Gaming Industry Seeks Financial Support in the UK

British video game developers are experiencing a significant downturn, with the sector shrinking by 9% over the past year and shedding 900 jobs. This decline stands in stark contrast to Canada's thriving gaming industry, which has grown by 33% during the same period, largely due to government incentives.

The situation has prompted major American gaming companies to lobby the UK government for tax relief. Both Sony and Warner Bros, which developed successful titles like Batman: Arkham Asylum and Lego Harry Potter in Britain, have been advocating for annual tax breaks worth approximately £39 million ($63 million).

Chancellor George Osborne is reportedly considering reintroducing gaming tax incentives in his March 23 budget, reversing his previous decision to eliminate planned relief after the Conservative government took power. Industry insiders suggest Osborne is looking for positive announcements amid widespread public sector cuts.

UK gaming association TIGA has proposed a three-tiered tax credit system ranging from 20-30% based on development costs. With the average British game costing £570,000 to produce, most would qualify for the maximum 30% relief. The organization projects that such incentives could generate £431 million in additional development spending and create over 3,300 new jobs within five years.

The British gaming industry, which contributed £1 billion to the economy and generated £3 billion in software sales last year, has slipped from third to fifth place globally in recent years. During the past two years, 131 game development studios have closed, including Activision Blizzard's Liverpool operation that employed 200 people.

Developers argue they deserve support similar to film producers, who benefit from tax breaks that attract Hollywood productions to British facilities like Pinewood Shepperton Studios. Activision CEO Bobby Kotick called the previous cancellation of gaming tax incentives "a terrible mistake," noting that publishers make location decisions based largely on available financial incentives.

The UK has produced globally successful franchises like Grand Theft Auto, but without competitive incentives, industry advocates fear further decline as talent and investment continue moving to more supportive environments.

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