Game designer bill yet to play out


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The burned-out smoldering shell of what was once Downtown Pittsburgh sets the scene for 's video game "Fallout 3: The Pitt." In the yet-to-be released Naughty Dog title "The Last of Us," a 14-year-old girl and her survival companion wander through dilapidated buildings and overgrown shrubs in what looks mysteriously like the Golden Triangle.

Given how often Pittsburgh has been considered for the site of a digital Armageddon in video games, it would be logical to assume that game producers are being lured to the city with tax credits similar to those that brought the latest Batman film to the region.

Quite to the contrary, a Pennsylvania Senate bill designed to maximize video game development in the state has idled in committee for so long supporters are saying it's time to refresh efforts to get it passed.

"While all of the delays are happening, there are jobs that are leaving the state of Pennsylvania and going overseas and to other states," said Erik Huey, senior vice president of government affairs for the Entertainment Software Association, a trade association for the computer and video game industry.

The ESA, along with Pittsburgh Technology Council and several other players in Pittsburgh's tech community, have been reaching out to legislators over the past year urging them to support the Video Game Production Tax Credit.

The bill -- introduced by state Sen. Daylin Leach, D-Montgomery, in May 2011 -- has seen no movement since it was referred to the Senate Finance Committee for review at the end of that month.

Modeled after the state's film tax credit, the video game tax credit would provide $20 million for a 25 percent tax credit to companies that come to Pennsylvania to spend at least 60 percent of their total production costs on a particular game. The credit also would provides incentives for relocation expenses, capital and infrastructure expenditures, real estate costs and for each employee hired by video game companies that relocate to Pennsylvania.

With a business-friendly theme, backing from local firms and bipartisan legislative support, it has come as a surprise that the bill hasn't gained the momentum necessary for its passage, or even to be put on the table for discussion, said John Tew, Mr. Leach's legislative director.

"It would seem like the sort of thing [legislators] would be supportive of, given the tax-breaks-to-spur-development feeling that's been going around, but this one just hasn't taken off yet," he said.

Drew Davidson, director of Carnegie Mellon University's Entertainment Technology Center, noted that a tough fiscal environment has led to the state reducing or eliminating several incentive programs over the past few years.

The film credit, which initially authorized $60 million in tax credits when it was enacted in 2007, saw its available funds reduced to $42 million in the 2009-10 budget, and proposed changes to this year's budget would provide additional credits of 5 percent for productions filmed on specific sound stages. The legislature has not allotted any additional funds to cover the 5 percent credit.

"It has not been an easy slam dunk," Mr. Davidson said. "It's hard trying to do this while the state is struggling to make a good and realistic budget while also trying to attract business."

If attracting business and shoring up the budget is the ultimate goal, legislators should look to what's happened in the 22 states that have video game production tax credits, Mr. Huey said.

According to the ESA's "Video Games in the 21st Century: The 2010 Report," direct employment from the video and computer gaming industry grew 8.6 percent annually from 2005-09 and employs more than 120,000 people in 34 states today. For states such as Louisiana and Texas, the boon provided from tech jobs has gone far beyond helping a single industry.

Louisiana's 35 percent tax credit helped state legislators convince Electronic Arts Inc., maker of the blockbuster "Madden Football" video game series, to place its new Quality Assurance Center at a facility on Louisiana State University's campus. Today EA's North American Test Center employs almost 400 people at LSU and soon will relocate to the new 94,000-square-foot Louisiana Digital Media Center, which will share space with the university's Center for Computation and Technology.

Once Texas added video game producers in 2007 to its Moving Image Industry Incentive Program, which provides cash grants up to 5 percent of qualified in-state spending for video game producers, the state began to see an immediate impact.

According to a report from the Texas comptroller's office, from April 2009 to August 2010, the state approved grants for 58 video games for a total of $9 million. As a result, game producers hired approximately 1,700 people for production jobs and 1,694 for full-time jobs, a total surpassing the number of full-time jobs brought in by television, feature films and commercials.

The notion of video game producers bringing long-term employment to the region should make approving the credit a no-brainer, said Jake Witherell, chief operating officer of Schell Games. The South Side-based game design and development studio is responsible for online games, interactive theme park games and "player designed games" where users contribute artwork, music and other content for new casual games created by the company.

"The film credit is great, but those guys come in and spend money in a temporary fashion, then they all leave, whereas with video game companies like ours ... we're here generating local revenues for the long-term in real hiring and by bringing people in from other states," he said.

The fact that many of those out-of-state hires are CMU or University of Pittsburgh graduates who fled the city for places that offer film credits wasn't lost on Mr. Witherell.

He'd seen the scenario played out time and again over the years, despite the city being home to dozens of gaming startups such as East Liberty-based Electric Owl Studios, South Side-based Evil Genius Designs and HeadRight Games, which is part of Oakland-based Innovation Works' AlphaLab startup program.

Even if the tax credit means companies like 70-employee Schell Games would have to compete with gaming titans such as EA for talent, anything that benefits the greater good of the local gaming industry is good for his company, he said.

"It's easier for people to say 'I'll make the jump from Vegas or Silicon Valley because there are other places I can go in the city if it doesn't work out,' " he said.

"We're the largest kid on the block, but we would like to see more games coming out of here in the future, even if [a company's] bigger than us, because that makes it easier for us to recruit."

businessnews

Deborah M. Todd: dtodd@post-gazette.com or 412-263-1652.


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