38 Studios Lobbies For Videogame Tax Breaks

38 Studios Lobbies For Videogame Tax Breaks

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Curt Schilling is a household name in Massachusetts, but he's considering moving his game company to another state if they don't offer tax credits.

Ever wonder why so many movies and TV are made in places like New York City and Hollywood? Because those cities foster the industry by offering tax credits and other incentives to productions that utilize local companies. Other states have been jumping on the bandwagon by offering similar compensation to movie productions in recent years, including Massachusetts, but Curt Schilling thinks the state should extend the benefit to videogame companies. If they don't, he may move his videogame company 38 Studios to another state like Rhode Island. 38 Studios is working on an MMOG penned by R.A. Salvatore and recently acquired Big Huge Games to work on an RPG set in the same world.

Schilling thinks his company would be great for any state's economy. "We have all the things any state in the country would want right now," Schilling said. "We're hearing from states that don't have programs talking about putting programs in place for us."

As MMOG development ramps up, 38 Studios is going to be hiring a lot of staff. "They're very high paying jobs, around $85,000 a year, they're permanent jobs and the industry is growing," he said.

Tax breaks for game companies have been a huge topic of discussion in the United Kingdom for years. With the success of Montreal's program, one wonders why municipalities wouldn't want to foster such a relationship. Production companies create jobs, which is what is needed in today's economic landscape.

Schilling points to a similar case in the film world in his home state of Massachusetts, when Scorcese's recent Shutter Island was filmed in Medfield in 2008. "I'm looking at two or three companies in Medfield that literally would be out of business if that film had not been shot," Schilling said.

Such a program for videogame companies would be even more amplified because their staff would not leave after filming was completed.

"It's like the film tax credit on steriods," Schilling said.

Wait, that may have been a poor choice of words, Mr. Ex-Baseball player.

Source: Boston.com

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Games companies are among the beneficiaries of tax cuts to the tune of 460 million announced in the UK budget today.

I think that traditionally games companies formed in places like Austin and parts of Massachusetts due to a large pool of smart people being there already. It's sort of a shame that people established there have to decide to grit their teeth and get on with it or emigrate to another country that has tax credits but there you go.

It will be interesting to see if Eidos Montreal can recreate a classic Austin/MIT school game type when they make Deus Ex 3. Maybe they will just make another Montreal type of game.

:D lets see if people go ranting about game companies getting special treatment :P

Personally not sure what I think of game companeis getting tax breaks, i mean can see the reason a company would wnat one, less money payed

If the game companies got tax credits/breaks it could very easily translate to the end user via reduced cost in the games themselves, which would be a win-win all around. No tax credits for Activision, they like money too much.

The only thing that sunk in my head was MMO penned by R.A. Salvatore. He is my fav author!

GloatingSwine:
Games companies are among the beneficiaries of tax cuts to the tune of 460 million announced in the UK budget today.

I read that too. Which made me smile.

Because its not only one of the largest they have ever got here in the UK...but its a substantial rise from the years previous.

Realy showing its part of the driving economy now

God i dislike that man...so much so that i forgot what i was going to say about this.

Jaredin:

GloatingSwine:
Games companies are among the beneficiaries of tax cuts to the tune of 460 million announced in the UK budget today.

I read that too. Which made me smile.

Because its not only one of the largest they have ever got here in the UK...but its a substantial rise from the years previous.

Realy showing its part of the driving economy now

And here's more detail on that, for anyone interested.

Wait, Curt Schilling owns a game company? What? Also, I don't think video game companies create as much business as movie productions do. I dunno if the tax break is really deserved.

Man, come to Ontario. The government gives out MAD tax breaks, like 30% now.

Why don't we just give everyone friggin' tax breaks while we're at it? /sarcasm

I'm a conservative politically and think tax breaks are a good idea to a point, but not everyone who asks for one should get it. I mean, there is a reason why people and businesses have to pay taxes. They aren't there just to make your paycheck look smaller.

I equate it to sports team owners who threaten to move teams if they don't get taxpayer money to fund brand new stadiums that will bring in tons of money to no one other than the team owners and that's bullshit.

I'd rather see a tax on video games than a tax on booze, music, or food.

As a Massachusetts resident (and looking to get into the industry) I'm a bit confused. I could've sworn tax breaks were being given to video game companies in Mass. already in order to make it appealing for them to stay here. Perhaps it was only something on the drawing board.

Can't say I expect this to happen: out of all the things we have costing the states and country money, why would we want to add video game companies to that debt?
And I always hated that "give us tax breaks or we move elsewhere" threat, especially from established sports teams.

Wait a minute...38 Studios bought Big Huge Games, makers of Rise of Nations?

If you think tax breaks will lower prices of games you're living in a fantasy world. they're running a business and the industry has set standards in prices that we're already willing to pay. tax breaks mean more money for the company to develop bigger and better games(we hope or we don't buy) I don't see that much of a problem with it considering they do bring a bunch of jobs and with those jobs income taxes. what I want to see is binding agreements that say if we give you this tax break you supply us with guaranteed jobs for x amount of years (or suffer the awesome wrath of back taxes!) based on how big the company is. Yes I know I like to dream too.

