I recently did a report on the efforts of TIGA, the trade body representing the video game industry in the United Kingdom. As an American, I could be forgiven for not considering the UK when it comes to video games. After all, their main claim to fame throughout most of my life has been two systems no one in America has ever heard of (the BBC Micro and the ZX Spectrum), and constantly getting stiffed on game releases (fun fact: the entire EU didn’t get Chrono Trigger until it came out on the DS. In 2009). However, to ignore the UK is to ignore the industry at large. A lot of dedicated gamers and successful studios call Britain home, from the illustrious past of Rare and Sensible Software to today’s success stories in Lionhead Studios (Fable, Black & White), Sports Interactive (Football Manager) and current EA subsidiaries Criterion Games.
However, even the good studios are the subject of bad news recently, with the closures of Black Rock Studios and Digital Warrington. A main reason why studios are either closing or moving out of the UK is because of a heavier tax burden than other companies have, and higher still than companies have in other parts of the world. With globalization and consolidation being the norm in 2011 instead of the exception, companies are brazenly loading up their workers in areas that give favourable tax benefits and other incentives, even if it’s in another country altogether. “Thank you for your years of working for us all these years, mate, but we’re moving to Quebec. You can come if you want. You, uh, do speak French, right?”
TIGA’s CEO, Dr. Richard Wilson, was kind enough to answer a few questions from us regarding the state of the industry in the UK. He talked about tax cuts, the challenges of dealing with politicians in the Coalition Government, and other issues hurting the industry, such as gamer “crunch” and piracy. We would like to thank Dr. Wilson for his time and consideration, as well as the verbosity of his answers.
Please describe, for our readers, your role with TIGA, and what TIGA’s ultimate goal is.
I am the CEO of TIGA, the trade association representing the UK video games industry. The majority of our members are either independent games developers or in-house publisher owned developers. We also have games publishers, outsourcing companies, technology businesses and universities amongst our membership.
TIGA’s vision and ultimate goal is to make the UK the best place in the world to do games business. We focus on three sets of activities: political representation, raising our industry’s profile and helping our members commercially. This means that TIGA members are effectively represented in the corridors of power, their voice is heard in the media and they receive benefits that make a material difference to their businesses, including a reduction in costs and improved commercial opportunities.
TIGA is intent on building an enduring organisation, the best in its field, one which improves year on year, to benefit the UK games industry and the wider economy.
Do you think TIGA’s goals and challenges are different than those of the American equivalent, the Entertainment Software Association (ESA)? Do you work together with the ESA on issues that are mutual?
We are developing TIGA into a tenacious, innovative, growing and ambitious organisation in order to advance the interests of games developers and developer-publishers and to achieve our vision of making the UK the best place in the world to do games business.
The challenges that TIGA faces include convincing the UK Coalition Government to introduce tax breaks for games production, to enhance the existing R&D tax credits, to improve access to finance and to enhance still further our already highly skilled workforce. TIGA is also continuing to encourage games developers and publishers to join TIGA to work together to achieve our ambitious vision and goals.
We currently do not work closely with the ESA because the challenges that we face are particularistic to the UK. Having said that, I would always welcome opportunities to share information and knowledge and to examine areas where we can cooperate.
I recently covered the recent closures of two large-scale studios in the UK: Digital Warrington by THQ, and Brighton-based Black Rock Studios. There’s also the case of Liverpool-based Bizarre Creations, which was acquired and then dissolved by Activision. The key issue with Activision is that they’ve been very vocal in support of tax breaks in the UK, hinting that they would not support development in the UK without them. Just how crucial are these tax breaks to games development in the UK? In a recent article, I stated that companies will go where the taxes are better, no matter where that is. Is the reality as critical as I’ve made it out to be?
Activision has indeed been a strong supporter of TIGA and of tax breaks for games production. Games Tax Relief, or tax breaks for games production, are absolutely crucial for the UK video games industry. Game developers in many competitor countries receive tax breaks for games production. No such tax breaks exist in the UK and so the industry has declined. Between July 2008 and October 2010, 131 British video games firms went out of business, employment in the sector fell by 9 per cent and investment declined by £41 million.
TIGA has led the campaign for Games Tax Relief in the UK and we are the only trade association in the UK to have consistently supported this measure. We continue to campaign for tax breaks for games production in order to put the UK on a level playing field and to enable our industry to fulfill its potential.
