Chancellor Vows Support for UK Games Industry: Too Little Too Late?

Alistair Darling's delivery of the budget for the coming year was greeted with a triumphant cheer from the UK's games industry today. Few could believe it when Mr Darling announced that he was introducing long awaited and hard lobbied tax breaks for the industry, and not only that, but that he was also going to do this in line with TIGA's previously announced tax relief plan.

To this effect, developers that create profitable games will now be able to use the relief to pay less tax on profits, while unsuccessful games will be awarded a cash tax credit to reduce losses. This should free up cash to spend on other projects or creating jobs for the increasing numbers of stellar graduates that British and overseas Universities are producing year on year.

Scottish developers are delighted and are basking in the warm glow of victory. Colin Anderson, Managing Director at Denki, said, "Games Tax Relief will stimulate much needed investment and innovation in one of the UK's leading knowledge based industries. The leadership TIGA has demonstrated throughout this debate has played a decisive role in getting Games Tax Relief on the political agenda and in to today's Budget."

And Colin MacDonald, Studio Manager at Scottish industry giant Realtime Worlds said, “The UK video games industry is one of the most creative and innovative in the world. This decision will mean we can continue to invest in UK talent and prevent brain drain to our overseas competitors. This is a great day for Scottish and UK-wide developers. It is also a major achievement by TIGA.”

The news of the tax breaks, and the form they are taking, was welcomed by TIGA. CEO Richard Wilson said "The Government's decision to introduce Games Tax Relief in today's Budget is an inspired decision. It is good for the UK games industry, good for consumers of British video games and good for the wider UK economy.

TIGA's research indicates that over 5 years Games Tax Relief would create or save 3,550 graduate level jobs; increase and safeguard £457 million in new development expenditure and ‘saved' development expenditure that would be lost without the relief; and generate £415 million in tax receipts for the Treasury, comfortably exceeding the cost of Games Tax Relief. Games Tax Relief would also encourage game developers to adopt new online, more sustainable business models and sell directly to the consumer."

For Scotland's games industry this is big news, as two major titles, Crackdown 2 and APB, are expected to emerge by quarter 3 of 2010. Provided these games are profitable, their developers, Ruffian Games and Realtime Worlds respectively, could stand to reap the rewards and this should have a knock on effect on a large scale with other local companies and Scotland's Universities.

Potentially this also will bring a sigh of relief to those companies whose commercial successes have, so far, been few and far between as they will be bolstered by the incoming cash tax credit, and overall this might lead to fewer British games companies going bust. Again, this stands to encourage ongoing employment and give these companies more breathing room to grow.

However, this may come as too little too late. With a general election expected to be called within the next six weeks, the Conservatives, currently tipped to win an upcoming election, have vowed they will enact an "emergency budget" within 50 days of coming to power, obliterating many of the more controversial and surprising of Darling's moves. As the Conservatives have not, at any point, indicated support for UK games industry tax breaks, we can't be sure that this would remain as part of a Conservative budget.

Though this shouldn't quell your enthusiasm or celebrations and in all actuality there's no real indication that the tax breaks would be at risk of removal under a Conservative government, we must bear in mind that much of what was in today's budget will have been included on the basis that it will encourage votes for the Labour government.

Let's not count our lemmings before they're out the door...

Keeping Them in the Nest

So if you listen to the papers, it would seem that last week it was announced that Scotland's games industry would be getting a multi-million pound investment - to the delightful tune of £2.5m.  Really what most of us here in Dundee hear when there's talk of tax breaks or cash injections from the Scottish government, ostensibly for Scotland, is "for Dundee".  Being at the epicentre of everything games in Scotland, and in some ways the UK, does have its perks.

However, perhaps that is not strictly the case.  This money is to go towards a prototyping centre at the University of Abertay Dundee - hoping to assist local companies in creating and developing new gaming content and methods as well as encourage hands on learning for Dundee's many games oriented students.  This is, of course, no bad thing.  We are better educating our own workforce and local companies are being given the chance to develop new content in state of the art surroundings.  However, there is one downside and it comes in the form of three words:

No tax breaks.

We have been hoping and praying that Alistair Darling's pre-budget report would include some mention of the tax breaks the industry has been begging for, but to no avail.  Currently it is estimated that the games industry contributes circa £1bn every year to the UK's GDP, of which £420m ends up directly in the Exchequer's coffers.  Despite this, the Chancellor has deemed that the industry should not receive tax breaks, allegedly because it does not contribute enough to the advancement of the UK's cultural values in the same way that the film industry does (which currently receives £104m in tax relief from the UK government annually - a figure UK trade body TIGA said is much in excess of what the games industry would need.)