$85,000 a year to write video games as a permanant job. Hmmm, and people wonder why the cost of game development is skyrocketing. I wouldn't care except for the fact that the bill gets passed over to me the consumer. Oh and they want tax breaks too... lovely. (people wonder why I keep harping about stuff like this) :P

Focusing strictly on the idea of the tax break, I can see the arguement. Movies and TV shows can be considered artwork (Acting is performance art) and our goverment has always provided breaks to encourage people to produce art, with various degrees of abuse through the year. If video games can be considered art or a platform for art, then arguably they should receive similar levels of tax breaks. Viewed that way it's fair, but in terms of argueing "oh look at all the jobs we'll bring to the economy" well, the way that's expressed gives me a certain reflex of saying they should go pound sand somewhere. Largely because I think the reason why games are so expensive is that the costs of development go up, and seeing as the cost of development is primarly human labour more than materials or anything it means people are being paid increasingly large amounts of money for what they do, which in turn gets passed to us (the consumer). The very arguement about why they should get the tax break (high paying jobs) is why I don't think they should because to be honest I can almost guarantee the money saved by that tax break is not going to lower the prices or go into the product, but instead be pocketed as extra profit.

I'm tired, but the point of my rambling is that if someone was to make the case properly I might be able to accept it. But not like this guy is, and truthfully I think the way some of that was stated is going to poison my thoughts on "tax breaks for game studios" for a long time to come.

Truthfully though I could see tax breaks also being used as a key to industry reform. If the goverment was to offer decent deals to big game developers in producers in exchange for caps on the price of the end product, and guarantees of abiding more by American competitive practices, effectively putting an end to cartel behavior, price fixing, and other things. That's getting well out of context of this article however.

I'm no political science major, but I think we're just talking about things at a state level. They're not talking about some federal all-encompassing law. Its up to the voters of Massachusetts to decide if they want it or not.

I'm ignorant on the matter though, so feel free to let me know if it is otherwise. After all, I'm no whale biologist.

Wasn't there also talk about someone trying to make either Philly or Pittsburgh into the "Hollywood for gaming studios"?

Hey can someone compare 85k to another job in the same state?

Or the pay for entry level grads for eg

Ok, that's it. The next time 38 Studios makes ANY kind of headline it better be because they just released information on whatever they've been spending the past 3 years working on. Seriously, Curt needs to $h!t or get off the pot.

DaxStrife:
Can't say I expect this to happen: out of all the things we have costing the states and country money, why would we want to add video game companies to that debt?
And I always hated that "give us tax breaks or we move elsewhere" threat, especially from established sports teams.

The idea is that having the business in your state produces enough tax revenue to outweigh the cost of the tax break you gave them to keep the there. therefore it's a net profit for the state if the state does it right.

WastedHero:
Ok, that's it. The next time 38 Studios makes ANY kind of headline it better be because they just released information on whatever they've been spending the past 3 years working on. Seriously, Curt needs to $h!t or get off the pot.

3 years sounds about right for a major MMORPG development cycle. they're shitting, but they're just doing it with the door closed.

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Val Kilmer?!?

And the title implies that 38 SEPARATE studios were calling for tax-breaks, rather than just one studios that has the title of 38.

"It's like the film tax credit on steriods," Schilling said.

he speaks with experience? XD

Treblaine:

And the title implies that 38 SEPARATE studios were calling for tax-breaks, rather than just one studios that has the title of 38.

Not quite. If it were that the headline would read "38 studios lobby..." instead of the way presented here. Grammar, you see.

Alpha Centauri:
The only thing that sunk in my head was MMO penned by R.A. Salvatore. He is my fav author!

Yea I never heard of this but a Forgotten Realms MMO could be hella fun!

heyheysg:
Hey can someone compare 85k to another job in the same state?

Or the pay for entry level grads for eg

85k is within the realm of what could be expected for a software developer with some level of experience in the area. Some make more, some make less.

cobra_ky:

3 years sounds about right for a major MMORPG development cycle. they're shitting, but they're just doing it with the door closed.

Your Analogy-fu is strong.

I'm just saying, I want to know more about this project Copernicus then 4-5 pieces of vague concept art which is all they have disclosed to the public in the 3 years it's been in development. Most, if not all, major MMOs have released more information about their games then this company has. It smells of vaporware to me and I'm starting to develop conspiracy theories that Schillings is just using the company as a major tax write off.

You know what I need to do is just forget about them and pretend they don't exist until they start making announcements. 3 years of anticipating an MMO being created by R.A. Salvatore is too long to be holding ones breath.

WastedHero:

cobra_ky:

3 years sounds about right for a major MMORPG development cycle. they're shitting, but they're just doing it with the door closed.

Your Analogy-fu is strong.

