Comment: Video game tax breaks are our 1966 World Cup moment
The next big challenge is inspiring and equipping a new generation of developers that will in a few years become the backbone of the video games industry.
By Dr Richard Wilson
When chancellor George Osborne spoke about offering tax breaks to the UK's video games industry in this week's Budget, it was a little difficult to keep a lid on the emotions, as this was ultimately the culmination of years of hard campaigning by Tiga and its members.
Tiga had convinced the last Labour to introduce games tax relief in its final budget in 2010 and had also persuaded the SNP, the Conservatives and the Liberal Democrats to back the measure in the general election campaign of that year. Yet the coalition government dropped games tax relief in the June 2010 Budget. Tiga then took on the major challenge of persuading the government to reverse this decision. We have finally achieved this and won cross-party unanimity on the issue too.
The experience reminds me somewhat of the 1966 World Cup final when the manager said to his players before extra time, "you've won it once, now go and win it again". They did. And so did Tiga.
So why did we win now?
The figures make compelling reading. Since 2006, the UK has fallen from being the world's third-largest games maker to sixth place in 2011, and now accounts for just 3.5 per cent of global investment in the sector, down from ten per cent in 2000.
Headcount among UK games makers has fallen 10 per cent since 2008, while at Canadian games developers it has grown by a third. Nearly 41 per cent of developer jobs lost in the UK have relocated to North America.
This brain drain and inevitable loss of income to the UK economy could no longer be ignored. But the reality is that it all starts from here. The chancellor has levelled the playing field and thrown down a gauntlet to the UK games industry. No more excuses. Build a thriving games industry in the UK to attract investment, create jobs and boost revenue and make us the envy of Europe.
So where do we go from here? What does this mean to the UK and how do we make the most of this opportunity?
First and foremost, the tax relief is recognition of the great work that is already being done by Tiga and by the UK's independent games developers. If there wasn't a strong collection of UK developers working hard to design and build games for all platforms, this tax break would not have happened. We have some great talent in the UK both in terms of creatives and programmers that have already combined to produce a number of top selling games despite the economic conditions.
The chancellor has recognised the potential and backed it.
The reference to the film industry during the budget speech was pertinent. According to the chancellor, the film tax credit helped generate more than £1 billion of film production investment in the last year alone. There is no doubting that a tax credit does give an industry breathing space, especially one that is competing in fierce international markets.
That has always been our message. Comparisons with Canada have been made regularly in an attempt to illustrate the positive effects of a tax break on a fast developing industry. Canada has a thriving games development base built on government support and incentives. France too has seen growth. Last month we released figures showing how the French industry, which received a tax break from its government in 2008, has grown in comparison to the UK.
Overall numbers of people working in the French games industry rose from 3,000 in 2008 to 5000 in 2011, and numbers of development staff rose by 500 from 2,500 in 2008 to 3000 in 2011.
Conversely, employment of development staff in the UK games industry fell by more than 1,000 over the same period.
This has to be our initial aim. Firstly keep development jobs here and stop the brain drain and then redress the balance by attracting overseas studios and investment to the UK. The benefits to the UK coffers could be significant too. We estimate that a tax relief would cost the government about £96 million but would contribute £283 million to Britain's gross domestic product, generate £172 million in tax and safeguard around 4660 jobs.
This is the plan. We now have an opportunity to develop the industry on a level playing field and encourage more relevant education to safeguard the future of UK games development. This is the next big challenge, inspiring and equipping a new generation of developers that will in a few years become the backbone of this industry. They are perhaps the ones who will ultimately benefit most from this announcement with secure jobs and a thriving, dynamic environment in which to build some great entertainment.
Dr Richard Wilson is CEO of independent games developers association TIGA.
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