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Digital consumption fuels NZ video game industry growth

Digital consumption fuels New Zealand video game industry growth

Traditional retail records NZD$133 million of sales to support expanding sector

Auckland, New Zealand – 17 February 2014 – New Zealand’s interactive games industry has recorded $133 million of traditional retail sales and an estimated NZD$162 million of digital sales in 2013, according to research released by the Interactive Games & Entertainment Association (IGEA). These latest figures put the overall retail value of New Zealand’s interactive games industry in 2013 just shy of NZD$300 million.
The latest data from independent market researcher, NPD Group Australia, reveals that sales of console hardware, games software and gaming peripherals sold through traditional retail outlets dipped by eight per cent compared to sales in 2012.

However, according to research commissioned by IGEA, traditional retail sales only from part of the overall consumption patterns. The research conducted by emerging technology analyst firm, Telsyte, estimated that in 2013 the NZ digital video games market was valued at $162 million with revenue gained from digital game sales, downloads, subscriptions and mobile games.
Mark Goodacre, IGEA’s New Zealand Director, said IGEA commissioned the Telsyte research in order to account for the growing number of New Zealanders extending their gaming experience online and provides a better snapshot of the burgeoning interactive games industry for its members.

“We’re seeing more New Zealanders consume games across a wide variety of consoles and mobile devices and consequently, extend the ‘traditional’ console experience with in-game extras bought online or a version of the game which users can access via their smartphone and other internet connected devices,” said Goodacre. “It is encouraging to see traditional retail sales are strongly supported by New Zealand consumers choosing to purchase video games content both online and ‘offline.’”
“The interactive games industry is continuing to evolve as consumers of all ages and backgrounds continue to play games at home and on-the-go and we expect sales figures to reflect this change in the market,” said Goodacre.

Sam Yip, Senior Research Manager for Telsyte, stated that the growth in digital sales was largely driven by the popularity of mobile games, which accounted for 57 per cent of all digital purchases and digital content consumed on consoles and PCs.

“Consumers spent more than $162 million on digital games, extras, subscriptions and mobile games in 2013, which account for more than 50 per cent of the total spend for the interactive games and entertainment industry,” said Yip. “New Zealanders continue to show an increasing appetite for content delivered digitally and these numbers reflect this trend.”

Mark Goodacre added, “While this significant increase in revenue and the velocity of change in content and content delivery excites the industry, it also poses increasing issues on the policy front, where legislation and legislators lag a long way behind the industry. These results highlight the need for government to quickly engage with industry to ensure that legislation can adapt to the speed of change facing New Zealanders.”
Other key highlights from NPD Group Australia reveal*:

· Console software was the most improved category in terms of dollar share compared to 2012

· During 2013 a number of software franchises including Grand Theft Auto, Battlefield, Bioshock, Tomb Raider and God of War have improved their market share over 2012.
· A new franchise, The Last of Us, entered the Top 10 best selling titles in 2013


· PC Games subscription cards grew significantly compared to last year and reflect the shift on consumer preferences for how they play games

· Console hardware was slightly down from 2012 although it is important to note that the 8th Generation Console Hardware was sold only during the last 6 weeks of 2013 and this category is expected to improve in 2014.


Key highlights from Telsyte **:


· Mobile games (upfront and in-game purchases) account for more than half of the digital games market at $92 million, followed by Digital Downloads (full games and in-game extras) at $36 million, Subscriptions (console network and MMOG) at $22 million and Social/Casual games at $12 million.

· New Zealanders spend large amounts on gaming subscriptions. Eight percent of the entire NZ games industry is made up of MMOG subscriptions, console network subscriptions and in-game spend.

· Consumers spent more than twice as much on in-game micro-transactions compared to up-front mobile game purchases in 2013. This trend is expected to continue with more freemium games flooding iOS and Android platforms.

· Consumers are expected to double their spend on digital downloads, subscriptions and services within online console networks in 2014.


New Zealand’s own game development industry has capitalised on the growth of digital games globally. New Zealand-made mobile games were downloaded over 130 million times last year and industry earnings grew 86 per cent to $36.3 million in 2012, according to NZ Game Developers Association research.

“Video games are now one of New Zealand’s largest creative IP exports. 100 per cent of games made here are digitally distributed, which makes sense given New Zealand’s remote location,” said Stephen Knightly, NZ Game Developers Association Chairperson. “Going digital has created huge opportunities for New Zealand developers. Digital means if we have a hit game then sales aren’t capped, we can be responsive and continually update our games and have a direct relationship with players.”

* Source: The NPD Group Australia. Category PC Games, Console Software, Portable Game Software, Time period(s) Jan 2 2012 – Dec 30 2012; Dec 31 2012 – Dec 29 2013. Country: Australia


** Source: Telsyte – IGEA Digital Market Monitor, 2013


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