Ukie outlines urgent case for EC to introduce UK tax credit

1 July 2013 - London, United Kingdom – Games trade body responds to European Commission investigation into the proposed UK tax credit scheme for games and calls on EC to introduce tax credit as soon as possible.

Ukie have used their response to the EC investigation to outline why there is a clear and evident market failure relating to the production of culturally British or European games being made by British studios, which the UK Government’s proposed games production tax credit scheme would address.

Ukie have set out the following reasons why the EC’s doubts are misplaced and why the aid should be approved as soon as possible:

  • Games play an increasingly important role in the lives of many consumers across the world and as the Commission itself has previously recognised, games can play an important role in promoting European culture.
  • In the past, games were often regarded as spin-offs from other cultural outputs such as films and music. Increasingly, successful games are now driving other outputs such as films and television series with the consequence that a lack of European cultural representation in the global games market may in time also reduce Europe's influence in other culturally important areas.
  • Games are one of the most important ways in which children engage with and learn about the world, yet currently little is done to ensure that they are presented with European culture in these experiences.
  • Games operate in an intensively competitive global marketplace where non-European culture is the dominant, driving force dictating which games are developed. 
  • Fewer people are making games in the UK, which means that fewer games are being made here. Because of the UK’s status as a major European hub for games development, this means that there is less culturally European content being created than should be the case.
  • A significant proportion of games developers who may be eligible for the proposed tax credit currently spend the majority of their time “working for hire” for non-European companies or brands, i.e. developing games based on non-European cultural references for the global market. As a result, there is an existing and tangible market failure which has resulted in a lack of culturally European games  being created
  • This market failure is being exacerbated year on year, creating a vicious circle: as fewer culturally European games become available, it becomes harder to persuade investors and the marketplace that such games are relevant and can be successful.
  • Ukie considers that the UK’s proposed measure offers the opportunity to reverse that market failure. In particular it is expected that EU-based companies which currently produce culturally non-European games would be able to devote more time to developing European culturally focused games and, just as importantly, are keen to do so.
  • The more such European culturally focused games become successful as a result of the proposed aid, the greater the likelihood that the global industry will in time be prepared to invest in such products, thus removing the need for state intervention in the longer term.
  • Ukie would also note that, particularly in the case of its smaller members and contrary to the Commission’s suggestion, most games are developed solely by UK-based teams.
  • Ukie is strongly of the view that the UK’s proposed tax credit is a targeted, proportionate solution which represents the minimum intervention necessary to address the relevant market failures. Ukie further considers that if the aid is significantly delayed, any subsequent intervention is likely to require far greater resources to achieve similar ends.
Ukie’s full response to the EC investigation can be found here.

Ukie’s response contains evidence from some top British developers and publishers, including: David Amor, Relentless; Ed Bainbridge, former VP, Disney Interactive Studios; Simon Bradbury, Firefly; James Brooksby, Born Ready Games; Paul Canty, Preloaded; Craig Fletcher, Multiplay; Sophia George, Swallowtail Games; Darren Garrett, Littleloud; Richard Griffiths, Rogue Vector; Richard Lemarchand, former Naughty Dog; Ella Romanos, Remode Studios; Jim Rossignol, Big Robot.

Ukie worked closely with DCMS and HM Treasury in creating its response and also made sure that there was a consistent industry voice on this vital issue with TIGA. Ukie also ensured that there was support for games industry tax credits from other UK creative industries who have submitted letters of support

Ukie CEO Dr Jo Twist said: “The UK needs tax credits to make sure that we can reverse the current trend for games being made with non-European cultural themes. As the audience for games increases, it is important that developers of all sizes can make commercial decisions in a financially competitive tax system. Fewer people are making games in the UK, which means that fewer games are being made which advocate our sense of humour, our creativity and our identity as European citizens. We need to have tax credits introduced as soon as possible”.

Ukie Chairman and Chair of Mastertronic, Andy Payne said: “It has never been clearer that the UK needs these tax breaks. Video games have huge cultural reach and are now pushing creative boundaries like no other medium. But unfortunately too many games are now created without British or European themes, a problem that will continue to exist unless we get tax credits introduced. Without tax credit there will be fewer developers operating in the UK, which means fewer British games being made. The case made by Ukie clearly spells this out to the EC and we urge them to get them in place before the situation gets any worse.”

CEO of Remode Studios, Ella Romanos said: “As with many developers we operate part of our business on a work for hire basis. Whilst this remains a valuable revenue stream, tax credits would offer us a real incentive to make our own original IP incorporating British or European themes. We hope that the EC listens to the points made in Ukie’s submission so that we do receive the tax credits the UK industry urgently needs.”

-ENDS -

 

Contacts:

For all press enquiries, please contact the Ukie press office on T: +44 (0)20 7534 0580 or E: press@ukie.org.uk

About Ukie

The Association for United Kingdom Interactive Entertainment or Ukie (pronounced YOU-KEY) is a trade body that aims to support, grow and promote the whole of the UK’s games and interactive entertainment industry. Founded in 2010 (although formerly known as ELSPA), Ukie’s membership includes all the major UK and global games publishers and the best of UK development talent - from promising start-ups to some of the biggest, most successful studios operating in the UK today.

We also have distributors, academic institutions, new publishers, and media outlets that are integral to the lifeblood of the industry as part of the family.

Ukie works with government to champion a range of issues including age ratings, education and skills, access to finance and protecting intellectual property rights. It also works with the media to ensure true and accurate representation of the sector by raising awareness of the industry’s positive economic contribution and the societal benefits of gaming to policy makers, regulators and consumers.

One of Ukie’s key roles is to support its members by providing them with key market information, promoting careers and offering the business support services, training and best-practice knowledge to enable them to operate most effectively.

We also offer a comprehensive events programme to give the games industry access to key information, leading industry figures and give everyone the chance to network. You can see our events programme here http://ukie.org.uk/events

In addition, Ukie compiles weekly, monthly and annual retail charts and sales reports for the UK market.

Twitter: @uk_ie

Facebook: Ukie


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