More subsidies isn’t the answer

Stuff reports:

New Zealand’s gaming industry says it is being disadvantaged by old-fashioned systems that give subsidies to films but not interactive media.

Since 2014, the New Zealand Screen Production Grant for International productions has offered a cash rebate for “qualifying New Zealand production expenditure”.

That means, in many cases, film production companies can access rebates of about 20 per cent of their budget for international productions. Domestic productions can access up to 40 per cent.

But games developers say they are often competing for talent with companies that work on those film productions – such as Weta – but that they do not have access to the same financial support.

It’s not really comparing apples with apples. Yes they both employ skilled IT people, but a typical film or TV series will employ hundreds and hundreds of people while the typical game will be I suspect less than 10.

The reason for the film subsidy is because bringing the production of films to NZ results in a huge amount of spending (increasing GST etc).

Her organisation’s research showed that while New Zealand’s games industry earned over $143 million in 2018, the global market was worth $258b.

Gaining 1 per cent of the global video games market would generate $258m in new exports. The sector has grown 39 per cent annually for the last six years, and if an industry plan and Government support maintained this growth rate, the industry would be worth $1b in 2024.

A 39% growth rate is superb, and we have a great gaming industry who produce many popular games.

But past performance is not a guarantee of future performance. Based on the data above, the industry has gone from $20 million six years ago to $143 million today, which is excellent. But an increase of $120 million is way different from saving you will grow a further $850 million.

Economic Development Minister Phil Twyford agreed that, with more Government support, gaming development could be a $1b industry.

“It’s the kind of industry we want to foster, it’s big on exporting, job rich, with skilled jobs that are well-paid, it’s carbon free – it ticks all the boxes.”

He said the Government was working through industry transformation plans, including one for the digital sector, which was already under way, and one for the creative sector later this year.

“The support we want to give to the interactive media industry will be considered within the creative sector industry transformation plan.”

He said gaming had “really bright” prospects.

I agree it has bright prospects, and there is a role for Government in assisting the industry. But not through huge subsidies.