Train2Game interview: TIGA CEO Dr. Richard Wilson on games tax relief part 1

Posted on April 18, 2012

students will be aware that the government announced games tax relief in the March budget, but what does it actually mean? At Gadget Show Live, Train2Game News sat down with TIGA CEO Dr. Richard Wilson who explained in-depth what games tax relief is, the campaign behind it, how itll help UK game developers, including Train2Game students, and more.

In part one of our extensive three part interview, Dr. Wilson tells Train2Game News how he felt when games tax relief was announced, what persuaded the government to introduce it, and how its positive for the games industry as a whole. As usual, leave your comments here, or on the Train2Game forum.

Games Tax Relief was finally announced in The Budget, how did you feel when the announcement was made? Did you know it was actually going to be coming?
Well, bearing in mind we were the only trade association to consistently campaign for a tax relief for games production for four years, and wed already won games tax relief before back in 2010. In 2010 to put it in context, we convinced the last Labour government to give us the tax break. Then we had a general election, all four key political parties backed the tax break during the campaign, but then in June 2010 the coalition government decided to drop the measure.

In the two years since 2010 weve been building up the case, gaining stronger evidence, tackling any deficiencies in the argument to make the case as compelling as possible. When we finally got the tax break in the March budget this year, as you can imagine, we were ecstatic, absolutely thrilled to pieces because it was the culmination of four years hard work.

I sensed that since the end of last year and from January this year there was a change in tone from government, the Treasury was much more interested in the arguments we were putting forward. They were particularly interested in all the evidence wed accumulated about the brain drain of talented staff to overseas jurisdictions, I think that evidence was very, very important. They also found our evidence about a lack of working capital, a lack of investment in the games industry, being really, really, important.

So, to answer your question of if I knew it was coming, I sensed things were improving, Ive always believed wed get the tax break, I wasnt necessarily convinced wed get in this Budget, but I always knew wed get it and Im obviously thrilled to pieces that we have.

When games tax relief was taken away in 2010, George Osborne said it was poorly targeted, what do you think changed his mind?
I think its a combination of three reasons. One is that the economy isnt performing as well as wed like it to perform, and its an important reason because the government has clearly been looking for pro-growth measures. Our games tax relief is a really positive proposal which wont only help the UK games industry grow, but will also support the wider economic recovery.

Because weve shown over the last few years that the video game development industry is export focused with 95% of all game developers export at least some of their games. It provides high skilled employment with a typical studio having 80% of their staff trained to degree level, the vocational equivalent or above, and clearly its a very R&D and technology based sector. Thats helped to convince the government that they should support our particular industry.

So, the economic background and the fact we needed pro-growth measures was one reason why we won the argument. I think the second reason was because we never gave up, thats the truth of the matter. Over the last few years a number of organizations and indeed politicians as well have said we should just drop games tax relief. People in the games industry, people in the trade press have said forget about it, youre never going to get it. One leading industry commentator said a year ago it was flogging a dead horse.

Well, we knew that they were wrong, these are the kinds of people that always give up and dont achieve things, whereas at TIGA we set ourselves a very clear goal that we were going to get games tax relief and we werent going to give up until we got it. The fact we stuck with our campaign and continued to prove the case was the second key reason why we managed to make the games tax relief proposal stick.

And the third reason is that the government was able to encompass the tax relief for games production in a wider measure to help the creative industries. So, the tax break that theyre talking about wont help just the video games industry, but also animation and high end TV drama.

The creative industries are one of the strong, growing sectors of the UK economy, its excellent the government has recognized that, its brilliant weve been able to get cross-party support on this, and we shouldnt forget that we have all four key political parties backing games tax relief which is really terrific. I think those three reasons add up and explain we got games tax relief this time round, rather than last year. Thats why theres been a change.

So, politicians supporting games tax relief by taking petitions to No.10 has been positive for the cam
paign and positive for showcasing games positively in general as well?

Yes, I think its really important that we were able to present the games industry as being economically important and economically significant. Because I think up until three or four years ago, when we had mainstream media coverage about the video game industry, it was normally about a violent game, or a game in some way we were told we should all disapprove of, and weve changed the tones of the debate, weve changed the way the games industry is talked about.

Its now seen economically important, contributing to the economic recovery, and also its being seen as culturally significant. And its great that weve got a cross-party group in parliament which TIGA helped to instigate in 2009, and then we helped instigate it again in 2010 after the general election.
So, we have a cross-party group in Westminster backing the sector, and were really pleased that the Scottish Parliament has also set up a cross-party group. Joe Fitzpatrick, Scottish National Party MSP for Dundee City West played a crucial role there, he managed to bring create an all-party group for the video games industry in Scotland.
I was really pleased with the first meeting we had in March that we had the Sustainable Growth Minster there, so really great commitment from the Scottish Government on the video games industry. So that alone demonstrates how the sector is seen as so much more important, so much more significant than four or five years ago.

Train2Game interview: TIGA CEO Dr. Richard Wilson on games tax relief part 2

Posted on April 19, 2012

students will be aware that the government announced games tax relief in the March budget, but what does it actually mean? At Gadget Show Live, Train2Game News sat down with TIGA CEO Dr. Richard Wilson who explained in-depth what games tax relief is, the campaign behind it, how itll help UK game developers, including Train2Game students, and more.

