The B.C. government has finally decided to support the video-game industry with tax credits. It’s good news for Vancouver’s developers, even if the government still doesn't appear to fully appreciate the video-game industry.
This afternoon (February 3), B.C. finance minister Colin Hansen and minster of tourism, culture, and the arts Kevin Krueger, who called the video-game industry “inspiring”, announced that the province will support game development with a new tax credit.
With the next provincial budget set to be announced on March 2, Hansen also announced an increase in the tax credit available to the film and television industry, as well as to the Digital Animation or Visual Effects (DAVE) tax credit bonus, from 15 to 17.5 percent. Those increases will take effect on March 1.
But the new B.C. Interactive Digital Media tax credit, for 17.5 percent of qualifying B.C. labour costs, won’t take effect until September 1. Hansen said this is because there was “implementation work” that needed to be done. It may be because the B.C. government still doesn’t understand the interactive industry.
In his comments during the briefing at Vancouver’s Rainmaker Entertainment, Hansen kept talking about the importance of film, television, animation, and visual effects companies. “Film and video and digital production and animation are becoming increasingly intertwined,” he said. “There is a growing convergence of technologies.”
True. And you can add video games to that list. But in his remarks, Hansen consistently mentioned video games last, when he mentioned them at all. That may not seem important, but it indicates that video games are not at the forefront of the finance minister’s mind.
The Straight asked Hansen why the government had waited so long to introduce financial support for the video-game industry. “It’s only now that we’re really starting to see that convergence,” he said, “and the inter-relationship between the video-game industry and the film and motion picture industry and the animation sector.”
Which suggests that the video-game industry on its own is not deserving of support. When the Straight put that to Hansen, he simply said that “there has been a lot done for competitiveness and job creation in British Columbia. This is one additional measure.”
Not much of an answer.
Hansen also suggested that B.C. game developers will have to choose between the new tax credit and the existing Scientific Research & Experimental Development (SR&ED, commonly pronounced “shred”) incentive program that is administered by the federal government. He said that the new B.C. Interactive Digital Media tax credit does not replace SR&ED, “but companies can determine which of the two programs actually best meet their needs”.
Leaving aside the impact of the economic slowdown, provinces such as Quebec and Ontario have been ratcheting up the tax breaks being offered to developers—Quebec’s labour tax credit is 37.5 percent and Ontario’s is 35 percent—and foreign markets such as China have a wealth of skilled and cheap labour.
Vancouver’s development community, led by larger studios Electronic Arts Canada, Propaganda Games (a division of Disney Interactive), Radical Entertainment, and Relic Entertainment, have been actively lobbying for government support that is required, they’ve argued, to put the Vancouver and B.C. scene on equal footing with competing regions.
Without success. Until today.
Howard Donaldson, vice president of studio operations for Disney Interactive Studios and head of Vancouver’s Propaganda Games, is also the chair of the B.C. Interactive Task Force. In his remarks during the briefing, Donaldson said the new tax credit was an “important first step to creating the next-gen digital media hub” in B.C.
Speaking with the Straight afterwards, Donaldson admitted that the 17.5-percent credit was more than the B.C. video-game industry expected when the task force was created late last summer. “Now that the task force has been established,” he said, “we will continue to work to grow the industry.”
In the past two years, studios that were considered for Vancouver have instead opened in Quebec or Ontario. Being compensated for a third of employees’ wages and salaries is a big incentive.
Donaldson said he hopes the new B.C. Interactive Digital Media tax credit will encourage companies to look at Vancouver more seriously. “B.C. has some definite advantages,” he said, invoking the province’s geographical location and the highly educated and skilled employees that are so interchangeable with the film, television, and animation industries.
So while the tax credit may seem small in comparison to other jurisdictions, B.C.’s video-game developers are not about to look a gift horse in the mouth. And the new tax credit could be just the shot in the arm that the sector needs to return to the levels of success and prominence it was celebrated for only a few years ago.
Hansen said he hopes the new incentives will lead to “continued growth” in the various industries. The appeal internationally, he said, will be that B.C. has strengths in all those sectors. “If you’re developing a new production...Vancouver and British Columbia will be one-stop shopping.”