For an industry that takes in more than $10 billion per year, video games receive relatively little dedicated support for economic development initiatives. When video game creators do attract the attention of federal and state politicians, it is often because of allegations of violent content and for encouraging sedentary lifestyles amongst consumers. A handful of states, however, have launched programs and credits that actively encourage the growth of the industry.
Texas joined these states last week when Gov. Rick Perry signed a bill approving up to $22 million in incentives for the entertainment sector, including video game companies. The money will be used to offer grants that will cover up to 5 percent of the total in-state spending on any video game project. The awards may range up to $250,000. Similar grants will be available for film, advertisement and television production through the program.
The state hopes the grants will help it capture some of the prominence in game development that it enjoyed in the 1980s and 1990s. Austin, in particular, was a hub for the industry and hosted headquarters and branches of many of the top names in the industry. For two decades, Origin Systems - creator of the Ultima series - was based in the city, along with branches of noted designers such as Dallas-based Eidos and NC Soft. In the late 1990s and earlier this decade, however, Austin suffered a few industry setbacks, with the closing of both Origin and Eidos and cuts following the tech bust.
Still the region remains important in the industry with big names such as Blizzard Entertainment, makers of the immensely popular World of Warcraft, Sony Online Entertainment, BioWare, Amaze Entertainment and Aspyr maintaining a strong presence. The Austin American-Statesman reports that the city is currently home to about 50 game companies, with about 1,000 employees.
The state hopes to build on this foundation and increase its presence in the industry, which generated revenues close to $12.5 billion in the U.S. last year. The grants will only cover a small portion of the costs of game production, which can take several years, but is an important symbolic victory for the game design community. In order to ease the concerns of those who object to the often-violent content of PC and console games, applicants will be subject to a review of their project's content before an award is made. The Texas Film Commission will have final approval over all grants.
Texas is not the only state competing for game design firms through such incentives. In April, the Georgia Department of Economic Development hired Asante Bradford as a Digital Entertainment Liaison to help build the state's growing video game industry. The department offers tax credits to game developers through the Georgia Entertainment Industry Investment Act. That measure, signed in 2005, provides developers with a 9 percent base tax credit on all in-state expenditures. The Florida High Tech Corridor recently added Interactive Entertainment to its list of supported industries and is currently conducting research into the sector's needs. Hawaii, Wisconsin and Connecticut all provide incentives to video game developers through their programs to support the television and film industries.
Meanwhile, on the other side of the Atlantic Ocean, France approved a measure earlier this year that may be the most aggressive move yet to compete for dominance in the game industry. The French government will provide tax credits of up to 20 percent of the total production costs of video game projects, if the game draws on more than one branch of artistic talent including graphic artists, musicians, sound creators, writers and directors.
While economic development professionals struggle to decide whether video games qualify as software or as entertainment, the industry continues to grow at an impressive pace. In 2006, revenues grew by almost 20 percent over the previous year. With the arrival of the Nintendo Wii and Playstation 3 late last year, along with the rise of on-demand game downloads and subscription-based gaming, many expect an increase in demand for interactive content.
Find out more about the Texas Moving Image Industry Incentive Program at: http://www.governor.state.tx.us/divisions/film/incentives
