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TIGA's Richard Wilson

On tax relief, the role of education and the rise of the self-publisher

TIGA's recent survey on the UK development industry raised some mixed messages about the current state of the playing field. 131 closures, but 145 new companies. A nine per cent reduction in the development workforce over two years, but a promising swing towards the greener fields of network and social development.

What this constitutes for TIGA's argument for UK games industry tax relief is another matter - does the industry even need it? Can it be justified when other industries have been hit harder by the recession? Richard Wilson certainly thinks so, and in this interview he discusses why it's so important.

GamesIndustry.bizLet's start by talking a bit about the figures which you released a few days ago - they seem to represent a very mixed picture of the UK industry - lots of closures, but more new companies, and a nine per cent reduction in developer head count. Does this really represent an industry in crisis, or does it just reflect the vacillations of a recession economy?
Richard Wilson

Well, I think it's a complicated picture, as you say. On the one hand, the fact that we've lost nine per cent of the workforce, over the last two years, is critical. Compared to the size of the UK economy, the loss of 900 workers doesn't sound like a great deal.

But proportionally, within the games industry, to lose almost ten per cent of your work force is very significant. So I think in that sense it's very very serious indeed. However, it is exciting, and encouraging to see that we've had 145 start-ups over the last two years. Perhaps even more encouraging to see such a large proportion of those develop games online.

So I think that's very positive news indeed actually.

GamesIndustry.bizThat's something I want to touch on next. A large number of those new companies are probably represented in that band of new network and digital developers - are the benefits of that not outweighed by the knock-on effect on traditional UK retailers? Do you see game retailers as outside TIGA's remit?
Richard Wilson

Well, we haven't got any game retailers as members of TIGA, however - I'm obviously interested in them and look forward to them joining TIGA in due course. So we're obviously interested in how the changing dynamics of the market affect the retail sector.

I think it's under a lot of pressure - all the evidence seems to bear that out. I think it faces a challenge, of how to sustain its business model, in the medium to long term. But lots of businesses face quite shocking economic changes to their business models and yet they still survive.

We certainly see that in other economic sectors. So there's no reason that game retailers can't revamp and update their business models and survive. They will have to change, there's no doubt about that - and I think we're seeing those changes taking place.

I do still think that overall it is a positive development, that we've seen such a high proportion of these new businesses focus on online gaming. The tendency for those businesses to be more sustainable will be stronger than if they were relying solely on boxed product.

GamesIndustry.bizThe tax-break issue is probably your biggest ongoing concern. What do you see as the next step after the government's rejection of your recent paper?
Richard Wilson

Well, we're updating our evidence, and we'll have further evidence to release before the end of the year in fact, about games tax relief and why that would be beneficial to the UK economy as a whole, and the games industry in particular.

So we continue to marshal our arguments, I think is the first thing. Secondly we're strengthening our link politically, as you know, TIGA instigated the creation of the all-party-group on the videogames industry last year. The group reformed after the election. We intend to work with parliamentarians from the all-party group to ensure that games tax relief remains a live political issue.

We're not going to give up on this. UK governments change their minds all the time. I see today in the papers that George Osborne is going to change, at least in emphasis, his policy in regards to bank bonuses. So, policies can change all the time. There's no reason why, in principle, we can't change the games tax relief proposal in terms of it being supported by the government.

As I say, we'll marshal our evidence - make it still stronger. I think it's a compelling argument anyway, but we'll make it even stronger. We'll work with parliamentarians and we'll continue to present our case to the government. We're not going to give up.

GamesIndustry.bizAnd what sort of time scale do you see those potential breaks reaping benefits within?
Richard Wilson

Well if games tax relief had been introduced last year, our data showed, our research showed that over a five-year period it would have cost the treasury £192 million pounds, but would have brought in an extra £415 million pounds to the treasury - it would more than cover its own costs.

So over a five year period the British taxpayer would be better off with games tax relief. Our research also showed that, again over a five-year period, you would see an extra £475 million in investment in the sector, and you'd see another 3,500 graduate level jobs in game development being created or saved. So it's a win-win situation for the industry and the economy.

So really it's just about how quickly we can encourage the government to adopt games tax relief. To answer your question more precisely, the sooner they adopt it, the sooner we'll see the benefits.

We actually going to look at this in still further detail, but when you look at the Canadian experience, the evidence seems to show that, for every dollar in tax relief they gave, they were getting two back in additional investment. That's very roughly the figure we got as well in terms of cost to the taxpayer.

GamesIndustry.bizAnd is that purely external, additional investment? It's not coming from elsewhere in the economy?
Richard Wilson

It's a combination - but the majority, because developers do depend so heavily on overseas publishers, it really is additional development in terms of the UK economy.