So what does this have to do with the £2.5m figure mentioned earlier?  What does it have to do with our students?  Though the UK does not offer tax breaks or incentives to developing studios, countries like Canada currently offer generous awards which are drawing companies, and subsequently talent, into the country in droves.  Their industries continue to grow and flourish and will as long as these rewards remain.  The main issue for the UK is, therefore, that our excellent Universities are training up our talent, nurturing them and then, once they have the degree and mortar board, that talent is being sucked out of the country.  Our studios simply cannot compete with the incentives tax relieved companies in other countries can offer.

This, however, is looking at things in a cold and harsh light, but you would imagine that this is the view that the government would take - why would we want to spend money training a workforce if we're not going to see a return on that investment?

Those with softer hearts might see it as essentially like bringing up a child, spending hundreds of thousands of pounds getting them ready for the world only to see them leave, set up home with someone else and take all of our "investment" in time and money with them.  Like a child though, we will see them from time to time; we will hear from them and we will receive some of the benefit of our investment a few times a year.  This is not totally unlike our workforce, who leave the nest with all their knowledge and experience, take it elsewhere and use it to develop new content there - we will see a return on our investment in that this advancement might effect what we ourselves are able to produce or we may be able to build on the idea, but we certainly won't receive the direct benefit that our "child" did.

It comes down to whether you can look at things with the view of an egoist or a utilitarian - should we share the wealth, share the talent and our know-how safe in the knowledge that, somehow and in some small way, it will come back to us?  Or should we not be looking to keep all that for ourselves and leading the charge development wise?

As much as I'm sure some people would like to take the warm and fuzzy approach to this, the truth is we, as an industry, cannot afford to keep hemorrhaging talent in the way we are presently or we will bleed out and die, or at the very least remain crippled.  We definitely cannot afford to keep pouring money into students if we can't keep them in our workforce afterwards.  I'm not suggesting we stop diverting cash to education - far from it as the UK only gives 5.3% of its total GDP back to education (Canada gives 5.2%.  We've got you beat there, suckers!)  What I am suggesting is that if we do want to better educate and prepare those in higher education to become part of our workforce then maybe, just maybe, we should actually be finding ways to ensure they do become part of it.

From Little Acorns Mighty Oaks Do Grow

On 11 December, GfK-ChartTrack released new data indicating that the Nintendo DS was the biggest selling games console in the UK ever.  Weighing in at 10.05 million lifetime sales against its predecessor the PS2's 10.02 million, this seems all the more impressive when you take into account that the PS2 was released over nine years ago and the DS has been on the market for a meagre five.

It is now estimated that one in six people in the UK own a DS, some of them owning more than one.  This is a remarkable figure even taking that into account and even more so if we cast our glance back to 2004 when the DS arrived on the scene.

The DS' arrival was not heralded to great fanfare by the gaming community.  It was hailed as clunky - cheap looking, plastic and ugly.  Its use of dual viewing screens and a stylus, by then seen as the outmoded peripheral of yore for PDAs only, was subject to huge criticism.  It's safe to say that no one imagined that five years later it would be dominating the console market, but it has, and this is due in no small part to its user friendly hardware.  Those of us brought up on a diet of games find this concept difficult to understand, but most non-gamers are immediately turned off of consoles and handhelds because of the controls.  A traditional controller set up, particularly in handhelds, is not intuitive or welcoming which causes a barrier when a company looks to attract new customers - a revelation we have recently heard repeated at E3 with the introduction of Project Natal.

The DS made gaming simple by breaking it into three simple steps: pick up the stylus, touch the screen with it, play.  No learning fiddly controls - no bumpers, no triggers, no joypads, no analog sticks and most importantly no confusing and frightening button combinations.  You have one peripheral and one input device, the screen, and that's it.  This painted a much more approachable picture to the casual and non- gamers and, most importantly, young children who make up a large part of Nintendo's target market with the DS.  The cheap and plastic look that was mocked by the gaming community to begin with seemed playful and fun to others.

