zealand, almost all of them have come out of PikPok or have got their start there or were tangentially related to them,” says NZ Game Developers Association (NZGDA) chairperson Chelsea Rapp.
Sutton joined 80 other staff there in 2013. Now its more than 180 employees fill four floors of a central Wellington building.
PikPok began as a work-for-hire outfit, doing contract animation and design work for the likes of DreamWorks and Activision, and creating games for PlayStation, Xbox and Nintendo.
It flicked the switch for itself and the industry in New Zealand about a decade ago when it joined the movement towards games on mobile devices and started creating its own content and taking control of its own intellectual property, Sutton says.
“In 2009, we jumped on the mobile games train very early. There was a huge opportunity in self-publishing games as an independent publisher.”
Those games can take up to $2m and two years to develop but, if they are successful, more of the money stays with the studio that created them.
Early success with a Flick Kick Football game and follow-ups led to its hugely successful Into the Dead zombie game and sequel.
These and other free-to-play games have been downloaded more than 350m times, with most of the company’s $10m-$25m in annual revenue coming from in-game purchases and advertising.
PikPok’s success has been shared with many others around the capital and the rest of the country.
Lucy Morris is just one. She worked there before setting up Starcolt.
Two years on, Morris and three other colleagues have created and published their first game - Best Friend Forever for the console - and are working on their next offering.
If PikPok is one enduring constant in the rise of the gaming industry, Wellington is another.
Auckland may house 40 per cent of the industry’s studios and workforce, with 14 per cent in Otago and 10 per cent in Canterbury, but the capital is the sector’s spiritual home, with 26 per cent of the sector based there.
As well as PikPok, A44 and Weta are other established studios based in Wellington, and they have inspired the rise of Starcolt, Dinosaur Polo Club, Studio Mayday and many others in the city.
Starcolt Creative and Studio Director Morris lived in Auckland, “but Wellington was always the place I saw myself being able to open a studio”.
She was lured to the city by its “quality of living” and its “vibrant developer community”, to which she contributes by helping to organise the annual NZ Games Festival in the capital.
“Directors from other studios, we talk to each other a lot and are super happy to share information that will benefit each other.”
Those people include Andrew Lamb, of Camshaft Software, who relocated his core team from Melbourne to Wellington a few years ago; Joshua Boggs of Studio Mayday, who took a similar path; and James Everett, formerly of Vancouver.
His company, NZXR Ltd, works with virtual and augmented reality to produce training tools and games.
He says the longevity, maturity and success of game development in Wellington “naturally creates the gravity” that pulls in creative thinkers and funders.
“And then it’s just a great place to live … a lot of excitement here for cool stuff.
“Te Papa is just a treasure, an amazing place; for creatives you can walk through that whole building and have your mind blown all the time.”
That gravity remains a powerful force around the established studios.
It has created an atmosphere and a momentum that will help the industry get to its $1b goal, but NZGDA’s Rapp believes it could get there even sooner and be more sustainable with more and better support from the Government, investors and universities. Particularly for the smaller firms.
“If we are able to support those newer studios which have a chance to reach that top tier, that’s how we get to $1 billion by 2024.”
Funding remains a big issue for smaller, independent studios and start-ups, while access to experienced, senior talent is a problem for bigger, more established firms.
“A lot of public money exists for film, especially in New Zealand, but games are specifically excluded from a lot of that,” Rapp says.
Government agencies support the film industry in a number of ways, including funding for development and distribution, and the NZ Screen Production Grant, which can refund up to 40 per cent of spending for a production filmed in this country.
Rapp points to gaming industry support in Finland.
“It’s about the same size as New Zealand, about the same population as New Zealand, but their interactive games sector is worth almost $4b annually. So there’s no reason our industry can’t be that same size.”
In Canada, the industry is supported with tax incentives. “That’s why a lot of games are made in Canada … Ubisoft, EA, they all have studios there because they get that 30 per cent incentive.”
Everett says politicians and investors struggle to understand the industry, despite its growing contribution to the national economy.
“We sit in a strange space between technology and the arts. That means being passed between different departments.”
It can also mean little help, unless the industry is in trouble.
“A term that I heard more than a few times, that confused the heck out of me, was: ‘We only intervene in the case of market failure’.
“That blows my mind,” says Everett. “At that point you are spending double, triple to get back to where you were … versus putting a small amount of funding in to have quite a large impact.”
But it is not just about funding, he says. It is about being taken seriously.
“It’s about … a genuine strategy from government, about treating the sector as part of the economy, and an important contributor. We need a NZ Interactive Commission, just like we have a NZ Film Commission.”
It appears that, finally, the Government is starting to listen.
Industry sources are excited about the Digital Technologies Industry Transformation Plan being developed by David Clark, in a new role as Minister for the Digital Economy and Communications.
As part of that he is putting together a digital strategy that will be “the key vehicle to identify how government and industry can best work together to accelerate industry growth … articulating a vision and an action plan for the sector”.
That has been backed with some funding, including $10m from the Provincial Growth Fund to launch the Centre of Digital Excellence in Dunedin.
“When this funding was announced, it noted an expectation that it would result in the launch of between 30 and 50 small video gaming studios, together with three to five large studios, over the next decade,” says Clark.
Studios could also apply for grants of between $25,000 and $50,000 from the New Zealand Film Commission Whakawhanake Te Ao Niko Interactive Development Fund.
That will help the smaller studios and start-ups, but bigger ones are short of senior talent in a sector that is barely two decades old and struggling with Covid-inspired border restrictions.
Universities could help, but they too have been slow to react to growth and struggle to take the industry seriously, says Simon McCallum.
The senior lecturer in engineering and computer science at Victoria University created the first university-level game development course at Otago in 2004.
That has remained largely intact 17 years on, despite advances in the industry.
To help address the lack of senior talent, he proposed a Masters in Game Development course for Victoria. “That was going through, but we’ve now been told that we have to pause while we get through Corona
“I have also been talking about undergraduate specialisation in game development. I could get that in place pretty quickly, but it’s probably going to take 2-3 years, because all the approval processes take so long.
“At the moment universities are more interested in responding to the loss of international students through Covid,” McCallum says.
“Some are trying to cut back; our university is likely to be retrenching, making people redundant this year. When people are stretched and tired and afraid, they tend not to innovate.”
Like others, he believes gaming isn’t being taken seriously.
“I found this with my father. He said games are trivial. People who are over 50…have always seen games as trivial and something that children do.”
These games used to be for children, but the industry figures prove that’s no longer the case.
They show that two-thirds of Kiwis play video games and a third have used training games at work.
The average gamer is now aged 34 and nearly half of them are women.
The country has the opportunity to support a billion-dollar industry with more than 1000 jobs.
That’s not child’s play, and it’s certainly not trivial.