Games developers need flexible space and good coffee

10:37 PM Tuesday October 31, 2017 Colin Taylor

Auckland video games developer Grinding Gear Games operates from a 3014sq m office – up from a 79sq m commercial unit; and earlier, a New Lynn garage. Photo / Supplied

The commercial property sector can capitalise on New Zealand’s fast expanding video games industry by providing quick and flexible accommodation facilities for development companies, says Ian Little, head of Bayleys Research.

“For video game developers, their property needs can change from a garage to an office suite in just a few short weeks,” Little says.

The industry’s official body, the New Zealand Game Developers Association [NZGDA], reports that Kiwi game developers earned $99.87 million last financial year - up 12 per cent on the financial year before, and a massive hike on 2012’s revenue of $19.5m.

“The NZGDA says the goal is to turn New Zealand into an international hub for games development, and grow annual revenue streams ten-fold to $1 billion,” Little says. 

“Flexible accommodation concepts like ‘coworking’ have helped grow tech start-ups around the world, with New Zealand property owners and developers increasingly taking advantage of this coworking trend.  

“The millennial demographic dominates the game development industry and is the key driver of growth in coworking. Over the next five years millennials will be the fastest growing age demographic – contributing about 70,000 people to Auckland’s workforce alone.”

Little says the demand for coworking space could rise more than eight-fold over this period.

He says New Zealand is home to 29 game development studios and 500 fulltime professional game developers and artists. Most New Zealand’s studios are small-to-medium-sized and locally-owned employing fewer than 30 staff, although some major players do have a big international presence.

“The three biggest studios are Grinding Gear Games, in West Auckland; PikPok in Wellington; and Cerebral Fix in Christchurch. Together they employ about 250 people, and are responsible for some of the world’s biggest selling game titles including Path of Exile, Flick Kick Football Legends and Mini Metro.”

Little says growth is the biggest factor influencing a gaming studio’s property choice. “Most studios start off as one or two-person outfits but can expand rapidly if they find success.

“In the past, start-up tech companies have tended to use a garage or bedroom as their first base of operations but modern coworking environments offer more sophisticated space.

“Tenants have all the facilities of a modern office – kitchens, receptions, conference rooms and creative communal areas – but they don't have to commit to lengthy leases; by the end of which, their company might not exist or have outgrown the leased space.”

Little says, “the top of the development tree in New Zealand” is Auckland-based Grinding Gear Games. “The studio’s more than 100 artists and programmers are responsible for the massively popular multi-player game Path of Exile, which is played by 14.2 million people around the world.”

He says Grinding Gear Games, founded in November 2006, operates out of a 3014sq m 1980’s office block in the middle of a supermarket car park, in West Auckland.

“It leases an entire floor, opting for an open plan work environment which is a big step up on its two previous Auckland offices – 79sq m in a commercial unit surrounded by bushland in Titirangi; and earlier, a garage in New Lynn.”

Since most of the business of video games developers is undertaken globally and via the internet, they can operate from almost anywhere and the spread of studios across the country shows this.

“Locations that offer lifestyle advantages are rated highly by the millennial workforce,” says Little. “If the Government and local bodies want to attract these innovative companies, they must invest in the required infrastructure - primarily reliable, high-speed internet.”

Little quotes Stephen Knightly, former chairman of the NZGDA, who says most studios prefer open-plan spaces in buildings with strong internet connections, good transport links and access to good coffee outlets.

“There’s a war for talent, so studios that offer good working environments have an advantage.”

Despite their success, Kiwi game developers are unlikely to pursue prestige offices in city centres since their customers are based all around the world and are unlikely to visit their offices in person.

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Ian Little, head of Bayleys Research