It's the economy, stupid.

It's a my budget!

Between 2008 and 2011 it was estimated that the percentage of people working in the video game industry within the UK had fallen by 10% according to TIGA. This fall in the amount of people working for the industry resulted in £100m less tax and a loss of a quarter of a billion in contribution to the UKs GDP. This is a shocking state of affairs especially when global growth for the industry sits at around 23% despite the current economic turmoil.

There was hope in 2010 that the sector would finally receive the tax breaks that were long overdue, tax breaks that the film industry was already receiving, breaks that when implemented in France had seen a 20% increase in staff. However when the Coalition came to power in his 2011, Budget Chancellor George Osborne announced that they would not be carrying out Labour’s promise to introduce tax relief for the video games sector. 

All was not lost however as finally this week in his 2012 Budget Osborne recognised the value of the industry to the economy and announced that following consultation video games would finally receive tax breaks similar to those currently benefiting the UK film industry. Obviously there was great relief within the industry with UK Interactive Entertainment claiming that it would lead to 4,700 new jobs and £188m investment by studios while the Department for Culture Media and Sport reckoned 1,650 studio jobs would be created and £280m added to the GDP. We already make some great games here with studios like Liohead(Fable), Codemasters(DiRT), Rockstar North(GTA), and Rocksteady (Batman:Arkham Asylum). This break, which could be as much as 20%, will allow those studios and others to make even better games. 

However before we get too excited there are a few things to be concerned about. The UK has seen a massive ‘brain drain’ in this area over the last few years with major studios such as Bizarre Creations, EA Bright Light and Black Rock all closing. In the case of Bizarre Creations 35%, mostly senior people within the studio, left for jobs in other countries and in total it is believed of the 10% of jobs lost in the industry since 2008 41% have moved abroad. This drain will not be easy to reverse and while tax breaks are great it will still be a while until they come online. There will need to be a period of consultation to figure out how this is going to work and EU approval garnered, which in itself can take up to a year, to make sure it’s not seen as state aid. 

But apart from the relief itself it is more the statement the government has made by introducing a tax break that is important. Gaming is still not as mainstream as people within the industry like to think and many investors don’t see it as a serious place to put their money. With this move the UK government is saying that they consider video gaming to be as important as TV and film and this will encourage people to invest. This is the point that I think people should take away from the announcement. By recognising the industry as being important the government is, for the first time, saying to the public ‘we take the video game industry and its output seriously’ and that will go a long way to helping grow what is a brilliant sector.