Losing the game
"We will not go ahead with the poorly-targeted tax relief for the video games industry." Just one line in George Osborne's Budget speech yesterday sent an industry into despair. For years, the big guns of the games business have been in and out of Downing Street lobbying for help for their industry - and back in March when Alistair Darling finally delivered the tax relief they'd been asking for, the champagne corks were no doubt popping at developers and publishers across the UK.
Even after the arrival of the new government, the industry seemed convinced it was still in line for help. After all, the new digital minister was Ed Vaizey, who'd already promised a games industry conference back in March that tax breaks would be introduced in the Conservatives' first Budget. Perhaps ELSPA (Entertainment and Leisure Software Publishers Association), the industry's main lobbying organisation, should have been listening a bit more carefully a couple of weeks ago when Mr Vaizey and his boss Jeremy Hunt seemed just a little more cautious about what the Budget would offer.
Anyway, yesterday ELSPA's boss Mike Rawlinson sounded like a bride jilted at the altar:
"Bearing in mind the pre election commitment towards tax breaks made by the Conservatives and the Liberal Democrats we are extremely disappointed by the outcome of today's Budget. Our industry will be rightly puzzled as to how tax breaks can be lauded before an election, only to be seen as 'poorly targeted' and scrapped just six weeks later."
But why should the games industry really expect special treatment at a time of huge strains on the nation's finances? The argument is that a vital creative industry which is a significant exporter is losing out because other countries, such as Canada, are using government money to lure games investment away from our firms. In Los Angeles last week at the E3 games event, I met leading British developers who accepted that tax breaks were bad for the industry as a whole - but argued that if others were playing that game, the UK could not afford to stand on the sidelines.
But if we do have such a thriving industry already, where's the evidence that it really needs propping up? TIGA, another industry lobbying group, put out a report earlier this month showing that UK developers were eager to export even more - but, of course, that would only happen if the tax relief was delivered. And like every industry down the ages, from coal to steel to cars, the games folks pushed the line that a little investment now would deliver a return for the Treasury in the long run: "TIGA's research shows that over a five year period it (tax relief) will generate £415 million in tax receipts for HM Treasury."
A Treasury which has heard those arguments many time before appears to have looked sceptically at those sums. But the games lobby had another, perhaps more powerful argument - if we are prepared to support the British film industry, now a minnow on the world stage, why not give similar help to an industry which has a far brighter future? I think that's to ignore the justification for the help to the film industry, which is there for cultural rather than economic reasons. In a movie industry still dominated by Hollywood, it would be hard for British films to make an impact without some support, though you can argue whether the likes of "Sex Lives of The Potato Men" are a great adornment to our unique cinematic heritage.
"We're part of the culture too!" is the response from UK games developers, but is there anything uniquely British developed here? The big winner at this year's games BAFTAs was Rocksteady's Batman: Arkham Asylum, and the big hits made by the leading independent developer Blitz Games Studios are based on American TV shows. Both are making excellent games but they hardly reek of Kentish Town or Leamington Spa, where they were made.
Still, the games industry will have another chance to put all of these arguments to a government minister next month. Ed Vaizey is speaking at the Develop conference in Brighton - he may want to sharpen up his first-person shooter skills in advance.