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Pitbull Studio: Tax breaks could come back to bite us

Pitbull Studio: Tax breaks could come back to bite us

Fri 13 Apr 2012 9:56am GMT / 5:56am EDT / 2:56am PDT
Business

Studio MD Robert Troughton explains how the new incentives must be used to safeguard UK development

Robert Troughton founded Pitbull Studio in 2009, and as the head of a small, independent UK development studio he's asking the government, and the industry, to make sure the new tax breaks help the UK rather than damage it.

"My worry is that if the funds provided by the government, by the taxpayer aren't put to good use then, some time down the line, this will come back to bite us," he told GamesIndustry International.

He explained that while the government support was a good thing, the tax breaks would have to be applied carefully and fairly to ensure they were really supporting UK companies.

"I'd like to see UK-owned companies with UK offices and UK employees benefit more than foreign-owned studios," he proposed.

"It's a no-brainer for me… we really need to drive growth in the UK economy with this. Of course it would be fantastic if one of the big publishers opened a 4000-person mega studio in the UK in terms of generating jobs - but what happens when the government wants to stop the tax break and start getting more of a return on their investment?"

I'd like to see UK-owned companies with UK offices and UK employees benefit more than foreign-owned studios.

He said this support of the UK industry could also extend to the genre and content of the game being developed, so larger investments for games with British elements, promoting tourism and British culture by supporting titles that feature British cars, or British locations. He admitted he's had enough of LA and New York.

"I'd like to see them benefit not just the large or mega studios but the smaller, independent developers too," he said, and argued smaller developers just aren't properly represented in the UK.

"I know that some of the big trade bodies have made moves to cover the indies - but the worry there is that their chairmanship and their interests don't really lie with those developers… if they cared, why are their board members all CEOs of large studios?"

He also made an interesting suggestion, that as well as tying tax breaks to the content of the game, there should be extra incentives tied to the welfare of the people making it. Troughton suggested a Quality Of Life charter to address unnecessary crunch periods and general lack of care, which he believes also contributes to developers moving abroad.

Asked if the move was enough to stop the talent drain that sees much of the UK workforce heading to Canada, the land of the tax, Troughton was unsure.

"The tax breaks will definitely help. But let's not fool ourselves - the money on the table here is a small fraction of what is being invested in Canada."

But he added that thanks to the UK's wealth of agile and talented developers, the UK wasn't so reliant on investment, because that workforce was something lacking from the mega studios abroad. Troughton is clearly a man with a lot of love for his UK peers.

"I also don't see the long term benefits of what the Canadian government are doing - what is their plan when they start to reduce these breaks? What happens if, pulling a name out of the hat here, Bulgaria times a tax break for when the Canadian tax breaks start to end? Won't we just see another exodus with the people that Canada are banking on moving abroad?"

He was also keen to see more freelancers within the UK industry, something that seems to be a growing trend. And why wouldn't it be? It offers more flexibility for the freelancers, gives them more control, and has benefits for the publishers too.

"It's a safer business model for the publishers - no expensive studio pre-production and post-production, no need to scale up and down the workforce through a project's development," he pointed out.

"You just hire people for the time that you need them. You also get the exact people that you need - you don't need to shift somebody from working on AI to working on a foliage system, for example."

But he said that doesn't mean just chucking the job to the cheapest bidder overseas. He used his own studio as an example, which specialises in complex technologies such as Unreal Engine, and says that it's not just about patriotism, but calculated investment.

"We quoted to a UK-based studio for some character work a year ago… our quote included full delivery milestones, set in stone, ones which we had delivered upon time after time," he said, before revealing that the client had chosen to give the work to a Chinese studio that quoted a price that was 20 per cent lower. But the cost cutting didn't pay off in the end.

We're not talking about just supporting our country, we're talking about supporting ourselves, our own studios, through more calculated investment.

"The models were created, paid for, but they hadn't been rigged correctly, there were small unseen mistakes in the modelling.. so they had an artist in their studio spend weeks fixing the models up," he revealed.

"The studio had now invested more in these characters than we'd quoted them for… and the shipping deadline was upon them. The game suffered as a result, the Metacritic score was low, the reviews drew attention to the art quality, and the game of course didn't sell well."

Troughton clearly doesn't take any pleasure in telling the story, but it's an issue that needs to be addressed when you're talking about freelancing.

"Cost cutting in this way will bite those studios in the end. We're not talking about just supporting our country, we're talking about supporting ourselves, our own studios, through more calculated investment."

