Budget: Ubisoft says tax breaks needed for gaming firms

Europe's largest video game publisher, Ubisoft, has said that the British government needs to offer tax breaks to the industry.

Speaking ahead of today's budget, chief exeuctive Yves Guillemot told BBC News that incentives were needed for firms to "take risks".

Britain's previous government floated the idea of extending the 20% tax break enjoyed by the film industry to the video games development sector.

But the changes were never implemented.

"The UK needs to react to what's happening in the industry and help the creatives in the UK," said Mr Guillemot.

Other countries are more generous. In Canada, the governments of Ontario and Quebec already offer significant tax breaks for developers, while earlier this month, the state of British Columbia (BC) also entered the fray, announcing significant tax breaks of their own.

"The enactment of this program has already resulted in an increase in our investment in BC and will continue to raise BC's profile as the international digital media centre," said Brian Ward, senior vice president of studios for Activision.

High costs

Incentives like these have helped numerous firms relocate development studios to the area and have now overtaken the UK in terms of video game development.

"I think [the government] will be receptive to the ideas of tax breaks," said Mr Guillemot.

"What was good in the last few months was that the pound went down, so the cost of creating games went down.

"When we created [the video game] Driver in England we saw a really big difference when the pound went down, but now the cost is getting too high," he said.

A report by PricewaterhouseCoopers (PWC) expects revenues from the entertainment and media market will grow by 20% over the next few years.

Despite the optimism exhibited at last years E3, revenue in the video games market fell 7.7% last year, to £2.6bn ($3.8bn). This was despite the release in November 2009 of Call of Duty: Modern Warfare 2, the best selling video game of all time.

Strong sales

Dr Richard Wilson, head of the UK's video game trade association TIGA, has made numerous calls for Britain to introduce tax breaks for the industry.

"I urge the new coalition to seize the opportunity to ensure that the UK's high-tech, high skills and low carbon video game development industry is able reach its full potential," he said.

PWC thinks the future looks more optimistic, predicting a 10% growth over the next four years, with much of that growth fuelled by the rise in online gaming.

That view is shared by many in the games industry.

In an interview with BBC News, Frank Gibeau, the president of Electronic Arts game label, was optimistic.

"Things are good right now, so we are now seeing some very strong game sales in the first half of this year and as we look forward to the future, it's going to be a good future for games," he said.