Can you describe any conversations you’ve had with the Coalition Government of David Cameron about the tax issue in the UK? It was heavily implied that the Cameron Government reneged on earlier promises to give the games industry tax breaks in 2010.
Thanks to TIGA’s relentless campaigning, we convinced the Conservatives and Liberal Democrats to back Games Tax Relief before the General Election in 2010. On March 29th, Ed Vaizey MP, the then Shadow Culture Minister told Develop that the Conservatives “are going to support tax breaks for the video game industry” in the Conservatives’ first budget”. On April 26th he added that “We are fully behind game tax breaks. This is my unequivocal statement,” he said. “It’s been approved by George Osborne [now Chancellor of the Exchequer].” On April 30th, Don Foster MP, the then Liberal Democrat Shadow Secretary of State for Culture, Media and Sport, said in a statement to TIGA that: “Liberal Democrats support the introduction of a Games Tax Relief. Following consultation on the details, we would implement the Relief as soon as possible.”
The Government clearly did go back on pre-election promises to the video games industry. However, the Scottish Government officially backs our policy, the Labour Party (the main opposition party) and some elements of the Conservative and Liberal Democrat parties (i.e. the UK Government parties) do support our policy. TIGA will continue to strengthen and make the case for tax breaks and other measures to help our sector and we are confident that eventually we will be successful.
In the United States, taxes for game companies are largely a states issue. It is how the state of Michigan was able to create favourable tax laws around the entertainment industry, and how Rhode Island was able to give a $75m loan to Curt Schilling’s 38 Studios. In Canada, Ontario just gave $3m CAD to Silicon Knights to assist them in creating jobs. Is it similar in the UK? In other words, are the rules in Brighton different than they would be in London or Manchester?
The UK is not a federal state like the USA. Tax policy is largely centralised and kept under the control of the Westminster Government in London. At the moment, tax breaks for games could only be achieved if the Government in London agrees. Having said that, the Scottish Government in Edinburgh is in the process of negotiating more powers from London. It is possible that over time it may win more power over tax policy. In which case, we could make the case for tax breaks for games production in Scotland as well as in the rest of the UK.
Switching lanes a bit, the issue of developer “crunch” has come up as a hot topic once again, with the issues related to Australia’s Team Bondi after the release of LA Noire. What’s been most shocking for anyone following that issue is that most of the comments coming from developers and other people working in the industry indicate that what happened to Team Bondi happens all over the industry, in the US, the UK, Australia, the rest of the EU, and anywhere else video games are made. Where does TIGA stand in regards to developer crunch? Do the laws of the UK and the EU prevent this type of treatment? If so, how often would you say these laws or regulations are ignored?
Many people in various professions sometimes work long hours, including farmers, lawyers and medical consultants. Game developers can also work long hours, but crunch is something that obviously all studios should want to avoid.
The game developers who work in our studios are the industry’s most important resource – they are the talent that create the games that companies sell and which the public enjoy. Therefore, CEOs and MDs of studios should nurture their talented workforce and care for their health and well-being. It’s vital that games companies project manage game development effectively and efficiently and keep crunch periods to a bare minimum.
A large issue for video game developers and publishers around the world has been piracy. In the United States, one way to handle piracy is a bill called the Combating Online Infringements and Counterfeits Act (COICA), which is relevant to the UK and the rest of Europe because the United States has controversially tried to help other countries (Spain comes to mind as a recent example) write their copyright laws. COICA, and similar legislation, is fought tooth and nail by groups like the Entertainment Frontier Foundation (EFF) as an unnecessary violation of individual liberties and freedoms, but is supported by the ESA. Where does TIGA stand in regards to legislation such as this, as well as international treaties such as International Intellectual Property Alliance (IIPA)? Does TIGA support them as they’re written, or do you believe there is room for flexibility based on the complaints of consumers concerned about their freedoms?
The majority of video games businesses see piracy as a problem for their organisation and an increasing one. However, piracy is not an existential threat for most game developers, including those involved in self-publishing. Many self-publishing developers are looking to combat piracy by adopting new business models, including digital distribution, subscription based services and/or advert supported free games.
A legal approach should address the most extreme forms of piracy. Additionally, promoting new business models amongst IP owners could improve their sustainability.