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UK vs. Canada: Do Tax Breaks Build An Industry?

September 7, 2010 Article Start Previous Page 3 of 3

Indeed, just two weeks ago, it was announced that Realtime Worlds, the largest independent studio in Scotland with over 200 employees, had entered administration. In a prepared statement, TIGA immediately called for the implementation of an action plan to strengthen the Scottish games sector.

According to Wilson, "if the Scottish video games industry in particular and the UK games sector in general are to come through the current crisis, we must take decisive action." He listed five action items, including the introduction of games tax relief at the earliest opportunity, retaining and enhancing research and development tax credits, and establishing business incubators to help the formation of a new wave of game companies.

"Small, start-up games businesses should receive business mentoring and advice on how to create and retain IP and how to develop relatively sustainable business models," he said.

In addition, he added, games clusters which can encourage knowledge transfer and business efficiencies should be consciously supported. And higher education must be adequately funded in order to ensure that the games industry has access to a well-qualified and skilled workforce.

In Canada, the ESA of Canada's Parr confirms that her country is, indeed, taking some of the actions that Wilson proposes.

"We have very exceptional government support of post-secondary education at various institutions, universities, and colleges in computer engineering, game design, animation, a whole variety of disciplines that are important to the industry," she says.

"And there are other policies -- having to do with labor mobility, for instance -- that work to the advantage of the games industry here in Canada. That makes it easier to bring in foreign talent to, as an example, be the project lead on something. Combine that with the multicultural nature of our country, as well as the linguistic duality, and you see why Canada has become good at making games for a global audience."

But Parr strongly denies "that Canada is using its tax credits to steal jobs and investments from other countries. You can have a jurisdiction that has really good tax credits," she explains. "But without the other pieces of the puzzle -- without the talent and the other conditions that make it a good place to do business -- you're not going to be able to attract investors. It is not a simple 'tax credits equal video games' situation."

Meanwhile, Rebellion's Kingsley sees opportunities for indie developers emerging from the current difficult situation. Because many AAA games have become so expensive to produce, there is renewed interest in less-expensive games that are the bailiwick of the small developer.

"That's where much of the competition is these days," he says. "I know how difficult it is to hear about studios like Realtime Worlds going bust. You think, 'Crikey, poor bastards.' But, in some ways, the upside is there's one less big studio left to compete against. As horrible as it is to say, it puts everyone else in a stronger place."

TIGA's Wilson says it's difficult if not impossible to put a number on the number of investments the UK has lost recently. But, he adds, the actions of publishers speak for themselves.

"THQ and Warner Brothers both announced studios in Montreal while Ubisoft expanded into a new studio in Toronto," he says. "There have been others, but I can't speak as to whether they considered the UK or not before making their decision. That's not the sort of thing publishers say; they just write the checks and set up the studios.

"All we can do is continue to make our arguments... and to point out to our government that all of these wonderful investments, all this wonderful creativity that's taking place in other countries, that we're not getting as much of a share as we could be. That's the real tragedy. But I want to emphasize that I do believe we will get games tax relief eventually. It will take a battle but that's a battle we intend to win."

Article Start Previous Page 3 of 3

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