‘The UK has something we don’t – a history' says Wet developer boss
In a surprise disclosure that could put UK calls for game tax breaks in an unflattering light, the largest independent studio in Canada has said the state support measures have never once helped it secure a publishing deal.
Remi Racine, the CEO of Behaviour Interactive (formerly A2M), told Develop that UK developers are still beating the firm in the race to sign contracts with publishers.
He did say that tax breaks were nonetheless “pretty helpful”.
“We calculate tax breaks in our price structure when pitching projects, and explain that around 15-18 per cent of production costs will go back to them.”
In a new interview with Develop, Racine added: “When you think about it, that’s a 15 per cent saving on production costs, but it doesn’t make better games, which is what publishers ultimately want.
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“Tax breaks help, of course, but there are some very clever people in the UK who have beaten our studio at signing a deal with a publisher. It’s not, clearly, all about savings that tax breaks can give.
“It’s all down to the pitch. There’s always a price a publisher has in mind for a project, so a saving isn’t as crucial as the pitch itself.”
Racine – whose experience in Montreal has helped him secure the seat as chairman of trade body Société en commandite Stationnement de Montréal – said that tax breaks had helped grow the games industry Quebec.
“We’ve had huge investments from Ubisoft, THQ, Warner and Eidos around here, the workforce is growing fast,” he said.
When asked how many times tax breaks have helped Behaviour secure a publishing deal, he replied: “Oh no, never. Never.”
Racine said there was much still going for the UK games industry:
“In the UK you have something that we don’t. You have a history and pioneers. We don’t. UK developers have a lot more experience than our Montreal staff.
“In fact we have hired a lot of British developers, and at around director level – of which we have fifty staff – we have about six people, so twelve per cent. My studio creative in Montreal is British-born, and my studio creative in our Chile studio is British-born. Our lead director of portables is British-born.
“But tax breaks are not essential. Some of the biggest successes in the industry, like Grand Theft Auto, are still created in the UK. There’s many more; Lionhead for example.
“Canadian studios are losing as many pitches as UK ones. I have competitors in the UK, and I lose business to them. Never have I won a pitch on price. We win on how we pitch.”
He can't say tax breaks haven't helped. Of course they have. If the UK had the kind of state subsidies (and let's be honest, that's exactly what they are) that Canadian studios have, the UK would be the world leader in games development. The UK's a football team without its best three or four players, still fighting to hold its own. If Canadian studios can't win projects without the help of 40% of their running costs paid for by Canadian tax payers, they won't win them without.
A level playing field would scare the crap out of Canadian studios, irrespective of what they might say.
As for his comments about the UK having history, history means nothing. Seriously. Just look at Liverpool Football Club:)
What I notice most about this piece is the clear instances of brain drain.
I don't think anybody really believes that tax breaks have done anything but help Canada's industry enourmously.
For a British industry trying the minimise the impact on itself we're left with three options.
1) do nothing and concentrate on British industry strengths
2) pressure the Canadians to stop subsidising their local industry (which is effectively going against modern thinking about free trade)
3) provide British industry with the same deal thereby nullifying the Canadian advantage (at least until the subsidy war starts)
Option 2 is probably the best option overall but it's also likely the hardest to achieve.
I wouldn't say that pressuring a country to remove subsidies is against free trade. Free trade is the removal of any distortions of the market such as subsidies or tariffs. However, I believe France and Britain have both tried to challenge the subsidies legally & failed so I can't see No.2 having much success.
You probably wouldn't have to match the Canadian subsidies to nullify their effect & I don't think they have much scope for further subsidies. That BC has had to introduce it's own measures to protect itself from other provinces shows the limits. Also, the expense of relocating staff cannot be a cost-effective way to work.
The UK definitely failed in a legal challenge.
At the end of the day, Canada will do what it does. There's an argument that the tax breaks promote inefficiency, and from what I've heard some of the Canadian studios are more about bums on seats, and numbers, than real quality - and given the gravy train that is tax breaks, that wouldn't surprise me.
At the end of the day though, the tax breaks won't last forever. All that's happening is Canadian tax payers are funding the development of IP, and the creation of wealth, for foreign corporations. Corporations are like the stereotypical footballer's wife - they'll go to wherever gives them the best change to make money.
It's all well and good people saying the tax breaks have resulted in a critical mass of skills in Montreal, but if they don't win any projects when the big studios move out and the form up themselves, they'll disperse. And it WILL happen. Might be later rather than sooner, but Montreal games developer can't expect a free ride from Canadian taxpayers forever.
And that's the bottom line.
