By Katie Finnell
12/11/12
From blockbusters like “Guitar Hero” to indies like “Resonance,” the video game industry in Massachusetts is one that is thriving.
Boston, as well as other areas in Massachusetts, is becoming a popular area for game design. According to the Massachusetts Digital Games Institute, the state’s video game industry has grown in a sluggish economy, directly employing over 2,000 people and seeing 28 new studios open in the past three years.
But to foster more growth in the industry, some industry experts said tax incentives are needed to help companies compete nationally.
“Massachusetts could be second or third in the nation instead of a distant fifth,” said Michael Cavaretta, a lawyer at Morse, Barnes-Brown & Pendleton who specializes in information and technology businesses.
What states do have tax incentives?
Tax incentives, he said, could give Massachusetts the push it needs to compete against large hubs of gaming, like California and Texas.
A bill is now before the state legislature that would provide tax incentives to video game and interactive and digital media companies.
H.3301, sponsored by recently retired Worcester state Rep. Vincent Pedone, would provide tax incentives to companies that met certain standards in the state. The bill is now being pushed forward by various co-sponsors.
Incentives include a 25 percent tax credit for total payroll when a minimum of $50,000 of total production costs is spent in the state and a 25 percent tax credit on production expenses when in-state production costs exceeds 50 percent of total production costs.
In September, the bill accompanied a study order by the Joint Committee on Revenue to examine various taxation bills and make recommendations in December to the General Court of the House of Representatives.
Cavaretta said companies “go where the best deal is.” When other states offer better incentives, Massachusetts-based companies may have no choice but to move, he said.
Tax incentives also help Massachusetts compete against out-of-state studios within a parent company.
Timothy Loew, the executive director of Mass DiGI, said tax incentives would help a Massachusetts studio compete against a Texas studio owned by a larger parent company. Texas has tax incentives for video game studios and can use those incentives to bid lower costs in a way that Massachusetts can’t.
Tax incentives would help keep Massachusetts-based talent in the state, Loew said.
“It’s a very mobile business – talent is important and you can move talent,” he said. “We have a lot of talent that migrates elsewhere because of opportunities elsewhere.”
Tax incentives would create more job opportunities by making businesses more cost effective, he said.
“We want young people to graduate from our institutions, to start companies, to grow here and start families here,” Loew said.
But for Robert Johnson, president of Becker College and member of the board of directors for the Worcester Regional Chamber of Commerce, measuring the success of a video game studio isn’t just measured in incentives or profits.
For him, “success depends on the company and the types of things it’s trying to do.”
Johnson spoke of video game companies that create video games and simulators that are used in areas outside of entertainment, such as in medical and educational settings.
“We are in an environment where opportunity among colleges and universities, entrepreneurship, economic development and academic collaboration is essential,” he said.
