Tax Breaks, Game Ratings, and the UK Game Dev

Members of IGDA London gathered on Thursday 24th September 2009 at the London School of Economics to hear from a panel of game policy pundits.

the panel from left to right: Vincent Scheurer, Michael Rawlinson, Fred Hasson, and Ren Reynolds

Our speakers were:

Michael Rawlinson

director general of the Entertainment and Leisure Software Publishers Association

Fred Hasson

chair of the European Game Developer Federation Online SIG

Vincent Scheurer

game industry lawyer

The event was chaired by Ren Reynolds, founder of the Virtual Policy Network. It started at 6pm but unfortunately I missed the first section. This report therefore only covers the later part of the session and is constructed from my hastily scribbled notes. My usual disclaimer (that any similarities between this report and actual events are happy accidents) applys.

PEGI

Michael gave us an explanation of the PEGI rating system. This previously voluntary system came into force in September and replaces the older BBFC and VSC systems. PEGI is a requirement for retail boxed games and voluntary for online and indie games.

Consultations with parents had revealed that what they really wanted was a suitability rating, and they were not generally worried about the content. Putting a low age PEGI rating on a product, dissuades adults from buying titles, as they are then perceived to be only for children.

PEGI certification costs €2,000 per platform. There is a reduced rate for small download games. The money from this goes into promotion and education about the system.

the London members

Tax breaks

Fred started the discussion on tax breaks by considering culture. Tax credits will likely be awarded on grounds of cultural significance. The department in charge of games is the Department of Culture, Media, and Sport. Previously this was the Department of National Heritage. Although it may have changed on the surface, the fear is that attitudes inside the department have not.

The DCMS could define the rules as narrowly as needed to limit the payout to games. The tax break campaign is a good way to start a conversation with the government to define culture and prevent them creating something unworkable.

Previously Fred had been CEO of TIGA and was obviously frustrated with the lack of support for tax breaks from fellow organisations like ELSPA.

Vince put forward three reasons why he felt tax breaks would not happen:

1. The country is broke, there is no money to fund it.
2. French tax breaks have been a failure. Any advantage has been nullified by the poor Dollar to Euro exchange rate. It has also been a practical failure as the French have produced nothing of consequence as a result.
3. The French developers had to agree to make non-violent games. Tax should not be dictating game content.

Michael suggested the money could be better spent elsewhere. Tax breaks would be symbolic at best, with any advantage swamped by exchange rates. It hasn't helped in other industries and money is largely wasted by regional groups. We are overly reliant on funding from the US and Japan already and tax breaks would not help there. Also tax breaks don't tend to help in the longer term.

It would be better for companies to make greater use of the existing R&D tax credits. In many cases the definition of what is a game and what is a tool can be exploited to get these credits. These rules are already there and the government encourages companies to exploit them.

Games are currently short of being a medium. There is a lot of room for expansion into education and more general content. Once the scale is there, the government will take more notice.

Drinks

After this heated debate, we headed to a nearby pub to cool down and continue the discussions.

some London members enjoying a drink