State tax breaks considered for video game firms
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Proponents say it's more than just free money for the Mario Brothers. But economists say backlash in Harrisburg could mean an automatic "game over."
The prize at stake: a tax break for video game companies.
States across the country are trying to siphon gaming talent from Silicon Valley with a number of new tax incentives enacted within the past few months. While the idea has never won the legislative game in Pennsylvania, it's long been a hot topic in Pittsburgh, where Carnegie Mellon's gaming programs have produced hot local firms even as most graduates flock to the West Coast.
Of the 60 students in the Class of 2010 at the Carnegie Mellon Entertainment Technology Center, four were picked up by Pittsburgh companies while 15 went to firms in California.
It matters because the business, once fueled by stacks of game tokens, has turned into one piling up real cash.
Cultlike devotion to action games like "Call of Duty" and family-friendly options like "Guitar Hero" helped video game sales exceed $20 billion in 2009. Pittsburgh's growing presence on the scene has some wondering if the sector could expand even faster here with the help of an incentive similar to the state's high-profile -- and much criticized -- film tax credit.
The timing isn't good. Economists warn that a strapped Harrisburg is not the place to look for help. Besides, analysts say tax credits may not be the lure in deciding a company's location as much as a community of like-minded peers -- so Pittsburgh should focus on building that first.
The gaming community here has been almost entirely fueled by the 11-year-old program at CMU that trains students in game development.
Drew Davidson, director of the university's Entertainment Technology Center, has joined students and local business owners in meeting with state representatives about a video game tax incentive over the years. He said the interest "goes in cycles" and is often bogged down by "so many different parties and different agendas."
First Published October 12, 2010 12:00 am
