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India Banned Most of Its Gaming Market. Here Is What That Means for New Zealand Studios

Jul 11
5 min read

Three pieces of news landed within one week of each other. On 8 July, NZ On Air released the latest GDSR data — $21.9 million to 43 New Zealand studios, whose combined revenue grew 17 per cent to $829 million. On 10 July, a new industry report projected India's mobile games market to reach US$2.4 billion by 2029. And on 10–11 July, the Indian Prime Minister was in Auckland, weeks after the two countries signed a trade agreement. Read separately, they are three unrelated stories. Read together, they describe a specific set of decisions now sitting in front of New Zealand game studios — and one sitting in front of Indian gaming companies.

In short: In August 2025 India banned all online games played for stakes — a segment one industry report estimates carried roughly 85 per cent of India's gaming revenue. The entire Indian industry is now pivoting to the kind of content-driven games New Zealand studios already build. That creates three distinct situations worth thinking about clearly: Indian capital and teams looking for a new operating model, a sourcing decision for NZ studios with a hidden 20 per cent catch in the GDSR rules, and a distribution market that is worth watching but not yet worth chasing.

What just happened in India's gaming market?

India's Promotion and Regulation of Online Gaming Act, 2025 — passed by Parliament in August 2025 — imposed a complete ban on online games played for stakes, covering games of skill and games of chance alike. Advertising them is prohibited, and banks and payment systems are barred from processing related transactions. The India State of Play report (produced by Naavik with MIXI Global Investments, on Sensor Tower and AppsFlyer data) estimates that segment represented about US$3.7 billion — roughly 85 per cent of India's gaming revenue. It disappeared by statute.

What remains is still one of the most striking audiences in world gaming: more than 600 million mobile players, the world's second-largest market by downloads, and a forecast of US$1.5 billion in 2026 growing to US$2.4 billion by 2029. But the revenue base is shallow — India ranks only sixth globally for in-app purchase revenue — and the industry that survived the ban is restructuring at speed toward in-app-purchase and advertising-funded content games. That is the category New Zealand studios have spent a decade getting good at.

Why would Indian gaming companies look at New Zealand?

Because the ban left experienced teams and committed capital without a domestic model, and New Zealand is one of the few small jurisdictions offering content-game builders a stable, subsidised base. The Game Development Sector Rebate pays 20 per cent on eligible New Zealand development expenditure, and eligibility runs through a New Zealand company or permanent establishment — an overseas-owned studio that builds a genuine New Zealand team qualifies. The rebate is earned on New Zealand-domiciled payroll, so this is a real-jobs proposition, not a brass-plate one; and the pool pro-rates when oversubscribed, a fact any entrant should price in.

The wider setting helps. The NZ–India trade agreement — signed in April 2026 and expected in force later this year — does not change the tax treatment of digital exports, but it changes the relationship climate: technology was one of six sectors showcased at the business forum during the Prime Minister's Auckland visit, India is establishing a dedicated New Zealand Investment Desk, and Auckland holds around 60 per cent of New Zealand's 292,000-strong Indian community — the professional and commercial network that makes a soft landing possible. For Auckland, an inbound Indian studio is new jobs, new capability and a new client for every service firm in the city.

Should NZ studios outsource development work to India?

The tempting version: Indian art, QA and co-development capacity is deep, good and keenly priced — and after the ban, more of it is available than ever. The catch sits in the GDSR rules, and it changes the arithmetic more than most founders expect.

  • GDSR Guidelines v1.5 define eligible expenditure around remuneration paid through New Zealand payroll to staff and contractors domiciled in New Zealand.

  • The exclusions list is explicit: expenditure on employees or independent contractors who are not domiciled in New Zealand at the time of the expenditure does not count.

  • So an offshore invoice is not competing with a full-price New Zealand salary. It is competing with a New Zealand salary that earns 20 per cent back. The honest comparison is the offshore quote against 80 per cent of the onshore cost.

  • There is a second-order trap for smaller studios: the GDSR has a $250,000 minimum eligible-spend threshold. Moving work offshore can push a studio below the floor — at which point the rebate on everything remaining goes to zero, and the outsourcing decision has quietly cost far more than it saved.

None of this means offshore co-development is wrong — some work clears the 80 per cent bar comfortably, and some spend was never rebate-eligible anyway. It means the outsourcing decision is also a rebate decision, and the two need to be run on the same page before anything is signed.

Is India a market NZ studios should sell into?

Watch, do not build — yet. India's download numbers are world-class, but per-player revenue remains thin and advertising-heavy, and the post-ban restructuring has further to run. This is a 2029 thesis, not a 2026 revenue line. The signals worth watching: in-app purchase share climbing toward the global norm, Indian publishers signing premium and content-game deals, and the proposed direct Auckland–India air route currently under evaluation for around 2028. When two of those three move, the market conversation becomes real.

The advisor's view

New Zealand's games sector earns 98 per cent of its revenue offshore, and the studios driving its growth are small and mid-sized businesses — 90 per cent of GDSR recipients. A sector built entirely on export decisions should treat a structural shock in a 600-million-player market as exactly what it is: a planning input. For a New Zealand founder, two questions belong in this year's plan — does India change your cost base (run the co-development arithmetic above), and does it change anything else yet (for most studios, honestly, no). For an Indian gaming company weighing a New Zealand entity, the sequence is structure, GDSR registration — the window has been opening in late January — and a business plan that stands up to both NZ On Air and a bank.

Strategize Auckland advises owner-managed businesses between $500k and $50m turnover, including game studios navigating the funding-to-launch gap. If either side of this equation is on your desk, book a session with Steven Parker.

 
 
 

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