I'm just saying, I want to know more about this project Copernicus then 4-5 pieces of vague concept art which is all they have disclosed to the public in the 3 years it's been in development. Most, if not all, major MMOs have released more information about their games then this company has. It smells of vaporware to me and I'm starting to develop conspiracy theories that Schillings is just using the company as a major tax write off.

True, they are being awfully secretive about it. If it's any consolation I've been to the studio once and it certainly looked they were making a game there.

WastedHero:
You know what I need to do is just forget about them and pretend they don't exist until they start making announcements. 3 years of anticipating an MMO being created by R.A. Salvatore is too long to be holding ones breath.

That's probably for the best.

This is probably a great forum for this sort of discussion. BTW this is Curt, the guy who is actually NOT asking for tax breaks...

So this all started due to someone 'leaking' information that should not have been.

It was a result of a conversation, one of many, 38 Studios is having with states around the country.

We have been approached often over the past 24-36 months by states, and countries, interested in discussing finances and our studio.

Mass does NOT offer tax credits on development for the gaming industry, the only thing that exists here is the film tax credit, which is under fire right now.

What people seem to miss is this (as it refers to tax credits). Tax 'credits' see states giving away 10-25 cents of every dollar to companies receiving them. What you should know is that is money that does NOT exist were it not for the tax credit in many cases. If you don't have the tax credit, you are keeping 0 cents of 0 dollars in taxes. If you DO have the tax credit you are keeping 75 cents of every dollar of 'found money'.

Prior to the Mass film credit, 6 movies were shot in the previous 5 years in this state, since? 38 in the following 18 months! That's likely 35 or so films that WOULD NOT have been made here.

The issue and MAJOR difference in this instance is the film tax credit is dedicated to low paying transient jobs in most cases. Where it DOES impact local economy is this. I live in Medfield, Shutter Island was shot here. I know 3 local businesses who's owners have told me in person that were it not for this film at least 2, and the third said he thought it would, businesses would have folded in this economy. A local bagel/breakfast shop served 300 breakfasts and lunches over an extended period of the shooting. Instead of what they thought was going to be their last year, they had their most profitable. That's a tax law that clearly works at a level that doesn't get media, press, or votes, and it should.

Now as it relates to 38, the conversations we've had have been with states that DO have credits and want to lure the company to move there. For the most part that is just not going to happen. A 25% tax credit is not enough to pick up and move 160 people. But other states have and are offering other potential deals that would see us move, and we are in deep discussions with Massachusetts as well. Our first desire is to remain where we began, but in the end our decisions are made in with the company, it's employees and their families best interest, whatever that may be.

As to what you know about Copernicus, well, ya, I'd love to tell you more but that's just not the smart thing to do. too many times, too many games/companies roll out their hype train years ahead of when they should, and you, WE, build up unrealistic expectations that could never be met.

It's just not the right thing to do, so we don't do it. We have announced a little bit recently, at GDC, with RA talking about one major content and game play feature of Copernicus, as well as announcing that EAP will publish project Mercury out of our Baltimore Studio (BHG), the single player RPG set in the IP that is driving Copernicus the MMO. And that single player (Xbox, PS, and PC/MAC release) game will be our first foray into the market.

After 23 years in baseball I thought I'd seen some shoddy journalism, but I'm quickly finding out this industry has some work to do as well:)

So no, I am NOT running around with our hands out, but we are certainly willing to talk to folks interested in helping 38 down the path to success, who wouldn't?

DaxStrife:
Can't say I expect this to happen: out of all the things we have costing the states and country money, why would we want to add video game companies to that debt?
And I always hated that "give us tax breaks or we move elsewhere" threat, especially from established sports teams.

Here's where I get REAL confused. This is NOT costing you anything when a company moves to your state. It is FOUND money. This industry is already established, and it's entrenched in places like Seattle, San Diego, Austin for this very reason. You are giving tax breaks on dollars you would never see if you didn't have them. You are keeping 75 cents on new money, rather than 0 cents of money you never saw.

Boston already possesses the studio depth to blow up in a big way, but the state has made it next to impossible to incubate start ups when so many other locations are aggressively pursuing the young new companies. This industry generated over 60 billion in revenue last year, with MMO players in the U.S. spending almost 4 billion ON MMO'S ALONE.....

Start ups don't need tax credits, they offer nothing really, start ups, the traditional industry kind we see, are 3-4 or 10 person garage shops that need physical property, or seed money. VC's aren't the answer, that should be the state working to help the industry incubate these start ups to the point tax credits would matter, and with tax credits in place you incubate a company that STAYS HERE when they grow, rather than getting to a point of meaningful revenue and then bolting to a city that provides the credits. Credits are a way to attract a major EA, Microsoft or SOE studio, which is all good, but to truly nurture something with long term potential you need to do a lot more at the grass roots level.

I tend to be skeptical of anyone claiming to be someone famous, but if you are who you say you are, then thank you for the clarification. Also good luck on your game, looking forward to it.

 

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