TIGA, the trade group that represents the video games industry in the United Kingdom, has called on their government to look further into “inward investing” into the games industry after the closure of UK based studios by Disney and THQ. Claiming that 76% of investment in all UK studios comes from global publishers, TIGA CEO Dr. Richard Wilson stated that global publishers are starting to divest themselves from the UK.
“The Coalition Government should reconsider the case for a sector specific tax break for games production. Activision Blizzard, THQ and Ubisoft have previously stated that they would be more likely to invest in the UK video games sector if we had a tax break for games production. TIGA will continue to refine the case for Games Tax Relief and propose other measures to the Government, included enhanced R&D Tax Credits, in order to encourage inward investment into the UK video games sector.”
According to TIGA’s press release, the amount of foreign direct investment games industry projects in the UK fell 11% to 1,434 in the year to March, which is the second year in a row that number has declined. This comes a day after a release claiming that investment by the government in the games industry would help the British economy recover.
TIGA, along with other games industry personnel, have been fighting for tax breaks in the UK since the David Cameron Coalition Government took power in May of 2010. After promising support, the Cameron government snubbed tax breaks (reg required) for the industry soon after coming to power. Prime Minister Cameron stated in January that eliminating the tax breaks was a “tough decision” that had to be made to help the British economy.
Analysis: Looking at the two examples that Dr. Wilson used as to why Britain needs tax breaks, he’s half correct. Black Rock would have closed regardless of tax breaks, because Disney had made it clear long before their closure that they were no longer making AAA development a priority. They were dead no matter what the tax base looked like. However, the whole reason Digital Warrington was shut down was because of tax issues. Simply put, the industry is cutthroat now, more so than at any other point that I can remember. It’s really an indictment on the digital economy, where major corporations can move their workloads to virtually any country they want if it’s economically feasible. As someone who had a job moved to Manila in 2009, I know that all too well.
Companies are flocking to Montreal, Vancouver, and certain parts of the United States based on tax breaks. It’s not just big guys, either; companies have moved to Michigan to take advantage of their tax breaks (though further evidence indicates that they weren’t as helpful as people thought, and in fact, they might have been a false promise). These companies don’t really care about their people; they largely view the workers as replaceable, and if they won’t move to where the jobs are, there’s some kid coming out of school that will, for half the price. That’s the case whether it’s in the UK, America, Australia, or anywhere else. Though I don’t know the specifics of developing games in the UK, the key issue, especially for larger publishers, seems pretty obvious.
I still maintain what I said when THQ closed DW and Kaos: I don’t understand why anyone would willingly work in the games industry at this point outside of naive idealism or possibly masochism.