The availability of tax benefits and a large number of specialists motivate AAA studios to open offices in the UK
The gaming industry in the UK is experiencing a new upswing: large companies and publishers are buying British studios, as well as opening new branches in London and across the country. This year, Square Enix, EA and Activision Blizzard were among such companies.
On October 20, Square Enix announced that it was opening its second office in London. The official press release says that the new branch will focus on the development of free-to-play mobile games. So far, the division is in the process of working on the Tomb Raider Reloaded arcade and a project based on the animated series “Avatar: The Legend of Aang”.
Before Square Enix, Sledgehammer Games, a subsidiary of Activision Blizzard, opened a new studio in the UK. The new division is located in Guildford. At the moment, the British office is developing content for Call of Duty: Vanguard and several new projects.
Electronic Arts has also heavily funded the gaming industry of Foggy Albion. In February, the company acquired the creator of racing games, Codemasters studio, for $ 1.2 billion. Next, in June, EA bought Playdemic, a developer of a game for mobile devices and Facebook Golf Clash. EA bought the studio from WarnerMedia for $1.4 billion.
Richard Wilson, CEO of the Independent Game Developers Association (TIGA), believes that giant companies are investing in the UK for two reasons:
- The Video Games Tax Relief (VGTR) program is active, under which video game companies have significant tax benefits;There are a large number of highly qualified developers on the market with expertise in working on AAA projects.
Let’s stop at VGTR.
This is a program that covers up to 20% of the cost of producing games.
But there is a nuance.
Initially, it was aimed at supporting local indie studios. However, after the introduction of benefits, international gaming giants began to actively use them.
In 2019, a big scandal broke out in this regard. Then Take-Two Interactive (publisher of the GTA series of games), WarnerMedia (owner of the British studio Rocksteady), Traveller’s Tales, Sony and Sega received a total tax refund of £ 150 million ($260.8 million).
This led to criticism of VGTR. There was an opinion that the program allows multinational giants to “milk” British taxpayers.
However, there were those who support VGTR. Among them are the CEO of the UK Interactive Entertainment Association (UKIE) Jo Twist. She still believes that thanks to the program, games developed in the UK are competitive on the world stage.
Now the tax program continues to work: in 2020 alone, 350 teams received $247 million in tax refunds.
