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Babel staff face redundancy as operations move to Montreal

Wed 24 Aug 2011 3:05pm GMT / 11:05am EDT / 8:05am PDT
PeopleDevelopment

Senior staff already relocating, tax breaks and "brain drain" responsible

Babel Media

Babel is the leading global provider of outsourced specialist services to the games and interactive entertainment...

babelmedia.com

Games outsource firm Babel Media is moving operations from Brighton to Montreal, and staff face relocations and redundancies.

"The market demands have dictated our move," CEO Richard Leinfellner told Develop.

"There is a brain drain in the UK while Canada is thriving, and benefiting from tax breaks that can save local studios thirty to forty per cent on production costs. So like THQ, EA, Ubisoft, Square Enix and many more, Babel is taking advantage of these initiatives already."

Babel's UK operations are currently in a consultancy period, with a large number of redundancies expected. According to the report, senior staff are already relocating to Montreal, with UK staff facing questions about whether or not they would be happy to make the move. Babel's Montreal office already has around 300 employees.

Earlier this month in a press release announcing the shift Leinfellner praised Montreal as a growing market.

"It's quite staggering to see Montreal becoming a major interactive entertainment hub in such short time, this realignment of Babel's resources reflects the cities growing "Canadian Hollywood" status."

Babel Media was founded in 1999 and its clients include Warner Bros, Nintendo and LucasArts.

12 Comments

Good for Canada, bad for here. There really is nothing else we can say to this anymore.

Posted:2 years ago

#1
Actually there is.

Canada will eventually find itself in a lovely poaching war.
When one production finishes or a operation winds down, the larger studios are happy tp poach the local talent as they can walk from one door to another. Bad for business overall.

Karma is a B, and they can make their bed and sleep in it, is what i say :)

To be fair however, various game studios I meet mutter darkly that the British Govt doesnt reward game development. The harder you work, the harder you get slapped with a ban and tax hammer. To summarize, the UK environment is hostile towards wealth creators and business in general (not just games).

- They need to URGENTLY opt out of Eu red tape directives
- Opt out of Euro VAT issues
- Opt out of bilateral EU subsidies
- Lower corporation tax today, not during a election year giveaway (there might not be many companies left standing, except those heavily r*ped and pillaged)
- Have a HMRC that can do simple accurate arithmetic, and be vigilant in their tax returns (rather than blatantly use a automated system that is 80% in error).
- Have a HMRC that can answer phones, and not in a weeks time
- Have good business incentives - promote sectors that ARE strong. draw a line in the sand to back sectors that are UKs strength and add to their net worth. Technology, services, next gen business and space tech. Manufacturing is important but LESS important in this day and age. Deal with it.
- Sort out and invest in infrastructure.
- Smack a large ban hammer on energy and transport firms that only gold plate their pockets whilst the general public and productive workers suffer. We know they use all sorts of waffly excuses about rising costs, but they still make disgusting profits. Not a small profit. a MEGA profit. R&D probably only involved 30-40% of their profit margin.

We're all in this together (obviously not)

Edited 1 times. Last edit by Dr. Chee Ming Wong on 24th August 2011 5:03pm

Posted:2 years ago

#2
Nice comments Chee. But Montreal already is a poaching hotbed. Was when I was there and it has not changed. But the incentives make it seemingly worthwhile for the big studios. And corporate taxes are WAY lower than in Britain. Personal taxes are high but unlike here you can have a lot of deductions so the effective rate is much lower. And the cost of living is much lower. So the government here need to wake up and smell the coffee before the Daily Mail 'last out turn off the lights' comes true.

Posted:2 years ago

#3
Hey Mark,

Good cost analysis. Running joke here is that If you want to negate any policy by Cameron, you just need to prolong it more than two weeks, and the focus will shift elsewhere. There are real physical things that the govt can do, but lob in a few civil servants, local mandarins, MEPs enjoying the really good life, hand wringing(when anything serious needs doing) and obsfucation And you have a govt that potentially has a great bargaining hand to make real long lasting change, but is currently on holiday or being fixated with Libya.

Lets look at UK first please

Posted:2 years ago

#4

Andreas Gschwari
Senior Games Designer

555 607 1.1
To be fair though Chee: the gaming industry is not the only one that does not receive any benefits in the UK. In fact i would guess most industries in the UK are without tax breaks or incentives.

So why should the gaming industry be singled out? Yes it has a relatively high market value, but how much of that is still generated and kept within the UK?

Even UK studios and publishers outsource a lot these days - particularly to asia and eastern europe.

