Why NZ’s video game industry hit its $1 billion revenue target two years early - and is now heading for $2b

Last year, its fulltime staff increased 29% to 1418. Keene expects that number to head north again.

The sector credits a tax rebate introduced by the previous Government for its recent growth spurt, which followed a couple of years of stalling.

The $40m per year Game Development Sector Rebate (GDSR, New Zealand-owned early-stage) returns 20c on every dollar spent to create a game.

It was set up in 2023 and left untouched in Budget 2025 after leading game studios said they would have no choice but to decamp across the Tasman if our government did not match similar schemes introduced by Australia’s Federal and state governments.

The gaming sector also argued it needed a level playing field in its war for tech talent with the heavily subsidised movie industry.

The current Government has been credited with expanding a second scheme introduced by Labour, “Code” (Centre of Digital Excellence), with grants for small game developers boosted from $2.75m to $5m per year with Budget 2025.

The big dogs of the local industry have traditionally been the most sophisticated operations, including West Auckland’s Grinding Gear Games - the maker of global multiplayer fantasy hit Path of Exile.

It reported $105m revenue last year. Other big players include the Auckland and Dunedin-based Rocketwerkz (maker of Icarus and other titles) and Wellington’s mobile specialist PikPok, which employs more than 200 staff.

But Keene says the $1b-plus tally for the year to March 31, 2026, includes “at least $200m from new games”.

The past 12 months have seen two up-and-coming game studios have monster global hits on the relatively low-fi Roblox platform, best known for kids’ fare and “cosy games”.

“Two of the three biggest concurrent player records ever set on Roblox were achieved by Kiwi creators,” Roblox executive Matt Kaufman told the Herald earlier this month.

Roblox games are free, with their creators earning revenue from in-game purchases.

Splitting Point Studios was founded by Janzen Madsen who earlier told US website Business Insider that, as a teen, he earned US$2 from his first Roblox game in 2017.

By 2020, he was earning US$40,000 per year from the platform, working from the basement of his parents’ home, and by 2023, “six figures per month”.

Madsen messaged the Herald last night: “We don’t disclose revenue publicly, but we’re really proud to be part of the New Zealand games industry and to see it reach such a big milestone.

“We’ve been fortunate to see strong momentum across our work, and we’re hopeful Splitting Point can continue growing and remain a meaningful contributor to the wider industry here.

“New Zealand is an export-driven economy, so wins in emerging markets like games are worth celebrating.”

Late last year, Madsen posted to LinkedIn: “The New Zealand GDSR, a tax rebate aimed at keeping game development jobs in New Zealand, was immensely pivotal in our decision to hire local talent when we went from a team size of 10 to now over 50.” Just under half are based in NZ.

Overnight, he told the Herald: “The rebate is very helpful for curbing some of the competitive incentives overseas.”

Before the GDSR was introduced, offshore studios who enjoyed better tax breaks poached staff.

“For us, we also see it as a way to help upskill our employees in Roblox, since it’s so different to traditional gaming; it’s nice to have a bit of assistance while people get up to scratch on the ecosystem,” Madsen said.

At the time, an issue had been identified with the rebate: only around half of $40m on the table each year was being claimed (and the fund does not roll over).

Some said the problem was that the large studios were capped at $3m per application, when they spent far more developing top-tier games. Labour said it would raise that limit.

But Madsen has qualms.

“My view is just that if the programme is being expanded or adjusted, more of the weighting should go toward early-stage and New Zealand-owned studios that are trying to build sustainable IP [intellectual property] and export businesses from here,” he messaged the Herald post Budget 2026.

“I think the biggest upside for NZ comes from helping local studios scale into global companies, rather than simply raising caps in a way that mostly benefits already profitable offshore operators.

“We have around 20 staff in NZ – and that assistance was actually a big driver in our decision to start hiring in New Zealand.”

Grinding Gear Games is now 100% owned by Chinese giant Tencent, which paid somewhere above the Overseas Investment Office approval threshold of $100m for an 80% controlling stake in 2018.

Rocketwerkz is 47% owned by Tencent (with the balance owned by its Kiwi founder, Dean Hall).

Other offshore sales have included Auckland smartphone and tablet game maker Ninja Kiwi (maker of the enduring global hit Bloons), which was bought out by Sweden’s MTG for $203m in 2021.

Keene earlier said that $22.4m was paid to video game companies under the scheme last year, but they returned more than $115m to Crown coffers through income tax and PAYE.

“For every dollar invested via the GDSR, the government has a direct return of $4.74, underlining the fiscal impact of the sector’s rapid growth.”

For this year, the final figures are likely to see close to $8 returned for every $1 invested via the rebate, Keene says.

“We’re seeing a truly inspiring industry success story here – our local game development sector is growing at more than 20 times the global average, year on year.”

Madsen, who attended Waimea College in Nelson, has largely kept a relatively low profile.

In 2014, aged 16, he fleetingly appeared in a local paper as he toured NZ as part of his father’s Bee Gees tribute act.

His Instagram account shows him touring the world with his partner.

But Madsen’s local assets – on the local property front, at least – are relatively modest. Public records show him owning two homes in the upper South Island: one with a rateable value of $1.85m, the other with an RV of $800,000.

TheGrandma’s Favourite Games crew consists of Matthew Hufton, Cameron Angland and Alec Kieft – better known in the Roblox universe as ForyxeV, Viridial and Cracky4.

Hufton and Angland grew up in New Plymouth, while Kieft was on the Kāpiti Coast. The trio met on Roblox in their early teens.

In 2018, while still students, Hufton (Auckland University’s engineering school and Kieft (doing a BA in Information Systems at Victoria) spent three months as interns on Roblox’s “Accelerator” programme in San Mateo, California.

Madsen did the same programme, and he and Hufton collaborated on several games during their early Roblox days, including one for the makers of Sesame Street.

After graduating in 2021, Hufton spent 18 months as a hardware engineer at smart cow start-up Halter before going fulltime as a Roblox developer.

The trio thought they were gaining momentum when they had several hundred people playing their games at once, then tens of thousands by their third hit. But with the release of 99 Nights in the Forest in May last year, their concurrent players hit the millions.

There was another breakthrough in April this year, with Disney-owned 20th Century Studios announcing it would develop a movie based on 99 Nights, with Hufton, Kieft and Angland getting executive producer credits.

There is “serious money” to be made on Roblox, into the six-figure range, Hufton told the Herald earlier this month.

“It is a super viable career path, especially if you’re at all inclined to create video games,” he said.

He advised young Kiwis interested in programming to “just jump in and make something you would enjoy playing”.

He and his crew have played their financial cards close to their chest, but Hufton’s choice of wheels indicates he’s not hurting. He was recently pictured with his McLaren 570s Coupe (sticker price: $339,000).

Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.