IndependentReport confirms that UK games industry at competitive disadvantage
TIGA, the trade
association representing the UK games industry, said today that there was new
evidence that tax incentives were influencing game studios’ location and
expansion plans, enabling studios to recruit and retain higher quality staff, enhance
the quality and attractiveness of their games and powering job creation. Studios
in receipt of public support in Canada are receiving support equivalent to 23
per cent of their turnover, giving them a significant competitive advantage.
TIGA made the
comments following the publication of a Report by e-skills, the
Sector Skills Council for Business and Information Technology. The Report, Technology
Insights 2011: The Games Development Sector, examines the importance of business support mechanisms in
operation, and is based on survey responses
of over 80 studios based in the UK and 220 based overseas in France, Canada and
the USA. The Report is significant because it provides strong empirical
evidence from overseas studios – particularly Canadian and French – that tax
relief policies are having a positive impact on their businesses.
Key findings in the Report:
- Survey results
show the incidence of support amongst overseas studios ranging from around
two thirds of studios based in Canada and France (i.e. 68 per cent and 65
per cent respectively) to 19 per cent of those sited in the USA. - The most common
form of support received by studios overseas was found to be tax
relief/credits for R&D activity, followed by relief/credits on labour expenditure,
with 65 per cent and 50 per cent respectively of studios receiving support
citing these as mechanisms for its delivery.
- 81 per cent of
Canadian studios receiving support received tax relief/credits on labour
expenditure, 61 per cent received R&D tax relief and 50 per cent
received relief on capital investment. - In France
R&D tax relief or credits were more commonly reported (82 per cent),
followed by grants (69 per cent), subsidised premises (27 per cent) and
tax relief/credits on labour expenditure (20 per cent).
- Considering the
value of support received, it appears that for studios based in both
Canada and France, the majority of the support provided is to assist with
labour related expenditure. - On average,
respondents to the e-skills UK survey stated that the support they
received was equal to around 20 per cent of their annual turnover – 23 per
cent in the case of firms based in Canada and 19 per cent of those in
France. - Public support
appears to have a significant impact upon the strategic decisions of
studios within the three study nations, with over three quarters of survey
respondents stating that support had had an impact both on their
establishing operations within their home country (77 per cent), and on
their decision to retain a domestic presence (76 per cent). - Just over two
thirds of studios (68 per cent) thought that support had impacted on the
company’s decision to expand operations within the study nation and over
half (54 per cent) thought it had affected the establishment or expansion
of an overseas presence. - At an operational
level, more than half (53 per cent) of studios questioned thought that
public support had enabled them to increase their output of games, over
two thirds (69 per cent) thought it had enabled them to increase the
quality/attractiveness of their games and 61 per cent considered that
support had actually enabled them to increase market share. Moreover, in
virtually all cases a still greater percentage of studios held these views
in Canada and France where fiscal incentives were more common place. - 61 per cent of
studios receiving support were of the opinion that this assistance had
enabled them to attract/retain better quality staff and 58 per cent
thought that support allowed them to increase domestic employment. - Seven out of ten
studios receiving support stated that this had enabled them to increase profitability
– rising to 90 per cent of those based in Canada. The potential for
increases in productivity and/or competitiveness were slightly less common
but still identified by almost two thirds (65 per cent) of studios
receiving support.
Dr Richard Wilson, TIGA CEO, said:
“This
Report provides empirical evidence that government financial support for game
development in countries such as France and Canada is significant, widespread
and impactful. At the strategic level, public
financial support – including tax credits/tax relief – often influences overseas studios’
location and expansion plans. At an operational level, public
support enables studios to increase profitability, increase their
productivity/competitiveness, increase their output of games, increase the
quality and attractiveness of their games and/or increase their market share.
“Additionally
the provision of tax relief has a direct bearing on recruitment and employment.
The majority of overseas studios
receiving public support were of the view that it had enabled them to attract/retain
better quality staff, and/or increase domestic employment.
“This Report states that studios in receipt of
public support in Canada are receiving support equivalent to 23 per cent of
their turnover. The UK games development sector is creative, innovative, and
talented. The potential for rapid growth exists. It’s time for UK policy makers
to support the UK games development sector through a tax break for games
production, enhanced R&D Tax Credits and a Creative Content Fund.”
Jason Kingsley, TIGA Chairman and CEO and
Creative Director at Rebellion, said:
“This
independent research confirms the thrust of TIGA’s argument. Namely, that tax
breaks and other forms of public financial support influence the studio
location and expansion plans and have a positive bearing on studio
profitability and competitiveness.
“With
the UK economy barely growing, now is the time for the Coalition Government to
look again at a carefully targeted tax incentive to enable the UK’s highly
skilled, high technology, video games sector to give a powerful contribution to
economic growth.”
Ends
About
TIGA:
TIGA is the trade association representing the
UK’s 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 was awarded ‘Trade Association of the Year’ and
the ‘Member Recruitment Award’ at the Trade Association Forum Best Practice
Awards 2010. In 2011, TIGA won a further
four awards at the Trade Association Forum Best Practice Awards, including
‘Trade Association of the Year’ for the second consecutive year. TIGA has been voted a finalist in the CMI
Management and Leadership Awards 2011 in the ‘Outstanding Organisation (SME)’
category. Dr Richard Wilson, TIGA CEO, has been voted a finalist in the
‘Outstanding Leader’ category. TIGA was
also named as a finalist in the 2010 Chartered Management Institute (CMI)
National Management and Leadership Awards in the category of ‘The Outstanding
Organisation of the Year Award (SME)’. TIGA is an ‘Investors in People’
accredited organisation.
TIGA is the trade
association representing the UK’s games industry. Our vision is to make the UK the best place
in the world to do games business. Our mission is to fight for the interests of
game developers. To achieve our vision and mission we focus on the delivery of
three strategic objectives: effective political representation, profile raising
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.
For
further information, please contact Dr Richard Wilson, TIGA CEO on: 07875 939
643, or email richard.wilson@tiga.org.