Video gaming firms want the taxman and teachers to help them grow. Alistair Houghton reports

THE humble British tax collector could yet join the ranks of video game icons such as Mario or Sonic The Hedgehog.

The UK video game industry remains one of the country’s great business success stories – and Liverpool is one of the industry’s hubs.

But leading figures in the industry say that status could be threatened unless the Government gives it tax breaks to help it battle competition from other countries.

Meanwhile some in the industry are also concerned that the UK’s talent pool could dry up unless schools and universities teach young people the skills the industry needs.

Last Thursday, Liverpool hosted Develop, the national video gaming conference that was being held in the north for the first time.

The event was a showcase of the best of British gaming, with discussion topics ranging from LEGO Rock Band to digital distribution techniques.

But the case for tax relief for the industry was never far from the surface.

In August, TIGA (The Independent Game Developers Association) launched consultation paper Investing in the Future to call for a tax break for the UK video games industry, similar to the tax credit which already exists for the UK Film Industry.

They say that without it, developers could move to Canada, where a number of provinces offer tax rebates of between 20% and 45% on staff costs.

The TIGA report said that tax relief would, over five years, create 1,400 jobs in UK games development studios.

TIGA said Games Tax Relief “would increase investment by games studios by £146m, direct and indirect annual tax revenues by £133m and GDP contribution by £323m”.

It added: “By year five, for every £100 of investment by government in the Games Tax Relief, the industry will invest £176.”

TIGA’s report followed last year’s Games Up campaign to raise the profile of the sector. The campaign was backed by companies including Liverpool’s Bizarre Creations.

One of the region’s biggest video game employers is Sony Computer Entertainment Worldwide Studios Europe (SCE WWS).

Its Liverpool-based senior vice-president, Michael Denny, gave a keynote speech in which he asked the Government to give more backing to the games industry.

Speaking to LDP Business later, he said: “The independent development community in the UK is a creative hub on the worldwide scene. It’s something that has been a great success and can have much more success.

“I think there is more the government can do, particularly in terms of tax relief, tax breaks or support in other areas such as local grants.

“I hope the government looks at our industry favourably, and that we get the support we deserve.

“Canada has shown itself to be a shining example of how government support can support a creative industry such as ours.”

SCE WWS employs 600 people across its studios and development centres in Liverpool and Runcorn.

Its Liverpool internal development studio has been responsible for titles including Formula One and Wipeout.

Its external development studio works with independent studios and developers from around Europe. That studio worked closely for several years with Runcorn’s Evolution Studios before buying it in 2007. Evolution has developed titles including hit PS3 game MotorStorm. Liverpool also boasts Sony’s testing department, which tests every PlayStation game Sony publishes in Europe.

Video gaming is still regularly portrayed as a niche activity, but it is big business worth hundreds of millions of pounds to the UK every year.

It has been big business in Merseyside for many years. Its growth was driven by the success of Psygnosis, which developed games including Lemmings and was sold to Sony in 1993.

VIDEO gaming will even be the subject of a new exhibition at Liverpool arts centre FACT, where next month’s Space Invaders: Art and the Computer Game Environment show will explore “the increasingly blurred boundaries between videogame spaces and real space”.

“I don’t know why people are surprised any more at the size of the industry,” said Mr Denny. “The video gaming industry has been around for a long period of time now and has become not only a big employer for this region but also a substantial revenue generator.”

Mr Denny said the industry was still growing, despite the recession.

He said: “Internationally in the recession, there’s some evidence to say that people have stopped spending money on large luxury items, and perhaps on going out, but instead are spending more time at home and entertaining themselves there. Generally video games have fared quite well.

“There is increased competition, which really I see as a good thing for everybody in the industry and certainly for consumers. It gives more choice.

“The industry itself is still very healthy, though it has a number of challenges.

“We are looking at digital distribution. We need to keep content relevant in an era when connectivity means that people have unlimited unfettered access to different content.”

Mr Denny said he wanted to see academic establishments work more closely with the industry to develop training opportunities for people looking to move into the industry.

That call for the industry to work with the education sector was echoed by Enda Carey, head of games and digital at support agency Northwest Vision and Media (NWVM).

Mr Carey said that while many games developers complained about the quality of university graduates, the problem in fact lay with schools rather than universities.

“Students are dropping maths and physics at a much earlier age,” he said.

“If we see maths and physics as being a problem area for the UK, then if we really want to change that, as games developers we have to change that,”

Mr Carey said gaming firms should not just complain about the education system, but should instead work more closely with schools. “Go to schools,” he said. “Tell pupils about why maths and physics are important in gaming. Look for the reaction.

“In a football game, for example, it takes a lot of maths and physics to get a ball from A to B.

“It seems it’s always the universities that get the blame, but it goes much more deep than that

“We can task the universities with making students a bit more rounded, but in terms of stem subjects like maths and physics, that’s secondary school level.”

Mr Carey also urged developers to work with universities to help them make their courses more relevant.

“Universities are crying out to be linked to industry and to make their courses more relevant,” he said. “They’re desperate to have a stamp of approval.”

But Mr Carey said firms themselves also needed a “commercial education”.

Firms could no longer rely on securing one massive deal, but should instead learn how to take advantage of the intellectual property (IP) they generate.

He said: “There has always been a legacy around Psygnosis and Sony that that’s going to be the payday for smaller developers – that those developers will get tens of millions of pounds from Sony and they’ll make the next PS3 blockbuster.

“That’s not going to happen. But they’ve got to understand there are other ways of creating IP.”