Games tax breaks: What next?

Games tax breaks: What next?
Richard Wilson

By Richard Wilson

August 10th 2010 at 8:00AM

Tiga CEO Richard Wilson explores where the association is going

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Success is a fickle food upon a shifting plate.

Games Tax Relief, introduced by the previous Labour Government in the March Budget, was removed by the Conservative-Liberal Democrat Coalition Government in the June Budget.

Disappointment is the midwife of despair. Why continue flogging a dead horse, the refrain goes.

We are campaigning for Games Tax Relief for three principal reasons.

Firstly, the UK needs to rebalance its economy away from an excessive reliance on the public sector and financial services. 

We need an economy with high skilled, well paid, low carbon, export oriented industries. The video games sector is one such an industry. The UK game development sector is export oriented: on average 62 per cent of a UK developers’ turnover is generated through exports.

It provides high skilled jobs: in studios such as Blitz Games Studios, Exient, Jagex, Rebellion, Realtime Worlds, and Ubisoft Reflections, 80 per cent of the development workforce is qualified to degree level.

The games industry is low carbon in nature. Most of the work in games development involves design on computers, the packaging of games is minimal and box products are relatively light to manufacture and to transport.

In the future, video games will become even more low carbon in nature as the industry moves towards digital distribution. The sector also provides employment throughout the UK. 85 per cent of the video games development workforce is employed outside of London.

The UK needs a strong supply of science, technology, engineering and mathematics (STEM) graduates: a growing video games industry with job opportunities could give an incentive to pupils and students to study STEM subjects.

The UK video games development sector is an industry of the future. With the right Government support the industry could contribute to the growth of a more diverse and sustainable UK economy.

Secondly, Games Tax Relief would help drive the UK video games industry to a new level of growth and success. Work for hire businesses and online developers, small indies and large publisher owned studios, all have the potential to benefit from a tax break for games production.

TIGA’s Games Tax Relief proposal would provide a tax break for any game with a budget of more than £100,000 that passed a broad cultural test: eligible profit making firms would use the tax break to reduce their corporation tax; eligible loss making developers would receive a cash back credit.

Games Tax Relief would promote creativity and innovation. A survey of developers commissioned by NESTA in 2009 showed that: 100 per cent of independent developers believed that a video game tax credit would enable them to adopt new online business models and sell directly to consumers; two thirds of studios believed that Games Tax Relief would enable them to generate original IP; and 75 per cent of independent developers argued that the tax break would help them to retain their IP.

Thirdly, TIGA’s relentless campaign for Games Tax Relief has had the positive effect of raising the profile of the video games sector from a subterranean activity to the pinnacle of policy making. Our industry is high on the agenda of politicians, policy makers and pundits.

We have rammed the story of our industry so far down the throats of our politicians that they have had no choice but to sit up and take notice.

When I took over as CEO of TIGA in 2008, the games industry was little covered in the national press as an economic or a business story and politicians where ignorant of the sector.

Today, all that has changed - with politicians from all sides of the political spectrum recognising the economic and creative contribution the industry makes to the UK economy and the national press regularly covering the industry in the business pages. TIGA has put the industry on the political and media map. This was not an accident. It happened because the expression ‘give up’ isn’t in TIGA’s lexicon.

The June Budget was a disappointment for the video games industry. Yet we must not forget that TIGA has made incredible progress towards securing the goal of a tax break for games production. Two years ago the video games sector was ignored by Government and we were almost invisible in the media.

Today, politicians take our sector, TIGA and our proposals seriously and our media profile has soared.

We have created a broad coalition in favour of Games Tax Relief for the video games sector. The Labour Party and the Scottish National Party, further and higher education providers, creative businesses in the animation and fashion sectors and the video games industry itself all support Games Tax Relief.

The national media is sympathetic and elements of the Conservative and Liberal Democrats are supportive. TIGA will regroup, refine and renew the campaign for Games Tax Relief or a similar fiscal measure. The strength of our arguments, our implacable resolve and our unrelenting focus will eventually ensure the introduction of this fiscal measure.

Encouragingly, Activision Blizzard Inc. has recently joined TIGA. Activision Blizzard is strongly supportive of TIGA’s campaign to secure Games Tax Relief for the UK development community.

Elspa, the UK publishers’ trade association, now backs Games Tax Relief and a steering committee under TIGA’s leadership has been formed. We will review the new tax regime established by the Coalition Government. We will review the original TIGA Games Tax Relief proposal. We will submit a refined, compelling case for Games Tax Relief.

Blitz Games Studios, Crytek, DR Studios, Exient, Kuju, Rebellion and Ubisoft Reflections, working with the rest of TIGA’s 160 members, have declared their support for TIGA’s campaign to introduce Games Tax Relief in the UK.

The named studios have generously agreed to back TIGA with further resources to pursue the campaign for Games Tax Relief to a successful conclusion.

TIGA is about much more that this single issue. Our vision is to make the UK the best place in the world to do games business. That means raising our media and political profile of course, campaigning on issues such as education and skills as well as fiscal and monetary reform. The other benefits and services we offer to our members are critically important too.

These services include networking events and seminars on everything from self-publishing to navigating the Government’s R&D tax credit system. We offer free advice on PR, discounts on industry shows such as Develop and funding to attend international events like GDC and Gamescom.

Since 2009 we have been running a number of innovative new programs including ‘Industry Sharing’ which allows companies to temporality loan staff to each other and manage dips in the development cycle and ‘Creative Industry Switch’ where we have coordinated events with Pinewood Studios, BAFTA and the London Book Fair to help developers meet and network with people from other industries.

We have also been out singing the praises of the games industry to the film industry, the book world and TV broadcasters, bringing in new business for the games industry and facilitating collaborations and new partnerships. Over the coming year we will be unveiling even more benefits and services to help all our members maximise their business potential.

Since 2008 TIGA membership has soared. We now have over 160 members from across the UK. Our members include not just established independent developers and publisher owned studios but also small indie-studios, start-ups, creative agencies, games publishers, art, audio and motion capture specialists as well as law firms, accountancy firms and other service providers.

In addition, TIGA now has over 20 education providers as members, from colleges and universities to distance learning providers and training specialists. 

TIGA truly represents the whole spectrum of diverse and talented companies and organisations that make up the UK games industry. All of these companies and organisations share our commitment to make the UK the best place in the world to do games business. TIGA is a thriving community of some of the most innovative and creative people in the UK and we are immensely proud to serve their interests.

If you would like to find out more about TIGA or join the TIGA community please contact Dr. Richard Wilson, TIGA CEO on richard.wilson@tiga.org.

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