In uncertain times such as these, it ought to be reassuring to turn to British successes. The UK video games industry – or at least its development, as opposed to the publishing side – is a rare example of Britain punching above its weight. At least, that's the popular perception. Speak to any independent British games developer and you will find a considerably more apocalyptic prognosis. Recently, the situation has deteriorated so badly that a coalition of British development studios, backed by developers' trade body Tiga and ELSPA, the publishers' body, has embarked on a campaign to lobby the government, entitled "Games Up?".
Games Up? seeks two things: tax breaks for UK developers in line with those enjoyed by the film industry, and institutional change in universities, designed to re-establish a flow of graduates with skills that are relevant to the game development process. But hang on: according to Games Up?, games made in the UK between 2006 and 2008 alone are on track to generate global revenues of £4bn, and the global games market is worth £18bn and growing at 9% per annum. The credit crunch isn't even an undue worry: consumers are known to turn to games in difficult times, as they offer protracted entertainment for a smallish outlay. So why are UK developers looking to the government for help?
Seductive benefits
The most pressing problem is that the UK development scene has slipped down the global pecking order since several other countries decided to seduce games companies with tax breaks. Ian Livingstone, creative director and head of acquisitions at Eidos, one of the few remaining British games publishers – and not a man ordinarily given to doom-mongering – explains: "We've recently slipped from third to fourth in world development behind Canada. We're now the most expensive country in the world in which to develop. Other countries – not just Canada, but two states in the US, Scandinavian countries, France, Singapore, Korea and others – offer salary subsidies. Canada saw games as a clear opportunity to invest in the future, as traditional manufacturing was disappearing, and made a conscious decision to invest in games. They don't see it as a handout but as an investment. They have actually given out, in salary subsidies, 37.5% to every employee in games companies, and up to 40% R&D tax-credit.
"Over 10 years, they have invested C$500m (£244m). But that has actually generated $1.5bn of inward investment from companies like EA, Ubisoft, and Eidos. It's paying off, because they have a great infrastructure there: they've got great universities providing skilled students, and they are generally pro-games. The difference between there and here is that our government clearly sees any state support as a handout, not an investment. It seems to me the UK government would rather see our great industry go into decline than help it maintain its prominent position in the world, and that is madness."
Livingstone paints a bleak picture of the future of UK games development. "In the past six years, half of the independent UK development studios have already closed or been bought by foreign publishers who see more value in our studios and intellectual property than we do ourselves. We'll end up being a work-for-hire nation. The inherent intellectual property that is created at those studios will be foreign-owned, and they can move that IP to be produced wherever they want in the world, if it suits them."
Richard Wilson, chief executive of Tiga, is the spokesman for the Games Up? campaign. He has been meeting civil servants from the departments for Culture Media and Sport, Innovation, Universities and Skills, Business Enterprise and Regulatory Reform, Children, Schools and Families and the Treasury, among others. He doesn't, however, sound enormously optimistic that the government will heed his call for "20% production tax credit, like that approved by the EU and already found in France". Not to mention that enjoyed for many years by the British film industry.
He adds that "the government understands that UK games developers are not competing on a level playing field" but is "reluctant to introduce tax breaks for games production unless it can be shown that there is an issue of market failure or that there are strong cultural reasons for supporting UK games developers".
Perhaps unsurprisingly given the economic circumstances, the various government departments proved unreceptive to inquiries; the Department of Culture, Media and Sport was particularly dismissive. The Treasury did manage to produce a stultifyingly generic response although, promisingly, it says: "Following approval of a cultural tax relief for games in France, the government is now working with the UK gaming industry to collect and review the evidence for introducing such a credit in the UK."
Battle for breaks
Don Foster, Liberal Democrat spokesman on culture and media, points out that the games industry is competing with others for tax breaks, notably fashion and tourism.
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