Texas Tax Credit Program a Model for Virginia Game Based Learning?

ALL:

It may sound like a stretch, but bear with me for a second. Texas is offering a tax credit to video game developers covering up to 5 percent of the total in-state spending on any video game project. This may sound like a small incentive, and it is, but in a business with considerable financial risk (high up front costs and possibility of a dud - not unlike the movie business) it could be the difference between "Made in Texas" and "Made in Virginia."

How does Hampton Roads, and Virginia, we fit in? Well, according to the National Association of College Stores, the U.S. college textbook / course materials market alone was estimated at $6.5 billion based on sales data for the 2005-2006 academic year. This does not include K-12 schools or the corporate training market. Led by VMASC, NASA and others, many in the Hampton Roads Region have been working on Game Based Learning (GBL) projects.

GBL integrates game (M&S) technologies into the learning environment. Such technologies are just beginning to make their way into school course materials. Many of us here believe use of GBL technologies will explode in the next 5 years. Right now the region is well positioned to develop as a GBL center, but we need to continue to support our region's universities in developing these technologies. We also need to incentivize the firms that are most likely to commercialize these technologies to base in Virginia rather than Texas, California, or elsewhere. This is where the tax credit comes in.

Bob

Texas Hopes to Score Big with Video Game Tax Credit

For an industry that takes in more than $10 billion per year, video games receive relatively little dedicated support for economic development initiatives. When video game creators do attract the attention of federal and state politicians, it is often because of allegations of violent content and for encouraging sedentary lifestyles amongst consumers. A handful of states, however, have launched programs and credits that actively encourage the growth of the industry. Texas joined these states last week when Gov. Rick Perry signed a bill approving up to $22 million in incentives for the entertainment sector, including video game companies. The money will be used to offer grants that will cover up to 5 percent of the total in-state spending on any video game project. The awards may range up to $250,000. Similar grants will be available for film, advertisement and television production through the program.

The state hopes the grants will help it capture some of the prominence in game development that it enjoyed in the 1980s and 1990s. Austin, in particular, was a hub for the industry and hosted headquarters and branches of many of the top names in the industry. For two decades, Origin Systems - creator of the Ultima series - was based in the city, along with branches of noted designers such as Dallas-based Eidos and NC Soft. In the late 1990s and earlier this decade, however, Austin suffered a few industry setbacks, with the closing of both Origin and Eidos and cuts following the tech bust.

Still the region remains important in the industry with big names such as Blizzard Entertainment, makers of the immensely popular World of Warcraft, Sony Online Entertainment, BioWare, Amaze Entertainment and Aspyr maintaining a strong presence. The Austin American-Statesman reports that the city is currently home to about 50 game companies, with about 1,000 employees.

The state hopes to build on this foundation and increase its presence in the industry, which generated revenues close to $12.5 billion in the U.S. last year. The grants will only cover a small portion of the costs of game production, which can take several years, but is an important symbolic victory for the game design community. In order to ease the concerns of those who object to the often-violent content of PC and console games, applicants will be subject to a review of their project's content before an award is made. The Texas Film Commission will have final approval over all grants.

Texas is not the only state competing for game design firms through such incentives. In April, the Georgia Department of Economic Development hired Asante Bradford as a Digital Entertainment Liaison to help build the state's growing video game industry. The department offers tax credits to game developers through the Georgia Entertainment Industry Investment Act. That measure, signed in 2005, provides developers with a 9 percent base tax credit on all in-state expenditures. The Florida High Tech Corridor recently added Interactive Entertainment to its list of supported industries and is currently conducting research into the sector's needs. Hawaii, Wisconsin and Connecticut all provide incentives to video game developers through their programs to support the television and film industries.

Meanwhile, on the other side of the Atlantic Ocean, France approved a measure earlier this year that may be the most aggressive move yet to compete for dominance in the game industry. The French government will provide tax credits of up to 20 percent of the total production costs of video game projects, if the game draws on more than one branch of artistic talent including graphic artists, musicians, sound creators, writers and directors.

While economic development professionals struggle to decide whether video games qualify as software or as entertainment, the industry continues to grow at an impressive pace. In 2006, revenues grew by almost 20 percent over the previous year. With the arrival of the Nintendo Wii and Playstation 3 late last year, along with the rise of on-demand game downloads and subscription-based gaming, many expect an increase in demand for interactive content.
Find out more about the Texas Moving Image Industry Incentive Program at: http://www.governor.state.tx.us/divisions/film/incentives

Where's M&S?

In its recent strategic plan, Moving Virginia Forward: Access, Alignment, Investment, the State Council for Higher Education in Virginia (SCHEV) recommends "[endorsing] the Virginia Research and Technology Advisory Commission (VRTAC) proposal to establish a consortium of universities, industry and federal laboratories that would focus on three thematic research areas of mutual priority:

1. Energy, Conservation, and the Environment;
2. Future Microelectronics in Virginia;
3. Lifespan Biology and Medicine, including public health and safety."

While universities and Federal Labs in Hampton Roads have expertise in several of these areas, there are glaring omissions, such as M&S, which are important to the Hampton Roads economy. Although the reports, in and of themselves, do not dictate state funding, they will likely influence executive and legislative decision making.

SCHEV 2007 Strategic Plan
VRTAC_Univ-Fed_Lab_report

Welcome to the Simulution Blog

This blog is intended to be a companion to the "Simulution" website (coming shortly) and generally support the region's M&S strategic plan. The term "Simulution" combines simulation with revolution to underscore the potential of Modeling & Simulation to transform the way many industries do business.

Given I'm not an M&S expert myself; it is my hope to enlist many of you in the regional M&S community to post blog entries in the coming weeks and months.