Where should the industryâ??s dialogue with the Government go next?

Time to move on

While the Government is finally starting to listen to the games industry, it needs to be consistent in its message. Here, ex-Tiga CEO Fred Hasson takes a look at the battles the industry should be preparing for…

At an investment club event recently, we were told that ‘moving on’ is what all good leaders should do after a good go at a job.

It’s what the industry now also needs to do on policy and the messages we’re sending to Brussels and the Government: recent events such as the victory for ELSPA on the PEGI age ratings, and the establishment of the All Party Parliamentary Group by Tiga, represent a watershed for the games industry in its recognition by government and growing up process. However, the industry needs to develop more detailed policy now that politicians are clocking the importance of games, and also be prepared for changes in Government, the European Commission, and the fall out from the economic crisis.

With these breakthroughs comes more responsibility, and now the industry has to deliver coherent, thought through messages, and this means moving on from the ‘notice us’ agenda.

At the same time the industry, as with other sectors, is going to have to reposition itself for a new economic reality now that the credit and leverage binge is over. These new financial realties will also exacerbate the general malaise that is being felt in the old console and disc media part of our sector – even though it is still the greater part of those staggering sales figures that the uninitiated note about the games industry.

The four issues the industry will need to come to grips with are the tax break, regulation, skills, and business support and innovation.

The tax break is looking more likely than ever, as the Tories show some appreciation of the potential of this industry – and an understanding of the downside of an industrial policy that has, over the past two decades, made Britain the most upmarket off-shoring shop.

But the tax break debate throws up all sorts of questions and issues that the industry could be underprepared for: will there be a tax break on similar grounds to that in film, or will it be an enhanced R&D tax break?

If it follows a similar application to film, we will need to define ‘culture’ for purposes of qualifying ‘cultural content’ – but how do we define culture? A large part of this debate in the film is governed by heritage considerations, which is not a fertile area for the current popular games output, but perhaps games can help redefine culture away from its traditional historic connotations to a least show some acknowledgement and respect of fast moving 21st century culture (and, for that matter, ‘ludology’ as an historical culture).

Will the industry be willing to challenge Government thinking on this or will it accept anything it can get? How will the incentive work, and to whom and how is the tax break paid? Will publishers use it as a subsidy? Is that desirable? Should the developer have to own the IP?

And, perhaps more importantly, is the tax break alone going to solve the problem of UK falling down the development output league table? After all, in Canada the tax break works alongside focused educational provision, enhanced R&D support and far more generous sectoral support for accessing global markets.

An industry lead by PEGI has been creditably achieved, but there are more regulatory issues on the near horizon that are feeding off the same negative attitude towards games in the popular and uninformed press and among significant opinion formers.

The most prominent of these is the EU ‘Telecoms Package’ , which has the potential to throw the baby out with the bathwater, through its very general proposals for regulating the internet. Taken to the extreme these could present a serious threat to not only the rapidly developing online games industry, but to new internet enterprises. The Government wants to know why there are no Googles or significant new media enterprises in the UK. But if proposals to filter and control access to the internet, as are possible with some interpretations of this proposed legislation go ahead, we can wave goodbye to any hope of the UK nations ever becoming entrepreneurial in a global sense and more likely to the continued hegemony of entrenched broadcasters view of media.

It’s time to move on from attacking academia for irrelevant higher education courses, not because the problem has gone away – it hasn’t – but because that mantra is decidedly simplistic and repetitive.

What is needed now is to develop the discourse and come up with some constructive ideas about how to move forward, because the opportunity to change things is here.

A system that leads to supply-led courses and that, frankly, misleads prospective students to think that they can work in their favourite pastime as a career if they attend a games course must change but we are not the only sector that faces this problem.

Skillset has never had the dedicated resources needed to make much of a difference, and have had a top down approach, but then neither has the industry bothered to address this issue collectively or put resources into this except at local level. So far, as we said at the time to Skillset, it’ll take dedicated and substantial action on a number of fronts to better the relations that some developers have had for some time with their local educational institutions.

Somewhere in the primeval soup of this debate, The Centre of Excellence idea for a post graduate ‘finishing school’ – which most definitely had traction in the industry two to three years ago – seems to have been engulfed in political shenanigans and lack of coherent and consistent voices.

The principles on which change must take place should be based on recognising that new and upcoming industries cannot be expected to devote as much resources as, say, an IBM can contribute. For new fledgling industries there must be some recognition that time given to education can be the difference between success and failure, between profitability and loss, and between innovation and mundanity. If Universities want placements and other industry credentials and credibility, resources should be made available to compensate them for building these relations. Tiga’s position on skills as presented to the Chancellor recently is most definitely a step in this direction.

As political parties face the current and serious economic realities, the Tories have focused on Regional Development Agencies for possible abolition. Would the games industry cry if RDAs as we know them now were abolished? What implications would this have on the support some lucky parts of the country have had from networks such as GameHorizon and Game Republic, which have both delivered significant assistance to members?

Looking back on the first years of Tiga, it seems that things were mostly quite simple when we dealt with the DTI, and then suddenly all these regional networks began to spring up. Some were stillborn, others thrived, but on each occasion companies in the area wondered why they needed a national organisation when they could get more goodies locally and pay little or nothing for them. At this point, it became difficult to develop and hold down coherent views on any issues, especially training.

Some lucky companies got grants for travelling to shows and conferences, but most did not, and as the games industry became more fashionable every RDA had to send out more and more support people from various departments to check out GDC and E3 so that they too could become experts. In my opinion too many fiefdoms have been created and, whilst much of the work has been helpful to the industry, there is something quaint and merely political about the way the RDAs have panned out – getting everyone thinking ‘my little England region’ when the issues and opportunities the industry is facing are global with a big ‘G’.

RDAs have hardly delivered where the business support is really needed – investment in particular, and in encouraging innovation. We were told when RDAs were created that they would deliver a remedy to the equity gap between angel investors and serious VCs – the £50k to £2m gap. However, we saw few signs of this in any part of the country at Tiga, and our experience at Redbedlam with Finance South East has frankly been hilarious if it were not tragic.

One innovation initiative does however stand out, and whilst not perfect, the recent TSB initiatives to encourage research and innovation to the AV industries with a strong focus on games. It is a good start and should be defended against possible cuts, maybe because it is national. The fund is small and still works along the practices developed for larger and less eclectic industries; its main failing is that it will pay 100 per cent grants to Universities but half or less to companies, and its rules discriminate against the way small companies work.

Providing business support to new industries is a specialist job; there has to be a clear distinction between what can be done at national and international level and what can be done at regional level. The RDAs and the business support organisations they inherited, and which have become ossified over their existence since Thatcher’s government introduced them under Hesletine, will be in the political spotlight soon, and playing beggar my neighbour with business support grants with the neighbouring region has been a far from efficient way to generate innovation and investment in the a global games industry.

With recognition comes responsibility, and the biggest challenge the industry faces is coherence. Can it face up to the new political challenges and opportunities?

Fred Hasson is executive director of virtual world firm Red Bedlam. He helped found Tiga in 2001 and served as its CEO until 2008.

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