The UK games industry has been vocal throughout the year protesting the inaction of government amid declining domestic production and developers in Canada receiving generous tax incentives.
Yet is it accurate to blame government inaction for the industry’s decline? Some industry participants survey in politics.co.uk article UK games industry ‘dead man walking’ believe it is.
Richard Wilson, Chief executive of Tiga, said: “Without real measures to turn the tide, we’ll see our best people follow the money overseas to where governments are more willing to invest in the future. A great British industry could become a dead man walking, just like the British film industry the before government gave it a tax credit.
Something that is not often mentioned in lobbying for government assistance is the difference in cost of living (and therefore labour costs) between London and several Canadian cities where major game developers have established studios. Regardless of tax concessions and wage subsidies, low living expenses make locations attractive to multinationals, and may also make it easier for employees to setup their own companies.
Tax-based incentives that are based on cultural production are also a highly inefficient instrument for industry to rely on. Assessing the cultural component of any one game to qualify for assistance could well be an arbitrary endeavour, and the stipulation for games to contain cultural content is bound to distort production decisions away from market preferences.
Production-based tax incentives and subsidies tend to appeal to small, independent developers, whereas larger studios particularly first-party studios linked to publishers are far more concerned about the supply of skilled talent.
Are appealing for tax incentives for local producers really the best way to enhance the international competitiveness of the industry?