5. The enablers: Content

5.4 Digital business priorities and challenges

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Content actions on digital business will be coordinated around three priorities:

  • Accelerating the growth of digital businesses with competitive advantage.

  • Increasing the use of worldclass productivity tools.

  • Using our knowledge and research to stimulate innovation.

New Zealand’s commercial digital content industry, while currently small in global terms, has gained international success. This is most notable in the billion-dollar digital and visual effects industry, including animation and 3D graphics. Other niches are also becoming prominent, such as ehealth, elearning, eresearch and super computing.

New Zealand’s reputation in these areas means there is an opportunity for industry to capture a larger share of this global market. This will require individual firms to obtain real insights into the characteristics of offshore markets, including consumer tastes, channels to market and regulatory environments. This will also require understanding of best practice in international management and
of different business models.

Accelerating the growth of digital businesses will make a contribution to the economy. But more important are the leveraging opportunities of digital technologies to drive productivity and innovation throughout the economy. The smart application of digital technologies can assist in transforming our largest export sectors, such as food and beverage.

The government can also act as an exemplar in the use of digital tools that reduce search and transaction costs, such as licence applications, geospatial data and procurement, while improving opportunities for participation and engagement with New Zealanders. The government can also ensure more open access to publicly funded scientific and cultural research that is vital to stimulating innovation.

RIGHT HEMISPHERE AND NEXTSPACE //////

Right Hemisphere
While the company and its technology expand globally, having a significant Right Hemisphere presence in New Zealand means we gain through:

  • direct economic benefits, such as retaining high-value 3D software development
  • the opportunity to build and embed in New Zealand a world-class ecosystem of ancillary industries based on Right Hemisphere’s 3D technology platform, which has applications in a wide range of industries  
  • technological and knowledge spillover, particularly in lifting local management and investor experience in taking a software firm through its exponential growth stage
  • international connections, including improving links into the United States venture capital market.

With these objectives in mind, the government has provided Right Hemisphere with a US$8 million growth capital facility for three to five years. The principal is repayable but the interest of 25 per cent per annum will be rebated if the company meets covenants and agreements relating to achieving the above gains.

The development covenant requires Right Hemisphere to undertake at least two-thirds of its global research and development (R&D) in New Zealand for the loan term. The spillover agreement covers a number of commitments from both Right Hemisphere and the government, which build on existing strengths and will help in fostering a product graphics management and related 3D graphics industry in New Zealand. The spillover agreement also secures commitments from the US investors Sutter Hill Ventures and Sequoia Capital Partners, to review selected companies’ business plans.

Nextspace
Nextspace has been formed to catalyse the establishment of a 3D digital graphics cluster built around Right Hemisphere’s technology platform. Nextspace’s activities are centred on Right Hemisphere, its technology and access to its international customers and relationships. It aims to bring together companies that can use the technology and universities and research organisations to develop worldclass research and commercial projects.

With their strong links to the US market, and its investors and partners, Right Hemisphere and Nextspace believe they can provide business and technology coherence as well as a proven path to market for commercialising R&D. This belief reflects Right Hemisphere’s strong links with key overseas partners and clients such as Adobe, SAP, NVIDIA, Bell Helicopters and Sikorsky, which form the basis of its growth aspirations to become a US$2 billion company in what is expected to be a US$10 billion global industry.

Government support for Right Hemisphere and Nextspace seeks to improve the chances of New Zealand realising economic development opportunities. In 2007, the government agreed to a $7 million fund to support Nextspace’s establishment. It officially opened on 28 February 2008.