Earlier this week, the British government published its long-awaited plans for keeping the UK at the forefront of the global digital economy, Digital Britain. While the main thrust of the report dealt with updating the country's broadband networks, reforming the BBC, and cracking down on piracy, it also addressed the thorny issue of game ratings, as well as discussing game development in some detail.
In 2008, UK-made games accounted for more sales than those of any country except for the US or Japan, in no small part thanks to the massive success of Rockstar's epic Grand Theft Auto IV. By the end of this year, the report projects the country will be overtaken by Canada once again and--for the first time--South Korea. By 2010, China is expected to overtake the UK, relegating it to the sixth largest producer of games.
Three main problems for UK game development were outlined in the report. Firstly, the cost of development in the UK is too high, thanks to the high cost of labour and the lack of tax breaks and other financial incentives. Secondly, problems in education have led to a burgeoning shortage of people with the skills UK game developers need to keep their studios stocked with fresh talent. Finally, there is a lack of UK ownership of British intellectual property in the gaming sector--while British firms are recognised for their ability to create original properties, they often end up being owned by non-UK publishers due to lack of adequate local support.
Of these issues, it is the lack of tax breaks that has seemed closest to the hearts of the British development community of late, given the explosive growth of development in Canada, as well as recent advances in France. Quebec's development boom, for instance, began in earnest after $4 million in grant money was doled out to Ubisoft in 2005. Since then, the province has attracted significant new investments from the likes of EA and Eidos thanks to a very generous array of tax breaks, subsidies, and other financial incentives far in excess of what the European Union would allow or the UK government can realistically afford.
While the report stopped short of promising tax breaks, the government did affirm that because games have the same potential as film "to engage us and reflect our cultural particularism," developers should be considered for the same sort of incentives that are currently in place to encourage UK filmmaking. The aims of such relief would be to nurture the UK's development talent pool, help it create and retain new IP--rather than seeing British-developed ideas being published by companies based abroad--and "encourage the production of culturally significant video games that may otherwise not be made in the UK."
The problems outlined in the report reflect concerns that the UK games industry has been attempting to make to government for some time. Speaking last year, ELSPA's director-general said, "The Canadians have driven a tank over the French Citroen and have now parked on our lawn. It is becoming very challenging to keep core development studios here."
Speaking to GameSpot earlier this week, both Dr Richard Wilson, CEO of Tiga, the UK's trade body for game developers, and Jon Kingsbury, the director of the creative economy programme at NESTA, reaffirmed that the issue of taxation and government assistance was the most serious issue facing UK game development today. While Wilson conceded there is no way that the UK will ever get financial incentives to the degree that has triggered Montreal's exponential growth, due to European Union regulations and the different political climate in the UK, he did express the hope that we could see tax breaks at a similar level to those found in France.
Both Wilson and Kingsbury indicated that there is cross-party support for such an initiative, a sentiment since backed up by statements from Labour MP--and chairman of the new all-party parliamentary group on gaming--Bill Olner. The MP hosted a gathering of developers in parliament on Monday, where he promised lobbying for such tax breaks would continue even though it was "not the most auspicious time" to be attempting to persuade the treasury to part with funds. He also indicated that MPs on the whole were becoming much more accepting of the games industry, making it clear he thought claims that playing games had negative psychological impacts on players were "quite plainly nonsense," while later stressing the importance of the industry to the economy.
There was further support for these ideas from the other side of the House, with Conservative MP John Whittingdale--currently the chairman of the Commons Select Committee for Culture, Media, and Sport--making it clear he too supported tax breaks for game developers. Talking to GameSpot on Monday, Whittingdale accepted that while he found some games "profoundly disturbing" and supported the BBFC's decision to attempt to block the sale of Manhunt 2, he had seen no evidence whatsoever that they caused harm to anyone. He also said he felt that many comments from fellow parliamentarians on the subject were "completely ridiculous" and that many anti-games claims made by politicians were "quite plainly out there," made by those who had not taken the time to actually investigate the facts of the matter.
Whittingdale echoed Olner's earlier comments about changing attitudes in Westminster, indicating that the battle for support of games was "being won," and that many did now realise the industry was "of real importance." The problems of the past, he said, were in no small measure due to the fact that the vast majority of MPs had never played a computer game. While Whittingdale admitted his own knowledge of games was less than thorough, he has logged time with both the Civilization and Age of Empires series. In addition, he said his experience dealing with his younger daughter's fresh obsession with The Sims 3 has added a certain amount of perspective.
While many seem cautiously optimistic about progress on tax incentives, assessments of the UK game industry's educational woes were direr. In fact, Wilson and Kingsbury were both nothing short of damning when it came to the state of UK higher education and its failure to supply staff qualified to enter the games industry.
"Loads of games courses are just not fit for purpose," Kingsbury told GameSpot. Of the 80 or so games courses currently on offer at UK universities, he said only five are officially certified. The problem, he said, was that the ways that universities were now funded led to courses of "ever-increasing specialization," which were of limited utility to the industry. He also lamented the lack of real incentive for universities to become certified, thanks to the surfeit of prospective students and the fact that all programmes are funded equally irrespective of certification.
The Digital Britain report did acknowledge that the skills shortage was an issue, stating that, "Instability and lack of adequate skills provision threatens to undermine the growth of the UK games industry," and that this would be dealt with fully in the upcoming Higher Education Framework. While the full details of the Framework are still under wraps, the report states universities will see a "shift in incentives from purely demand-led emphasis in courses toward meeting recognised skill gaps." Universities will then be encouraged to "combine 'hard' excellence in science, technology, and mathematical skills with the 'softer' excellence in business and creative skill."
Finally, the report promised a thorough examination of proposals for a new "Usability Centre for Video Games." Potentially located in Salford's MediaCity complex, it would "address issues around skills development offering graduates the work-related training necessary to enable them to secure their first job in the industry."
While encouraged by the acknowledgment that the system needs repair, Wilson said more detail was needed about these proposals. He also suggested that games courses should be managed in such a way that programmes that were formally accredited or had strong industry links receive "preferential funding," and that tuition fees for mathematics and computer science degrees should be cut. He also suggested that financial incentives be provided to encourage more students to study the sciences and mathematics in school, which would in turn naturally lead to increased take-up of those subjects at university.
However, not everyone was upbeat about the proposals. The lack of detail and action promised in the report also raised concerns from the Conservative party. Jeremy Hunt, the shadow secretary of state for Culture, Media and Sport, poured scorn on the report in Parliament, branding it a "colossal disappointment," and as further evidence that the Labour party was simply providing "government of the management consultants, for the management consultants, by the management consultants."
Vincent Scheurer, a video game law expert from Sarassin LLP, also sounded several notes of caution: "Anyone encouraged by the tax breaks will move to another country if they can get better breaks elsewhere--compare [them] the benefits of long-term investment in education," he said. The concept of cultural significance being attached to the tax breaks was also given short shrift by Scheurer, as such requirements often come with wider restrictions, such as age ratings or limits on the level of violence in a game.
"A mature creative industry should not face content requirements of that kind," Scheurer said.