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The threat of the closure of The Blast Furnace underlines the importance of games tax relief to the UK industry, claims games trade body TIGA.
Activision is currently in discussions over the future of the Call of Duty mobile developer, and our sister-site MCV was informed on Friday that the publisher has already begun an employee consultation process with its 47 staff.
It is understood Activision is keen on keeping the team together, but may still close the studio.
TIGA CEO Richard Wilson has said the situation underlines the critical importance of games tax relief, currently being investigated by the European Commission, as it puts the UK on an unfair playing field when competing with countries such as Canada and the USA.
Wilson referred to previous comments by Activision CEO Bobby Kotick in 2010, who said publishers needed more incentive to invest in the UK, an issue that could be remedied by tax breaks. It should be noted however that The Blast Furnace was still opened in 2011, before tax breaks were announced by the Government in 2012.
“While a variety of factors are in play, and will determine the outcome of the consultation process, there can be no question Activision’s decision underlines once again the critical importance of and urgent need for games tax relief for the UK video games industry," he said.
"The UK has been competing on an un-level playing field with game developers in competing countries such as Canada and many states within the USA receiving significant tax breaks for games production.
“TIGA’s own research shows between 2008 and 2011, employment in the sector fell by over ten per cent and investment by £48 million. The introduction of Games Tax Relief will reverse this decline.”
Wilson went on to say that should tax breaks be approved, it would safeguard more than 4,660 direct and indirect jobs, as well as generate £188m in investment expenditure by studios.
"All this additional investment, new jobs and new projects risk being jeopardised by the on-going delay," he said.
“TIGA urges the UK Government to redouble its efforts to persuade the EU Commission to authorise the introduction of games tax relief at the earliest possible opportunity.”
