Most developers would probably express some degree of consternation about the role that the state can play in their nation’s games industry. Headlines scream of government-enforced games censorship and regulation, creating much controversy in the States and further afield. Governments in most major games development territories have long been concerned with our industry, in some cases tasking dedicated officials to liaise with and monitor the industry. But, in fact, their primary motivations are rarely related to censorship.
You may be surprised to learn that you are the subject of a pitched, slow-moving battle waged between a handful of nations that recognise the economic and social potential of a vibrant indigenous games development and publishing industry.
Canada’s steady emergence as a major games development territory over the last 10 years has primarily come about not because of any unique genius of creativity but because its national and, in particular, provincial governments have created a business environment that is considerably more appealing than other rival games development territories. The list of incentive schemes offered to both games businesses starting up in, or existing businesses relocating to, Canadian provinces is long and varied. Generous salary and training cost subsidies, numerous R&D tax credits and grants, flexible state-backed loan schemes and investment tax breaks have all proved extremely alluring to games companies the world over, often proving sufficiently enticing to overcome any relocation concerns.
Canada’s status as the most commercially attractive country in the west for games development has resulted from internal competition rather than a desire to compete with other nations. Since corporate taxes are collected locally rather than nationally, the individual territories have the latitude to offer incentives to local businesses to stimulate growth and attract further investment. Whilst initial target companies were confined within Canada’s borders, this internecine conflict escalated, with provinces launching increasingly competitive schemes, resulting in a fight with international consequences.
France has arguably been the most affected, losing the rump of its indigenous development industry to Canada and French-speaking Quebec in particular. Since 2000, France’s games development industry has, as a direct result, collapsed by around 50% and, with Ubisoft’s aim to create the world’s largest games studio of 3,000 people in Quebec, is at serious risk of further collapse. In parallel, Canada has risen from being a development minnow to become, in 2006, the third largest producer of games in the world as developers and publishers alike rush to harvest Canada’s government-sponsored largesse.
Many governments have responded to both the threat that this represents and the growing potential of a conducive business environment for games companies. Unsurprisingly, the French have led this charge, responding to the increasingly urgent calls for protection of what remains of its development industry. An array of regional incentive packages that specifically target the games industry have failed to stop the decline. This prompted the national government to respond emphatically with a proposed 20% tax credit specifically for games development expenditure. The European Union prohibits state aid, but France claims its aid will be cultural, a claim under investigation by the European Commission. Its ruling will influence policy makers across Europe.
This is, at its heart, a battle being fought over you, the games developer, and is a war that is not only spreading but appears set to intensify significantly in the coming years as mature games development territories struggle to protect their existing markets and emerging territories look to emulate Canada’s success. This war is probably good news for the industry overall, stimulating investment, start-ups, risk-taking and innovation as well as creating jobs. But it also runs the risk of creating a phoney market of companies without commercially viable product but which are proficient in harvesting grants from willing bureaucrats. Whether these artificially uneven playing fields create viable, long-term industries will ultimately be determined by your choice of which country needs you the most – and for how long.