Local Reps Want Tax Breaks For Video Game Companies
Photo/Brandon Butler
ONE UP: Mark Claypool, director of WPI's Interactive Media and Game Development program.
It wasn’t that long ago that a mention of biotechnology in Worcester social circles would have been met with furrowed brows and confused looks.
Today, the University of Massachusetts Medical School is investing $405 million in The Albert Sherman Center, a new clinical research facility.
Next month, in another area of the city, Worcester Polytechnic Institute is hoping to break ground on a $30-million addition to Gateway Park, a hub for the city’s biotech industry.
“Thirty years ago no one in Central Massachusetts understood biotech. Today, it’s a major force for our economic well being,” said State Rep. Vincent Pedone, D-Worcester.
Now Pedone’s ready for the next big industry in Worcester, and he’s betting that it will be the video game design sector.
“We have an industry that I think is poised to be this generation’s biotech,” he said.
Worcester is already home to two of The Princeton Review’s top 10 schools in the country for video game design programs — Worcester Polytechnic Institute and Becker College.
Building On Strengths
In an effort to further foster growth in the city, Pedone and State Rep. John Binienda, D-Worcester, have both proposed to extend a tax credit available to film industry production studios to video game design companies as well.
According to some in the industry, now is the precise time to embrace the sector.
The industry has matured from the “wild and wooly” 1990s to being a more professional and entrepreneurial sector now, according Chris Zirpoli, creative manager of ImaginEngine, a Framingham-based game development company that has about 30 employees.
Now, he said, gamers are businesspeople.
“We’ve gone from the garage to the mainstream,” he said.
The game industry is huge, but it doesn’t mean that it’s been immune from the global economic slowdown. The industry shed about 10 percent of sales internationally in 2008 and 2009. Last year the market rebounded, which seems to be continuing in 2011.
Fueling the growth is the use of smartphones among the general population.
“More smartphones means more gamers,” said Lewis Ward, a consumer research manager covering the gaming industry for Framingham-based IDC.
The last few years have seen a rise in the “casual gamers,” or people who play browser-based games on their phones or other devices, like the iPad, he said.
Ward estimated that about half of Americans, 163 million, at least tried gaming in some form or another in 2010, which is up from 101 million in 2005.
And there’s room for growth.
Game design technology is already being used for business training, for example. Three dimensional games will soon be common and the richness and diversity of games is only expected to increase in the future, Ward predicts.
And someone needs to create all of those games.
The Commonwealth’s Edge
Massachusetts already has much of the social infrastructure to support the game industry, argues Jeff Goodsill, general manager of Tencent Boston, another game design company located in Concord with about 50 employees.
Having access to a skilled and trained workforce that is ready to jump into the market is a competitive advantage for the state, he said. That’s where programs like the ones at Becker and WPI come into play.
WPI already has an undergraduate program with about 180 students, according to Mark Claypool, director of WPI’s Interactive Media and Game Development program.
In the fall, the school will begin offering a graduate program in game design as well.
Paul Cotnoir, chairman of the design programs department at Becker, said the school is looking to launch a video game institute in the fall, which will be a clearinghouse for public policy research, economic development outreach and business networking specifically for the video game design sector.
The program at Becker is wildly popular. Applications to the college are up 24 percent, while applications to the video game program are up more than 200 percent. The school has created a wait list for applicants because enrollment has reached capacity.
Finding Critical Mass
There are, however, some issues holding back the industry in Massachusetts, according to Michael J. Cavaretta, an attorney with Waltham-based Morse, Barnes-Brown & Pendleton, which works with video game companies on protecting intellectual property, among other services.
It’s a chicken-and-egg problem, he said. Gaming companies want to locate where there is a high concentration of other gaming companies.
So in some ways, you need gaming companies here to attract other game developers.
Other places also have advantages over Massachusetts, he pointed out. California, and specifically Silicon Valley, is a hub for venture capital financing for the gaming industry.
Canada, Montreal in particular, has established lucrative tax credits and even grants for companies to locate there.
That’s why these Bay State gamers believe the tax-credit legislation being proposed in Massachusetts is a step in the right direction.
Pedone’s bill, which has been filed in the state Legislature but has not yet been considered, would provide a 25-percent tax credit for video game design companies based on all of their expenses. Or, a 35-percent tax credit just on the labor portion of their expenses.
Companies could qualify for additional tax credits if they meet job creation benchmarks, if they locate in a Gateway City such as Worcester or if they include a “Made in Massachusetts” promotional logo on their products.
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