And what about the future? What else can we, as an industry, be doing to ensure the growth and health of the UK development scene? Troughton's answer is simple. Fight back

"When I see tables reserved at game development awards events in the UK by Canadian governments, it worries me… why aren't we out there fighting back? Why isn't my region, the North East, represented at GDC or E3? Why isn't my country even represented there..? Why aren't we shouting from the rooftops about our excellent talent pool, the games and technologies that have been developed here?"

"I'd like to see the UK fight back, make our way back up the global games development chart. We can do it - but we'll need to work together."

12 Comments

Well, we could start by getting nationalised bodies like BEEB hiring locally to get educational games done locally :)

Posted:2 years ago

#1

Lol Scragg
Co-Founder & Director

8 4 0.5
well said Robert! I've been quite vocal about possible side effects of tax breaks for some years now and thought I was alone given the disparaging comments I have received from some within the industry.

Any incentive HAS to be targeted at long term sustainability rather than short term job generation and I am afraid that the references to 'overseas companies' in TIGA's recent press release hasn't eased my concerns.

Posted:2 years ago

#2
Well said Bob. Tax breaks aren't answer, but definitely help - but do need to be carefully thought out so that we don't get involved in what essentially amounts to a government version of benefit tourism.

Posted:2 years ago

#3
Chee - EU rules, innit. We can't discriminate in public contracts on the basis of nationality.

Posted:2 years ago

#4
I am curious if there also will be a follow up now that Italy are wanting to implement a tax break too (can they afford one? not that it will keep me awake at night)

All in all, I'm still not sure how anyone in the game industry will quality for local UK tax breaks. Will everyone with their one man band developer and cat be able to qualify ?

:)

@ Fran Eu rules and overseas....the fact is as Robert alludes, the cheapest bidder doesnt necessarily work out as the best long term cost effective biz model.

Posted:2 years ago

#5

Andreas Gschwari
Senior Games Designer

558 607 1.1
Could not agree more with Robert here. Those exactly the concerns i have with a tax break system in the UK. If it benefits the big (foreign) publishers then it's a waste, despite them maybe staying in the UK and helping to create the odd job in the UK.

I really like his idea of tying it to "quality of life" - though that would mean many UK developers (and the few remaining publishers) wwould have to seriously look at how they work. and that would be a great thing.

As many ex-pats have said on here, it's not just the money that draws them abroad (and it certainly was not for me) - it's the working conditions and much better work/life balance available outside of the UK in many cases.

Posted:2 years ago

#6
Chee, sure - but it still means you're not allowed to refuse to consider bids from overseas.

Posted:2 years ago

#7
IMO a pointless article.

The UK games industry needs foreign investment, it creates jobs, opportunities and helps to expand UK game production.

Posted:2 years ago

#8
Growth stimulus could happen internally as well, not necessarily needing foreign investment .For goodness sake we have the City of London virtually as a nation state with some of the richest investors available on the globe. However our case for investment is historically poor.

Perhaps startups publishers like Zattika might change things around?

Posted:2 years ago

#9
I don't think Bob's comments are somehow anti-foreign investment per se. He's just illustrating that any government support has to be aimed at sustainable investment.

Posted:2 years ago

#10

Jon Kay
Outsource Manager

1 0 0.0


[Chinese] outsourcing studio, but rather the fault of the developer giving unclear instructions, inadequate briefs, changing their mind or having untrained staff in the role.

[Chinese]

Posted:2 years ago

#11

robert troughton
Managing Director

220 93 0.4
Jon, agreed, outsource can work for studios that can put the correct measures in place. CCP, Epic and many other studios do this successfully. But, still, unless the outsource studios can offer significantly lower costs, I would question whether the work should be passed abroad - the benefits of having a resource that can quite easily hop on a train to meet you and that you can speak to during your own working hours shouldn't be discounted.

Also, time invested in speccing out work to the very last detail can often be saved by working with a team that has experience with the tech that you're developing for. With our studio, we don't just concept and create the models, we rig them for animation, import them into the engine, setup the materials for in-game use, etc.

I don't want to bash foreign resources here, they can definitely help in some cases - but I'd still like to see taxpayers' investments being used for the betterment of the UK as much as possible. The priority should be to support within the UK as much as possible - much as I'm sure Sony would prefer to support themselves rather than pay money to their rivals (though, of course, they need to do that as well).

Posted:2 years ago

#12

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