OPINION: Our games analyst looks at the pros and cons of government involvement
With the topic of tax breaks for games developers still a key talking point amongst studios, Develop contributor Rick Gibson (a partner at Games Investor Conulting) has examined the recently EU-approved French subsidy in a piece online now.
In the piece, Gibson looks at how French protectionism has and hasn't worked for studios in the country, saying "there is a very real question about whether a new tax break for French studios will actually make their sector more sustainable in the long run".
Despite this, and the EU ruling stipulating the qualifying games have a 'cultural' dimension, Gibson adds that the UK industry's sustainability "is under threat from globalisation, not least cold callers from Quebec offering all sorts of goodies. Despite its wealth of games talent, the UK, currently sporting the world’s highest production costs, badly needs a more level playing field to remain competitive in the long run."
The full piece can be read here.
Advertisement
While reading M. Gibson's article, I was surprised to read that "grants and hand outs (...) totalling hundreds of millions of Euros" were being poured into games companies in France before the now famous French tax credit.
To my knowledge, the only public aids of some sort that have benefited French development studios in the past 15 years came from:
- the FAEM (Fonds d'Aide à l'Edition Multimedia) to finance mostly game prototypes (in average 100 K€ per prototype). It is worthwhile noting that these are "only" loans that must be reimbursed by the studio if the game gets published, regardless of success;
- a (compared to the UK) highly restrictive R&D tax credit that is open to all companies in France and which only a fraction of studios are taking advantage of because it is highly complex to apply for and the benefit only materializes after 3 years (yes, three years!);
- a recently established 6,5 M€ envelop put together by the state, the city of Paris and the Ile de France region to finance amongst many others (and within a strictly separated entity) 7 Paris based game studios to build a middleware.
- calls for projects by the ANR (Agence Nationale de la Recherche) with sometimes game specific topics enabling some studios to apply for grants to fund advanced research within a consortium including at least one public laboratory (you imagine how popular those projects are…).
Talking about national institutions and bodies "sponsoring" game developments, the only such thing I can remember are games co-produced by the Reunion of French Museums (games such as Versailles). If I recall correctly, the RMN co-produced between 1994 and 2000 about 12 games (I produced 3 of them). Altogether, the RMN must have invested around 4 M€ over those years into games. It is worth noting that, while these games where of course rather “niche”, they did actually pretty well and, if they did not become worldwide blockbusters, broke at least even from a financial standpoint. Versailles for instance sold more than 300 000 units on its different formats in France alone.
Altogether, my most “optimistic” calculation would therefore point at some 40 M€ in the past 15 years, most of it (the FAEM) being reimbursable loans.
To make a long story short now, I do think like M. Gibson that the Quebecois tax incentives are not alone to blame for France's downfall in games development, however I believe it is totally inaccurate to point at grants and other incentives, let alone in the “hundred million” area, to explain the phenomenon.
If UK development studios were granted similar tax credits to what France is currently establishing, have no fear: UK developers will continue to create the great games that the world is enjoying.
If nothing is done, that is unfortunately more doubtful considering the competitive challenges of a now worldwide established production business and the extremely aggressive propositions of some countries to woo talents and businesses.
Guillaume de Fondaumière
President - APOM (France's National Video Game Developer Association)
