2. Behind NZ's quietly successful gaming exporters

Chinese Internet giant Tencent has been heavily investing in New Zealand game studios; Photo: Getty Images

Newsroom technology columnist Richard MacManus takes a closer look inside New Zealand's fast-growing computer gaming export sector, which employs hundreds of developers and is worth hundreds of millions of dollars.

Interactive gaming is one of New Zealand’s hottest startup segments and is attracting significant interest from technology companies overseas.

Auckland’s Grinding Gear Games recently sold 80 percent of its company to Chinese Internet behemeth Tencent, for north of $100 million. Tencent also holds a 25 percent stake in Dunedin’s RocketWerkz.

Meanwhile, Wellington’s PikPok is still 100 percent locally owned and is now into its 21st year of operation. Last month, PikPok won Best Medium/Large Business at the Wellington Export Awards.

Both Grinding Gear Games and PikPok employ over 100 staff each. So along with all the overseas investments and export revenue, interactive gaming is a solid source of local jobs too.

PikPok specialises in mobile games, such as the zombie hit Into the Dead and its soccer game Flick Kick Football. I asked founder and Managing Director Mario Wynands how he’s recruited the talent needed to create PikPok’s impressive list of games.

“Recruiting into the games industry now is much easier than it was,” he replied. “We have several mature tertiary games courses providing a stream of new talent, and New Zealand remains a top of mind destination when foreign industry veterans are considering a move.”

However Wynands also acknowledged that the growth of the local interactive games industry “has put pressure on the talent pool.” Although PikPok has been able to import overseas talent, it’s been easier said than done. Wynands says our geographic isolation “means anyone considering relocating here is making a major life decision, and likely leaving their friends and family network far behind.”

Government support for companies like PikPok may be on the way. Digital Media Minister Clare Curran has clearly taken note of the success stories and wants to know more about the sector. She recently announced a study to “map the landscape of New Zealand’s interactive media sector, which includes game development and consumer augmented and virtual reality apps.”

One thing is for sure: interactive gaming has so far been the silent sibling of the digital arts sector in New Zealand. Multiple Oscar-winner Weta Digital continues to wow Hollywood, while AR/VR startups like Wellington’s 8i have been wooing VCs in Silicon Valley. Compared to the media attention those companies garner, the likes of Grinding Gear Games and PikPok have been the quiet kids in the corner – just playing their games and staying out of everyone’s way.

To find out more about this relatively under the radar industry, I spoke to Stephen Knightly, Managing Director of gamification services company InGame. Knightly is also a board member and former chairperson of the New Zealand Game Developers Association.

I asked Knightly how kiwi companies in the sector have managed to make a name for themselves on the global stage.

“Kiwis genuinely seem to be good at mixing creative design with technical thinking,” he replied. “We will solve seemingly technical problems with a smart user design, or apply technical smarts to content problems.”

As an example, Knightly pointed to the single game that Grinding Gear Games produces: Path of Exile. The game’s dungeons are “procedurally-generated,” he said, which means “they don’t become repetitive.” See more on Grinding Gear from before its sale in this piece on Newsroom from May last year by Troy Rawhiti Forbes.

Path of Exile is an online role playing game for Microsoft Windows and Xbox One. It’s set in a dark fantasy world of warriors and monsters, and is reported to have over two million active users worldwide. The game is free to play, but the company makes money from in-game purchases – mainly virtual clothing. The company and its fans are at pains to point out that these in-game purchases are not “pay to win,” but purely cosmetic.

Stephen Knightly also believes New Zealand game studios were well-prepared when app stores and digital downloads arrived a decade ago. “We had some quality teams who had early hit digital games,” Knightly said, “and most impressively and importantly, they maintained that success by building a franchise or operating their games as a service, not a one-off product.”

One of those early hits was a game called Bloons, created by Auckland brothers Chris and Stephen Harris under the brand name Ninja Kiwi. Bloons initially launched as a Flash-based browser game in April 2007, but later became a successful mobile app. In 2012, Bloons Tower Defense 5 reached number two on the US App Store charts. The latest game in the franchise, Bloons Tower Defense 6, launches this week. It “will easily sell several million copies,” according to Stephen Knightly.

Despite the success of ten- or twenty-year-old gaming companies like Ninja Kiwi and PikPok, Knightly is concerned there is a lack of young entrepreneurs. “We haven’t grown the next generation of studios,” he told me. “On one hand we have publishers and investors interested in New Zealand games, but on the other hand we don’t have the products or prototypes to take advantage of that opportunity.”

PikPok’s Mario Wynards also warns that “companies here lack scale, depth, and/or the forward looking pipeline that would warrant substantial investment.”

That said, Wynards points to “a surge in investment and acquisition interest from China” as reason to to be optimistic going forward. He thinks New Zealand’s gaming startups should aim to “grow their portfolios and revenues, and develop more mature strategic planning.” That, he says, will lead to “an increase in the number of transactions.”

As for Stephen Knightly, he has his eye on a few promising developments. Aurora44 has “a great unique visual style for their upcoming game Ashen,” he said, “and Rolling Line is my favourite New Zealand VR game – it’s a kiwi model railway playset.” He also thinks Weta Gameshop’s Dr. Grordbort’s Invaders is one to watch, since it’ll be a launch title for the much-hyped Silicon Valley AR headset, Magic Leap.

Whether you’re a gamer or not (and I must admit I’m not), you have to acknowledge that kiwi gaming startups have made us proud on the global stage. Here’s hoping the next generation continues that trend.