Games: Giving Credits Where They Are Due

by Matt Johnston on June 10, 2012

I’m a little ambivalent about the whole tax credits for TV thing and I find myself expressing the same about the new tax credits for games coming to the UK next year.

This article in Mancunian Matters says:

George Osborne’s tax credits for video games producers may not be enough for Manchester firms
The video games industry is a global, fiercely competitive, and incredibly lucrative one.

I just reckon that if the industry is incredibly lucrative then it’s not tax credits that are needed but rather more support for small indigenous firms to start something. Tax credits are exciting to big studios and big money. If you already have the money then it’s going to be cheaper to make new games.

But most major international publishers seem to be closing studios rather than opening them. Activision shut down Bizarre Creations in February 2011, Disney closed down Black Rock in July 2011 and EA closed down Bright Light in January 2012.

So, if this tax credit does make the UK more attractive to big publishers again, it just re-enforces the brain drain where our talented individuals are sucked into big companies again until the burn rate means they cry out for a bigger tax rate. To put it into perspective, in Quebec, 37.5% of games development salaries are government subsidised. And I’m reminded that I was told a couple of years ago that Scotland had risen to be one of the most expensive places to make video games. It was atop a throne that could be easily toppled.

We’re not going to build an indigenous industry with tax credits. We’re also not going to build it in the current mid-recession lending drought. And we’ll find it hard to build it when every college and university is trying to produce insufficient numbers of J2EE graduates as their entire Software Engineering output.

{ 1 comment… read it below or add one }

Darryl Collins June 12, 2012 at 2:20 pm

I see you’ve been reading the same article as me! http://www.guardian.co.uk/technology/gamesblog/2012/mar/23/video-game-tax-credits :-)

In a global economy, which is clearly where games companies exists, there is always someone willing to incentivise to boost an industry. (That’s precisely why NI Screen get their big budget – it’s an economic incentive driven by a simple met concept i.e. “spend x attract 5x” to the local economy. In some ways it is more a subsidy for hotels and transport since that makes up a significant part of spend on a production in NI!) So to stop the drain, and even attract business, you have to compete with subsidies. I’m not advocating subsidies or tax credits for games, just recognising the realities. It’s a strategic move that needs a clear strategy, and even an end date to ensure that the industry knows it won’t last forever!

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