In his June 12 Op-Ed in the Globe, Jeff Jacoby (@jeff_jacoby) writes that “the video game industry wants to be bribed to do business in Massachusetts.”
He goes on to describe how the state shouldn’t pick winners when it comes to businesses. That tax benefits have not worked in the past for the green industry, movie industry, or for mutual funds. Each of these industries is completely different, and the attempt to apply a single rule to all markets is a fallacy. In fact, there have been incentive programs in Massachusetts that have worked extraordinarily well, bringing in jobs and revenue into the state. A fine example of this is illustrated in the success of the biotech industry in Massachusetts.
As State Rep. Vincent Pedone (Worchester Dem.) has pointed out in the past, “Twenty-five or 30 years ago, no one in the commonwealth knew what biotechnology was, and it has now become a critical part of our Massachusetts economy. We think the video game design industry has equal potential.” Rep. Pedone has been a key figure in introducing the legislation that would support video game companies.
Some argue that MA should be more business-friendly in general. While it’s true that MA taxes are some of the highest around, there are other benefits which help to balance this challenge. According to CNBC’s 2010 report, Massachusetts is ranked #5 in America’s Top States for Business. This score is mostly due to the fact that Massachusetts is #1 in Education. We have some of the greatest minds coming out of the greatest schools in the country. In the games industry especially, we end up sending that talent away to greener pastures for game development because the jobs are in California, Washington, or Texas.
Here at Fire Hose Games, we are constantly getting inquiries from eager, qualified applicants that could be contributing to the MA economy, if only there were a position for them. Tax incentives would allow companies like ours to retain our capital for longer so we could employ more people, over longer periods of time. Jacoby claims that MA games companies want to hire more senior-level people, but it is much more than that. We want to hire more senior-level, junior-level, and entry-level people. We want to create jobs here and grow the already flourishing community into one of the strongest in the United States. We want to keep our talent here in Massachusetts instead of shipping our grads off to California.
The video game industry is traditionally highly project-based. Development cycles are long, and when capital runs low, layoffs are made. Again, tax incentives from the State would allow us to smooth the bumps during ups and downs of project cycles so that we would not lose people during downturns. Furthermore, this model is changing, as the industry increasingly trends toward less project-based cycles and more sustainable, long term revenue cycles.
In grand editorial style, Jacoby goes as far as insulting the game companies that want to help Massachusetts, as well as our own businesses, grow, quoting Pushkin to call us pigs. He also makes comparisons to rich Hollywood actors and Fidelity Investments. Those kinds of comparisons are not only completely inaccurate, but they speak to a basic lack of understanding or research about the games industry whatsoever. According to the 2010 IBISWorld Report on the Video Games industry, the average wage in the games industry was $47k, and the wages/revenue ratio was about 25%. Not exactly the fatcats you were expecting? We aren’t asking for Massachusetts to bribe us, we simply want to aid our businesses so we can stay here, instead of having to leave like 38 Studios did. Already, 17 other states have tax incentives of some form for video games. Massachusetts is behind the curve.
Our Fire Chief, Eitan Glinert, had this to say, “If Fire Hose was offered a deal like the one that 38 Studios got with Rhode Island we would leave Massachusetts. To some degree we feel like we’re the only ones missing out; we see the federal government giving out billions of dollars in bailout money to huge business (usually to financial companies that create nothing of value but profit for themselves) while small businesses get the handout shaft. We see other states giving tax incentives or loan guarantees to incoming high tech and media companies. We see foreign governments investing in small businesses with grants designed to help them get off the ground. Here in Massachusetts we get none of these things, and to be frank it feels like we get no government support. A tax break, even a small one, would go a long way to help us make ends meet in an expensive city and keep us rooted in a state we love.”
Video games are a fast moving, technologically intensive industry that is expecting growth rates upwards of 8% in total U.S. Revenues over the 2011-2016 period, as well as increased profitability due to digital distribution. This is a burgeoning industry in its growth phase with increasing globalization; in other words, a huge opportunity. Why shouldn’t Massachusetts want to invest in an industry like ours, and enjoy some of that GDP?