In part two of our extensive three part interview, Dr. Wilson tells Train2Game News how games tax relief will benefit the UK games industry, and smaller studios in particular, and discusses the benefits of digital distribution. Part one of our interview is available here.
Leave your comments here on The Train2Game Blog, or on the Train2Game forum.

How is games tax relief going to fundamentally improve things for UK game developers?
Im glad to say the benefits are manyfold. The first benefit is that itll create a more level playing field in terms of attracting inward investment into the games industry. Over the last few years the UK has been competing on an unlevel playing field, with our competitors in Canada, the United States, France, Singapore and elsewhere have had tax breaks for games production while the UK hasnt. Over the last four years we lost 10% of our workforce, we roughly lost around 50 million in investment each year, quite a significant drop.

So, the first thing is itll make the competitive playing field for international investment more even. That means that Activision Blizzard , Microsoft, or Square Enix, when theyre looking to invest, they can look at the UK and see that not only do we have a fantastically skilled workforce, but theyll also see really good tax incentives in place as well. It makes the decision of where to invest much more about the skills of the workforce than the financial incentives.

The second thing is that it will lead to more investment coming into the games industry. Not just from global publishers, but also from venture capitals, private equity investors who will be looking to invest in the games industry in the UK because of this tax treatment. Those investors are not only global investors, but also indigenous investors as well, so therell be more money coming into the games industry.
The third really good thing is that itll enable UK game development studios to take on more staff. The cost of game development, in essence, will be lower next year than it has been for the previous two, by quite substantially. Thats fantastic because UK game development businesses will have more money to spend on hiring more staff and making more games.

I think well also have a further positive effect on learning providers, because theyll be able to say study games courses and get into the games industry. Its great for Train2Game as a key provider of training for the games industry because so many more students will now have an opportunity to get jobs in the sector.
Then I suppose the final point is that itll give more scope for more game development studios to set up and grow. So I imagine many Train2Game students wont simply want to work in a studio, theyll want to set up their own businesses. And when you have an environment where you have more people coming into the industry, training and learning and coming into the sector, you now have an opportunity for those students to set up their own companies, which is excellent. So, were going to have more investment, more jobs and more studios being set up.

Tell us more about games tax relief will benefit smaller and start up studios?
When we were campaigning for the tax break on games production, we were specifically weighted the proposal to help smaller and startup companies, so we suggested to the Treasury that there should be two levels of tax relief. One should be a 25% level of relief on any game between 50,000 and 3 million, then a 20% relief for any game with a budget of more than 3 million, so weve disproportionally weighted games tax relief on smaller and startup studios.

So in essence, smaller studios will be getting more money, theyll be getting more money back in tax relief. Its worth emphasizing that the companies thatll benefit from the tax relief wont simply have a lower tax burden to pay, because games tax relief doesnt just reduce the cost of cooperation tax. If your company is loss making, but your game qualifies for the tax relief, you actually get money back from the Treasury. How cool is that? You actually get money from the government which is brilliant. So, all those startup companies that are unprofitable in year one, or even year two, they stand to get more money from the Treasury they can invest in their studio and make it more sustainable.

This goes hand-in-hand with TIGA encouraging UK developers to distribute games digitally too.
TIGA, to emphasise, is focused on making the UK the best place in the world to do games business and were working really hard to help smaller start-up studios. So many of our members now are start-up studios whove only been around for a year or two, so its really important for us to help those companies.

As part of that process, we have been helping studios through best practice information advice to grow their companies and move towards digital distribution. So were very shortly bring out a guide on self publishing which has been co-written by fifteen members of TIGA including people like Patrick OLuanaigh from nDreams, Jason Kingsley from Rebellion, companies that are already involved in digital distribution.

Digital distribution is obviously creates many opportunities for start-up and small studios. Sometimes theyll have to rely on other people to help them, distribute or PR their games successfully, but it does give studios a much greater sense of control over their own destinies because they are self-publishing, they are moving towards digital distribution. The tax break will help us in that process because itll help to create more sustainable studios.

In essence, would you suggest to a Train2Game student studio, say the winners of Make Something Unreal Live, that digital distribution is the best way to attempt to become successful?

I generally think it depends on the circumstances of that particular studio and the type of game theyre making. But I do genuinely believe, other things being equal, it must be better to control and own your own IP and move into digital distribution. Thats the way the market is moving. Retail sales of physical games have fallen for four years in a row in the UK, its digital sales that are increasing.

The trauma thats taken place at GAME confirms the challenges for physical retailers, and 80% of all the new companies that were set up in the UK last year are making games for digital distribution. The trend in the UK is towards digital distribution, so by and large, Id encourage the winners of Make Something Unreal Live to go into digital distribution to be a self-publisher and I hope at TIGA we can help them achieve their dreams.
Part three of the Train2Game News TIGA CEO Dr. Richard Wilson is here. For more information about TIGA and their involvement with Train2Game, see the official website. And for the latest TIGA news, keep reading The Train2Game Blog.


This is important news. Since it deals with the taxing of the U.K gaming Industry and i am part of that indusry in terms of buying games and console's