We started our first games company (DemonWare) in Ireland in 2003 to hoots of laughter and utter incomprehension from the local investment community. In 2008, we were laughed at (again) by local investors when we started Jolt Online (again in Ireland), who told us that people wanted more sophisticated games, not simpler ones they could play from Facebook.
DemonWare was acquired by Activision Blizzard and today is the multiplayer backbone behind the Call of Duty franchise. Jolt Online was acquired by GameStop and leads their online gaming strategy in a division which now includes Kongregate and Spawn Labs. And we’re no longer laughed at when we talk about the video games ‘industry’.
Both DemonWare and Jolt Online remain headquartered in Dublin, with neighbours like Zynga, Popcap, Blizzard, EA, Havok, Big Fish and many others. The cluster has developed to the point where people rightly point to Ireland as the online gaming hub of Europe. Amazingly, this has happened without any specific government policy aimed at the games community (although there is genuinely superb support from Enterprise Ireland for games startups-they have consistently invested in our companies over the years).
I had been quite heavily involved in the consultation process which led up to yesterday’s announcement by the Irish government on their video games action plan. So I was a little surprised to see that it was really more an announcement about an announcement than any material policy. The argument given for this was that the current transition phase within the games industry makes it hard to enact policy which won’t be out of date within six months. While we can all smile at the obvious spin going on there, with Zynga and Facebook’s respective app platform announcements over the last week (which will all in turn sit on Apple’s platform), I wonder if they don’t have half a point.
With the exception of the Bay Area, the biggest games clusters in the world are still largely structured around console game development. Console games are labour-intensive, high risk and single-product focused. With the exception of the risk factor (which is still many, many times less), social and mobile (SoMo) gaming is the exact opposite. In an industry which has now firmly passed console as the leading edge, Ireland has an opportunity to create the world’s first SoMo development eco-system. It’s like the opportunity JJ Abrams had to reboot Star Trek.
The Forfas report which outlines the structure for the policy planning is worth reading. Some interesting suggestions include;
- Reducing income tax for video games professionals
- Extending and specifying the existing R&D tax break to include video game development
- Significantly extending the existing games investment fund to essentially compensate for the lack of local venture capital investment
One of the rumours I’ve repeatedly heard is that there will be an attempt to reduce the VAT payable on virtual items for companies operating from Ireland. This would be a genuinely radical move and would cause huge waves within the European games community. It would be very interesting indeed.
Getting this right isn’t hard. Speaking to several friends of mine who run games companies, their wish list extends to three things; talent, investment and competitive tax breaks.
Many people have criticised the latter as being inherently unfair. At this stage it doesn’t matter-the cat hopped out of the bag a long time ago and it expects grants and subsidies as standard. The critical element is to incorporate these into a policy which creates a long-term and sustainable industry. When you look at the growing number of successful games spin-outs happening in Ireland, we are tantalisingly close to this goal.
Of course the greatest risk about non-specific policies is that they get wiped off the table at a later date for political reasons. The UK saw precisely that scenario in last year’s now-you-see-it-now-you-don’t Labour-led (and Tory-removed) tax incentive plan for game development. The Irish government needs to execute a policy which matches the nature of SoMo game development itself: deploy rapidly, test and adjust. I and the rest of the community would like to see some concrete policies being announced before the Game Developer Conference in March 2012.