Tax Breaks for Games

The UK Chancellor announced today that videogame developers could look forward to receiving tax breaks, similar to those given in the film industry in the UK, in the coming years. The industry have been banging on about getting something like this for years, in the face of other countries - Canada for example - offering incentives for games companies to set up or relocate with their borders. Blame Canada.

State aid of this type is a tricky business in the UK. Very broadly speaking, European Union law prohibits the government of a Member State giving assistance to a company based in its jurisdiction that would not be enjoyed by a competitor company based in another Member State, as all companies operating in the EU should be operating on a level playing field. As with a lot of European law there are some exceptions - if your last indigenous car manufacturer goes tits up a few months before an election and its employees live in marginal constituencies, for example. Or if half of your banking industry had got heavily involved in financial instruments based on mortgages granted to the two little pigs who didn't build with bricks.

But even so there are many restrictions on what the government can do and for how long it can do it. There are platoons of State Aid (that's how big an issue it is - it gets turned into a proper noun) lawyers in government, working to make sure that the UK doesn't infringe any of those restrictions. Great guys at parties.

One of the exclusions, I believe, is where the aid is given for cultural (to the country giving the aid) reasons. Tax breaks for companies making 'culturally British' games was mentioned in the Digital Britain report published last summer and I figure that's where the £40m, then £50m, tax breaks in the next couple of years will be directed at.

I'm not sure what, in 2010, a culturally British game is - Grand Theft Crumpet? Sim Walford? Army of Tea? I think the Fable games are undeniably British but I don't think Microsoft needs any tax breaks. Maybe Rebellion could put their hand in the pot, in order to develop games based on their 2000AD properties? 2000AD is a British institution after all.

Over the last twenty years, the gaming industry has increasingly globalised and, as part of that process, the 'rough edges' of national identity have been knocked off so as to appeal to the wider market. 20-25 years ago, it would have been easy to identify games as British. The coders were often working alone, in their bedrooms and coming up with their own ideas based, subconsciously (at the very least) on their own experiences and they only had half an eye, if that, on the end market for the completed game. My big hope for the Government's initiative is that it will help fund games of the type that just aren't made anymore - idiosyncratic titles that are unconcerned if the US or European markets will 'get' them.