Analysis: French Tax Breaks

27 03 2008

Money

A Develop feature from Tuesday 25th examines French Games Industry tax breaks in some detail. It makes a lot of very good points, taking examples from France’s past of where they’ve gone wrong before:

France’s games industry was in trouble before Montreal started calling. Its independent sector was shrinking rapidly just like every other major development territory. Beyond a few major hits, France had real problems creating global blockbusters.

Many of its games studios had become dependent on grants and hand outs, mostly from local government but also from national funds. Grants totalling hundreds of millions of Euros were being poured into games companies, some without commercially viable products.

Essentially classic French protectionism, some of their studios were being propped up artificially while the global market ignored their products. Eventually, subsidies always run out, and this led some unviable studios, like Cryo and Kalisto, to crash spectacularly. Many of their staff will have ended up in Montreal.

News broke late yesterday that Ontario is raising corporate tax breaks for the games industry to 25% from 20%. Looking at longer term strategies, whether or not anyone wants to start a arms race with Canada over games industry tax breaks is a question worthy of very serious consideration.

While it’s unpleasant and often unspoken, public funding procedures tend to be static enough that they lead to periods of people learning to exploit systems for cash. That can be stemmed by changes to policy and organisations, but this in turn is very bad news for any industry that comes to depend on subsidies, because obsolescence of government help can be easily and catastrophically missing from many business plans.

(CC image by kappuru)

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