Unless the UK would make sweeping benefits possible like they are in Canada (in some cases playing close to 70% of employment costs) there won't be a massive relocation to the UK as we see it with canada. So things would largely remain as they are now, and the govenment would probably loose tax revenue - so whats the incentive for the government to do it? other than to appease a few people with who seem to want hand outs?

Posted:2 years ago

#5

Mikolaj Macioszek
Translator

14 0 0.0
Chee: Funny to see a Brit point the finger at the EU, as per usual. Next thing you know it was mainlanders starting the riots.

Just to paraphrase you "Karma is a B, and they can make their bed and sleep in it, is what i say :) "

Posted:2 years ago

#6
@ Chee. You can say all that until you're blue in the face, but it'll make no difference. The government here has ZERO interest in saving the video games industry.

Andreas has a point as to why games should be singled out. Personally, I'd like to see the government slash corporation tax on that element of profit that is earned by exporting. So if 20% of the royalties earned for a game come from sales in the UK, that's taxed as normal, but the remaining, earned by the title selling overseas, gets taxed at half the normal rate, if not less. And not just for games, either - for ANY exporting business.

@ Mikolaj - don't even go there on the EU. The EU's an utter mess. Once the EU sorts out its political will to save the Eurozone, and once the ECB stops setting interest rates to suit Germany, then you can come back and talk to us Brits about how brilliant the EU is. But it won't - the eurozone WILL fall, and the EU will go back to being what it should have been right from the start - a free trade area, nothing more.

Posted:2 years ago

#7
@ Fran & Andreas : "To summarize, the UK environment is hostile towards wealth creators and business in general (not just games)"

I did try to highlight that the UK govt is not going to provide handouts to any particular sector, although in the past it has tried to side with a few sectors. Nevertheless, what i do try to point out time and again is there are many opportuntieis and methods that do not involve direct tax incentives to encourage businesses as whole.

As Fran said, a overall lowering of corporation tax is one of the first gold standards to pursue. Osborne wants to reduce it 1-2% a year (and probably try to hand out some interesting headlines for re election). The next is to lower the 50p taxation on the higher earners. France may opt for a 3% taxation on super high earners, but the fact is there are ALL sorts of legal and creative accounting which ultimately results in a large bracket of middle income earners carrying the brunt of the taxes on one end, reduced household income on the other.

In addition, today they show there is a considerable decrease in net migration from UK. "the total leaving the UK for work-related reasons was at its lowest for three years at 179,000."

"It's emigration that is, in a sense, the problem for the government at the moment," said BBC home affairs correspondent Danny Shaw.

"Work is the main reason why people leave the UK, and the numbers of people leaving the UK for work reasons is down considerably. So what it would seem is that the economy in the rest of the world [and the] lack of opportunities for jobs elsewhere is actually making people not want to leave Britain."

Guess all the Canada-philes have already up sticks! And the rest of those wanting to emigrate cant afford to!

Edited 2 times. Last edit by Dr. Chee Ming Wong on 25th August 2011 11:20am

Posted:2 years ago

#8
1-2% per year? That's a joke. It should have been lowered by at least 4% as a one off, with international aid abolished and benefits cut to compensate.

But that's just me.

Posted:2 years ago

#9
@ Fran - pick up the issue with your local MP

"Corporation Tax will be reduced by 2% from April 2011, rather than 1% as previously intended, and fall by 1% in the next three years, to reach 23% by 2014. Mr Osborne also said that he was looking to boost enterprise and exports, as part of a Budget "for making things"

Also in other news, looks like the 6 strong collective called AppyNation is the step in the right direction, as a new nesta-backed Publisher

Edited 1 times. Last edit by Dr. Chee Ming Wong on 25th August 2011 8:40pm

Posted:2 years ago

#10

Phil Williams
freelance artist

6 1 0.2
I wish they gave tax incentives in warmer locations. really don't fancy putting up with -30 just to get a decent job.

Posted:2 years ago

#11

John Bye
Senior Game Designer

480 451 0.9
I certainly wouldn't complain if taxes for me and my employer were lower, but if they drop Corporation Tax they need to clamp down on tax avoidance / evasion by big companies at the same time, so everyone is on an even playing field and overall tax revenue doesn't suddenly drop (which, let's face it, the country can't afford right now, whatever your politics). At the moment most big companies don't pay anywhere near the headline rate of Corporation Tax, just as most rich people don't pay anywhere near 50% of their earnings in Income Tax. The whole tax system needs simplifying and bulletproofing to make it fairer and more efficient for everyone.

Posted:2 years ago

#12

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