Nzherald article about GGG from 18 Aug, 2022

Original source: https://www.nzherald.co.nz/business/west-aucklands-grinding-gear-games-clocks-45m-profit-but-is-tempted-by-aussie-tax-breaks/5IZUVIUCKOJGGPN5RXHGJ4HXUQ/

Text below is taken from the above article.


West Auckland's Grinding Gear Games clocks $45m profit - but is tempted by Aussie tax breaks

Chinese gaming and social media giant Tencent reported its first revenue drop since its 2004 IPO overnight.

Its second-quarter revenue declined 3 per cent to the equivalent of $31.3 billion on tighter regulation in its home market, weaker online advertising and gamers spending less.

In New Zealand, Tencent has two major investments, both Auckland-based computer game studios: a minority (46.6 per cent) stake in RocketWerkz and a majority (87 per cent) holding in Grinding Gear Games.

RocketWerkz has had a busy few months with the release of its big-budget Icarus. But the firm, majority-owned by its Kiwi founder Dean Hall, is not required to file its financials publicly.

Grinding Gear Games - maker of the hit global multiplayer fantasy game Path of Exile - most recently filed in February this year, for its 2021 financial year, ending September 30.

The Henderson-based firm said its annual revenue fell from $116.9 million in 2020 to $104.9m in 2021

Net profit fell from 2020's $54.4m to $44.9m. Pre-tax profit was $80.9m in 2020 and $62.4m in 2021, as Grinding Gear Games paid respective tax bills of $26.5m and $17.5m.

Path of Exile is free to play, but gamers can pay for cosmetic effects to dress up their characters.

Profits have dipped throughout the industry as many people return to working in the office, leaving them with less downtime. At the same time, inflation and recession fears have led to gamers tightening their belts.

But co-founder and chief executive Chris Wilson told the Herald that, in his company's case, the revenue shift could be pinned on exchange rates.

In constant currency terms, 2021 revenue and profit was roughly the same as the prior year, he said.

"Anecdotally I'm hearing that in 2022 people are gaming/spending less due to eased lockdowns and economic reasons, but that hasn't yet hit our published financial statements yet," Wilson said.

Exile has several million players worldwide, but the firm is shy of giving an exact number.

"Our players are from all over the world, with the majority coming from North America and Europe, but also reasonable contingents in Russia, Brazil, Korea and China. We're working on a Japanese language version," Wilson said.

Grinding Gear Games was founded in West Auckland in 2006 after Wilson and co-founders Jonathan Rogers and Erik Olofsson decided that, unable to find their ideal multiplayer game, they should make their own.

Crowdfunding campaigns in 2012 (US$200,000) and 2013 (US$2.5m) let early Exile fans help fund the game's early expansion by buying supporter packs.

In 2018, Tencent took an 87 per cent stake, with the founders retaining the balance of the shares, plus assurances that they could keep control and keep and expand their NZ staff.

Talent squeeze

At the time of the Tencent deal, Grinding Gear Games had 114 staff. Today, Wilson said 165 full-timers are working on the game, plus contractors.

A talent squeeze continues to be the talk of the industry - and more so after tax incentives for game developers kicked-in across the Tasman on July 1.

Several game studios, including RocketWerkz, are now shaping up to open offices across the ditch rather than hire more staff locally.

Grinding Gear Games could follow.

"We're certainly tempted to open an office in Australia because of the significant game development tax subsidies over there," Wilson said.

"It makes hiring staff very difficult because Australian companies can offer so much more for the same position, paying for the difference out of their tax subsidies so that their profitability isn't affected."
The long-awaited sequel

His company remains, happily, a one-trick pony. It first announced Path of Exile 2 at its ExileCon event in Auckland in 2019.

Wilson says the live-meet-up will reboot for the first time since the outbreak next year with ExileCon 2023 scheduled for July in Auckland.

The event will feature more details of Exile 2.

Thank you

With the player distribution worldwide and majority in NA & EU, why is China PoE still superior?

china PoE "superior"

nice joke its pay to win as much as diablo immortal

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Imperialsirens wrote:

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DreadLordAvatar wrote:

With the player distribution worldwide and majority in NA & EU, why is China PoE still superior?

As someone who tried the "China PoE", it is really bad.

I mean, really, really, really, really bad.

If it isn't clear enough.

It is so bad that I choose to come back to the global server.

p2w extra item slot; p2w currency auto-picking service; really bad localization, due to local regulation most of the monster corps need to be "sunking into the ground" to make is invisible. This localized feature causes significant extra lags in addition to the current, you-know-how, laging in the global version. You really think the "China PoE" is superior for what? That build-in auction house? well that's one point, but cost much much more than "superior".

Oh btw, the mysterious gacha box and Kirac's season pass is, idea from the "China PoE" (I think). I don't know how do you evaluate these features, I remain neutual on them.

It's illegal to show morbid elements in China, such as skulls, blood, corpses and shit. So I am very much curious as to how GGG washed the game over for that market.

And yes it is a national law, but most if not all people over there dont really care for it. But of course the gov kept it around cause it is very convenient to backpedal to if they need to "deal" w/ a company.

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DreadLordAvatar wrote:

With the player distribution worldwide and majority in NA & EU, why is China PoE still superior?

bc we still live in the stoneages " the brain " :P the law of the stronger is still around. Stronger is who has money or ppl with power and money.

They bought the game and can make what ever then want with it.
if its superior i dont know, what i know they have much QoL stuff we probly never gone see what ever the reason is.

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AhuraFortunata wrote:

And yes it is a national law, but most if not all people over there dont really care for it. But of course the gov kept it around cause it is very convenient to backpedal to if they need to "deal" w/ a company.

You might be surprised by just how superstitious people over here can be. Even younger people, though to a lesser degree than their elders with regard to various things.

We're coming up on the end of "Ghost Month" here in Taiwan, where people young and old leave out tables loaded with food, drinks, incense, "ghost money" and other items to placate "hungry ghosts". Ghosts are attracted to water, so you're supposed to avoid swimming and water activities that might attract them further. You also shouldn't whistle or use stuff like chimes, because that's like an invitation. Going to the hospital should also be avoided if at all possible, because ghosts like to gather there.

Then there's other little things (unrelated to Ghost Month/Hungry Ghost Festival), such as hospitals not having a 4th floor because the number 4 sounds too similar to "die" in Mandarin Chinese.

It all might seem a bit silly if you're not "from here" (I'm not, but have been here forever and am just familiar with it all), but stuff relating to death and the dead does matter to an awful lot of people over here. Not to everyone, but those who don't care at all are the exception rather than the rule.

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Gopstop22 wrote:

china PoE "superior"

nice joke its pay to win as much as diablo immortal

Yeah right, get real. Nothing is more p2w than DI.