Initially praised as a great investment into a high growth industry, plans to introduce tax breaks for British videogame development studios have been since scrapped by the UK government after the change in leadership during the General Elections in May.
The videogame industry was one of the main victims of the “austerity budget” passed through the UK Parliament by the new government last week, with George Osborne, the new Chancellor, labelling the tax breaks as “poorly targeted“.
So it comes as no surprise that some of the big studios with a heavy presence in the UK are now beginning to reconsider their options. Activision Blizzard CEO Bobby Kotick has told the FT: “For us to continue to invest in the UK there needs to be an incentive provided for us to do so. The talent pool in the UK is among the best in the world for what we do. But we really need to see some more incentives. We are seeing great incentives in Canada, Singapore and eastern bloc countries.”
Activision’s stance reiterates industry trade body TIGA’s fears; that the scrapping of these tax breaks will cause a ‘brain drain’ on the UK videogaming industry as studios and key staff members emigrate abroad.
According to TIGA figures, the UK’s games development workforce has fallen by a substantial 44 studios – six per cent – since 2008. The body suggests this is set to rise further still in light of the tax break scrap last week.
Sony has also gone on the record to say that the government’s decision could also impact its investment in the UK industry.
Ray Maguire, boss of Sony Computer Entertainment in the UK indicated that although “existing plans will continue,” any future developments “would have to be looked into.” Maguire also confirmed that Sony may take previously UK projects abroad for budgetary reasons.
Sony and Activision are among the largest employers of UK videogame developers, with 1,200 and 700 development staff respectively, and titles such as Blur, DJ Hero, LittleBigPlanet and MotorStorm are among some of the major exports from their British studios.
There is currently no sign of a reversal by the UK government, but TIGA continues to lobby for tax breaks for the £1 billion industry.