TIGA, the trade association representing the UK’s games industry, has once again issued an urgent call to the current government calling for the introduction of targeted tax breaks in order to reduce the cost of game development in the UK and provide the opportunity for growth seen abroad in countries such as Canada.
TIGA's latest report presents the reader with some sobering figures, showing that although 216 new games companies entered the UK games industry between 2008 and 2011, there were also 197 closures, and that the UK’s share of global investment (venture capital and private equity) in the games industry has declined from 10 per cent in the mid-2000s to 3.5 per cent.
TIGA's CEO, Dr Richard Wilson, stated that the fact that the UK's key competitors in this industry were being offered tax breaks for games production meant that investors simply went elsewhere, and that "despite an almost record number of start-up studios, the industry’s potential is being held back by limited access to both private and public finance".
"Access to debt, bonds and equity finance is difficult because of the high levels of uncertainty about consumer demand and the intangible nature of IP in the games sector," Wilson continued. "In contrast to the film industry which benefits both from a tax credit and from lottery funding, there is negligible public financial support available for video games development."
Although there's widespread support within the industry for this course of action, the notion is not without its critics who, as the Guardian note, "claim that tax breaks distort the market and move too slowly for the rapidly evolving games industry". Then again, if done correctly, a tax break that pulls in investment pays its own dividends, generating revenue and potentially saving jobs.