It wasn't just the hardware that proved attractive - Nintendo came out with a slew of different titles that seemed to bridge every gap and fill every niché market imaginable.  These titles challenged everything we knew about handheld gaming, with titles such as Brain Training and Cooking Mama designed to educate as well as entertain.  The DS could be use as an e-book reader and a study aid as well as play fun and interesting gaming titles such as the Professor Layton series and The Sims.  This opened the device up to a market that its competitors just couldn't access by becoming an acceptable and often encouraged part of people's every day lives.

This device broke apart the very definition of "game" and as such our characterization of what a "gamer" is.  Hardcore gamers, who grew up on a regimen of Quake and Wolfenstein may scoff, scowl and mock, spitting venom at the casual gamers who dare liken themselves to what they perceive a gamer to be without realising times have changed.  In most people's eyes there is no difference between a man who plays Professor Layton for three hours a day on his commute home from work and one who spends the same amount of time on World of Warcraft in the evenings.  The growth in uptake of the DS, along with that of the Nintendo Wii, should highlight to gamers that the gap between "us" and "them" is ever shrinking.  We were wrong to laugh at the DS - we were out of touch with the way our world was changing then and if we continue to box ourselves in then this is the way it will stay.  More than ever, we need to accept that we are no longer a minority unless we make ourselves one - we need to face that are just another niche in an ever expanding and changing market and find common ground.

Game of Peggle anyone?

"Mummy, I want one of those..."

With not a whimper but a bang, NEoN '09 came to a close on Sunday night with a performance by Videogames Live.  The festival certainly provided plenty of food for thought over its two day run of speakers, but nothing quite got me thinking, and worrying, so much as a subject that came up during the Friday's workshops.

During my first workshop slot, I was in with Neil Ross, Head of European Operations for e4e Interactive (formerly Absolute Quality).  His talk was interesting, covering such topics as Playfish's recent buyout by EA and the future of that most 'casual' of gaming formats, the social game.  Games such as Farmville, Mafia Wars, Tiny Adventures and Fishville are played, sometimes to obsession, by millions of people every day.  They're played by people from a variety of different demographics, from housewives to business executives to the elderly.  These games commonly use an incentive reward system that encourages continued play and only allow a full experience of the game if you are willing to pay.

Taking into account the multitude of demographics playing these games, this thought started to concern me as the talk moved on to discuss the increasing number of children playing these games.  Playing these games is not, in itself, harmful to children, but ultimately with a child you get the immediate issue of an underdeveloped sense of self control.  If a child is playing Farmville and can't get a decent harvest without paying a pound for the latest model of combine harvester then they are not going to be happy.  Without facility to pay for these things themselves, it's mummy and daddy who will fork out the money time and time again.  There is already a culture of this in our society at the moment where the concept of delayed gratification on children, but what concerns me most is that children are now learning from a young age are learning that this is okay - they can always get exactly what they want, when they want and all they need is mummy and daddy's credit card.

This idea should be particularly alarming to anyone who has ever heard of Walter Mischel and his "marshmallow test".  Walter Mishcel is an American psychologist specialising in personality theory and social psychology who, in the late 1960s, conducted a series of tests on a group of preschoolers, aged four years old at the time.  These children were each given a marshmallow and promised another in addition to it if they could wait 20 minutes before eating the first one.  Some children waited, but others could not.  The researchers then followed the progress of each child into adolescence and demonstrated that those who managed to wait were better adjusted, more dependable and scored around 210 points higher on Scholastic Aptitude Tests.

More disturbingly, with the research followed through into adulthood, some of those who didn't manage to wait ended up gamblers, drug addicts and criminals.  Those that escaped this trap were still less likely to exercise, to take care of their personal hygeine, eat well or put in more than the bare minimum at work.  They were the least successful of the group and were only interested in short term payoffs and immediate gratification, just as they had been as children.

Now imagine that all children are brought up in a world where immediate gratification is the norm from birth.  They never have to wait for their marshmallow - no one ever asks them to.  While this may not be a big problem while they are children, we are inactuality raising generations of adults who will not know how to defer gratification and will ultimately be lazy, selfish and self-involved.

So while in itself these games are harmless, it's the impact on an underdeveloped mind that we have to worry about.  Microtransactions in social games are not inherantly a bad thing, but the rule of thumb "everything in moderation" must be key.  As an adult you can choose to spend as much time and money as you like on these games, but a child needs the lines drawn for them or they will never learn to draw them themselves.  We can only hope that current and future parents alike remember this when they sit their tyke down to play a few hours of Fishville...