Whatever your views on how we got into recession, most of us would agree that a shrinking economy is not a good thing (even if initially it means less energy consumption). The UK is now plagued by austerity policies which may end up making the situation worse, not better.
Some media industries – those that don’t rely directly on selling advertising space – have thrived during previous recessions. Cinema, especially in the 1930s, grew rapidly in the US and UK. A recent report announced that a season ticket to watch Premiership football was the last thing that fans would give up if their income fell.
But, outside Hollywood, cinema has often needed forms of government support. In Europe, film industries are heavily dependent on ‘soft money’ – tax concessions, loans and grants. In return for public spending, governments expect to see both cultural and economic benefits from healthy media industries. The economic benefits of soft funding are well set out in a report that can be downloaded free from the UK Film Council.
What this report demonstrates is that public funding support for media industries is not a luxury but a necessity. Without it, a major industry may falter with jobs being lost. Reducing the spend by 25% as current austerity plans dictate is likely to have a negative multiplier effect – i.e. losing more than 25% in revenues and future benefits for the economy.
Many commentators argue that the video games industry internationally is now challenging the film industry in terms of economic value. (See Chapter 7 in MSB5.) The US and Japan are the major international players in this industry, but the UK and France have jostled for third place for some time. Now, because of lack of public funding support, UK games companies and individual games designers are leaving the UK and moving to where support is available. Multinational games companies are closing operations in the UK and moving them to South Korea, Australia and, especially, Canada where such support is more easily available. In this context it isn’t surprising that what is left of the UK games industry was shocked by the recent budget decision to withdraw the planned scheme for tax relief announced by the previous Labour government. The story and its background are covered in detail in Guardian reports. When Labour’s plans were announced in March, this was the reaction from the industry:
. . . Richard Wilson, the chief executive of the trade association Tiga, which is only 10 years old, says the decision “will more than pay for itself. We predict over the next five years tax relief should result in the creation of 3,500 graduate level jobs, another £457m of investment into the sector, and £415m in tax receipts for the Treasury.” (Guardian 29/3/2010)
Now that the decision is reversed, there must be a few thousand would-be graduate games designers thinking about how they can move to Canada or South Korea.