Video Game Sector Jobs Up 20.5% with Tax Rebate, but Half of Fund Unclaimed

New Zealand's video game sector has seen a significant boost in employment and revenue, thanks to a government tax rebate scheme. However, a substantial portion of the allocated funds remains unclaimed, raising concerns about the program's effectiveness.

The latest data from NZ On Air shows that the number of people employed in the video game sector has increased by 20.5% to 1,300 over the past year. This growth is attributed to the Game Development Sector Rebate (GDSR), a $160 million initiative launched in 2023 to support local game developers.

Splitting Point Studios, known for its hit game Grow a Garden, is one of the beneficiaries. The game attracted 16.4 simultaneous users last month and earned the studio a feature in the New York Times. Its founder, Janzen Madsen, was also recognized as one of the Listener's 30 Under 30 young New Zealanders shaping the future.

The New Zealand Game Developers Association (NZDA) reported that the local industry generated $548 million in revenue last year, an increase from $434 million the previous year. This trend is expected to continue, with a projected 60% growth over the first two years of the GDSR.

Despite the success, the scheme has faced challenges. For the second consecutive year, a significant portion of the $40 million allocated annually has gone unclaimed. NZ on Air reported that $23.4 million was paid out this year, close to the amount applied for, but much of the funding remains unused.

The GDSR is a four-year program with no rollover of funds, meaning any unclaimed money is returned to the Treasury. The Ministry for Business, Innovation and Employment (MBIE) is currently reviewing the rebate, with a focus on its effectiveness and potential improvements.

The NZDA is advocating for changes to the scheme, including increasing the rebate from 20 cents to 25 cents per dollar spent on game development, and raising the per-company cap from $3 million to $4 million. This would bring New Zealand closer to the tax incentives offered in Australia, where a federal rebate of 30 cents can reach 45 cents with state-level support.

Splitting Point Studios' founder, Janzen Madsen, highlighted the impact of the GDSR on his business. As a fully remote company, he often faces the dilemma of hiring locally or globally. The GDSR has helped make hiring in New Zealand more viable, with the company now employing a near 50/50 split of local and global talent.

While the GDSR has had a positive impact, the unclaimed funds raise questions about how effectively the program is reaching all eligible studios. The upcoming review by MBIE will be crucial in determining the future of the scheme and how it can be improved to better support the growing video game industry in New Zealand.