After 38 Studios, Mass. mulls bill to boost gaming
January 19th, 2011 at 3:07 pm by Ted Nesi under General Talk
Massachusetts got a little bit of a black eye last summer when 38 Studios agreed to decamp for Providence thanks to a $75 million taxpayer-guranteed loan. (“Who lost Curt Schilling?” asked The Boston Globe.)
But even as Rhode Island officials crow about spawning a new gaming hub here, at least some Bay State leaders are preparing to fight back. A new Massachusetts Video Game Institute was announced last month, and legislation to boost the industry is now being drafted, The Associated Press reports:
Massachusetts video game companies could receive tax credits and other incentives under legislation that seeks to strengthen the state’s foothold in an industry that’s sustained strong growth in a weak economy. …
Details of the legislation aren’t finished, but a draft offers a menu of possible tax credits tied to job creation or production goals for companies that design or produce video games.
Incentives would be offered to startups or existing companies who expand or relocate in Massachusetts. A so-called ‘clawback’ provision would help the state recoup investments in firms that leave or fail to produce promised jobs.
State Rep. Vincent Pedone said it’s too early to say what the effort would cost, but the goal is expand the state’s $2 billion video game industry to $20 billion in five years. …
Seventeen other states offer financial incentives to video game companies and the Province of Quebec has aggressively lured firms with tax credits. …
The effort comes after former Boston Red Sox star Curt Schilling decided to move his video game company, 38 Studios, to Rhode Island after that state offered a $75 million loan guarantee. Pedone said he believes Rhode Island took the wrong approach by focusing on one company and not the entire industry.
Rep. Bradley Jones, the House Republican leader, said he’s not against cutting taxes but doesn’t believe the state should pick “winners and losers” in the private sector. …
Massachusetts has already carved out a respectable niche in the industry, with 1,295 people directly employed by video game developers or publishers, according to a recent report by the Entertainment Software Association. That places the state fifth behind California, Texas, Washington and New York.
Those five states account for 71% of total employment in the video game industry, according to the same organization. Rhode Island doesn’t even merit an individual state report on its website. The state has a long way to go if it’s going to become a major hub for game developers.
Tags: 38 studios, economic development, edc, gaming, massachusetts, state government, video games
Nesi's Notes covers politics and the economy in and around Rhode Island for WPRI.com. (Twitter: 
I think there’s a certain amount of built-in not getting it here. Where do you start.
RI sold bonds to back a round of venture funding. Taxes don’t even come close to figuring in this equation. In fact, in order for tax credits to have any effect, you have to, you know, owe taxes. And to owe taxes, you need profits. Even for an established company, expansion (adding new jobs) means way less profit for a period of time. It’s really pretty idiotic to tie job creation with tax abatement.
So MA just said, “We totally don’t understand the entrepreneurial space.”
And then there’s the whole RI-gains-and-MA-loses bit. Mostly mythical. The only real change is that RI gets the share of income tax and the unemployment. Some office space goes back under lease. Who’s really moving their domicile from suburban Boston to PVD? I doubt it will be more than single digits. If 38 was hiring RISD students and PVD residents already – as they were – people were already making that commute.
This kind of regional job sniping does nothing for real market growth. In fact, it’s distracting us from – and actually working against – the real potential, the real opportunity for real market growth.
It’s the cluster. Sonalyst Studios down in CT has massive simulation production capabilities. Boston has that MIT place. It’s not that far between them. In the VC world, they say “Deals attract deals.” Similarly, industries, sectors and niches develop ecosystems of mutually supportive companies that generate the kind of broad, easily recognized economic prosperity we’re really looking for.
Support the cluster, MA, RI and CT. It’s good for all of us.
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