The UK's interactive entertainment trade body, Ukie, has reiterated their stance regarding the ongoing investigation by the EU Commission into the Government's proposed games production tax credit scheme.
The tax break was proposed to enable UK-based developers to receive financial incentives to create culturally relevant games, but an investigation by the EU Commission is currently ongoing in order to ensure that the move wouldn't "distort competition".
In a lengthy press release, Ukie has once again outlined their belief that the tax credits are necessary in order to ensure that UK studios remain competitive in the global marketplace (the full response can be found here:
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.