Can a city known as a media, film and television capital also become a hub for creating video games? Tax subsidies would help.
On a steamy night in May, six stories above Times Square, a 12-year-old aimed a blaster into the sky, and fire shot out of his avatar’s boots. His mother attempted to do the same. She was quickly admonished.
“No, Ma, you’re doing it all wrong!”
This may sound like a parent’s nightmare, but it’s a video game programmer’s dream. New York developers like Exog3n Studios, the creator of Maui Wowie Smash Up, come to Playcrafting’s Spring Expo to get feedback, network and figure out how to scale a tween’s stoked response into millions of plays and the payday that comes with them.
On Aug. 11 and 12, at the Manhattan Center on West 34th Street, more than 100 game developers, the majority from New York City, will showcase their work at Playcrafting’s largest event of the year: Play NYC. Some of the attendees will be part-timers who dream of building the next Activision or EA — publishers that have racked up billions in global sales for game franchises like Call of Duty and Madden NFL — yet making that leap as a New York business is a lot harder than it should be, according to several local developers.
New York is the fourth largest state for video game companies in the United States, way behind California, and a little less far behind Texas and Washington, according to the Entertainment Software Association. While the West Coast has a relatively long history of game development, areas like Texas (with Austin as its hub), Quebec (with Montreal as its hub) and London have used a combination of tax incentives, rebates and active lobbying to entice video game companies to build outposts or relocate completely. New York, located between the vibrant centers of the West Coast and London, finds itself in the unusual position of being in flyover country.
“There are more disadvantages than advantages to being in New York,” said Kurt Bieg, of Simple Machine, the mobile game company. “But the advantages are really rare and unique.” Simple Machine’s game Pop the Lock has been downloaded 25 million times and has been turned into an arcade game.
[ 12 Video Games Made in New York]
A discussion about the challenges of New York game developers often begins with tax credits. More than 20 states give incentives for interactive media companies, according to the Entertainment Software Association. Internationally, London and Montreal created some of the world’s largest game hubs by offering developers between 20 percent and 37 percent in production reimbursement.
Over the last five years, Martin J. Golden, a Brooklyn Republican state senator, has pushed for a tax subsidy in support of video game production in New York State, similar to the existing program that sets aside $420 million for movie and television production. That effort has turned into a long game of “Mother May I?” with Governor Andrew M. Cuomo.
In 2016, a bill that included a $50 million tax incentive for video games and music production passed the state house and senate, yet was vetoed by the governor. Then Senator Golden said he learned that the governor was more interested in a credit for games than music production.
So in 2017 Mr. Golden submitted the Empire State Digital Gaming Media Production credit with a $50 million cap. It passed the State Senate. Later he found out that the governor was more likely to pass a $25 million credit. Mr. Golden resubmitted the bill with that amount in early 2018, which passed the senate in June, but now the State Assembly is expected to be out for the rest of the year.
“If we don’t pass the tax credit we’ll lose these jobs to neighboring states like New Jersey, which just passed a tax credit for video game companies. Once a company has settled somewhere else, it’s very hard to get them back.”
Games are now one of the most lucrative forms of media in the world. In 2017, movie box office receipts for the United States and Canada were $ 11.1 billion. National spending on games during the same year was $29.1 billion, according to the NPD Group .
New York’s city and state efforts to support the video games industry are often tucked away in larger programs. The Mayor’s Office of Media and Entertainment and the New York City Economic Development Corporation are spending $6 million, for example, to open a virtual reality/augmented reality lab at the Brooklyn Navy Yard in the fall. The mayor’s office is also preparing a report on women’s representation in the video game industry.
And yet these projects are unlikely to add the thousands of jobs to the economy that large game studios could bring to New York.
In Austin, for example, city officials successfully lobbied small companies like Twisted Pixel and large ones too, like EA, to open development studios there, adding more than 4,000 jobs between 2005 and 2012. Canada’s Invest Quebec program has representatives who regularly contact developers, including many in New York, to consider starting divisions in Montreal.
“If you go to a game event in Montreal, they roll out the red carpet,” said Prof. Frank Lantz, director of the New York University Game Center. “There’s a sense of wooing developers and investing a lot in trying to build out that industry,” he continued. “And you just kind of get the opposite effect in New York. The attitude is more ‘Hey, you’re lucky to be here’ rather than ‘We want you here and will do everything we can to make it a desirable place to start.’”
Several notable game publishers, like Take-Two Interactive, have offices in New York, but these primarily focus on sales and administration.
While most people think New York is pricey, the reputation runs deep among game investors. David Grijns oversaw the hiring of a 100-person team in SoHo for the Swedish company Avalanche, which produced the third installment of Just Cause, an adventure game series partly inspired by the United States’ 1989 invasion of Panama.
Mr. Grijns said that those in the business regularly ask him how he was able to afford starting a studio in New York. He even gets the question from San Francisco-based executives, who are accustomed to paying comparable or higher prices. Programmers have told Mr. Grijns that they would prefer to work in New York, but they stay on the West Coast for job security.
On the state level, most of the incentive programs that New York video game companies can take advantage of were created for start-ups. Howard Zemsky, president of the Empire State Development Corporation, recently mentioned the Excelsior Jobs Program, which offers a 10-year state tax abatement for software developers, as well as a recent $1.3 million grant to create “digital gaming hubs,” which was given to three universities over three years.
Mr. Zemsky has not spoken with Governor Cuomo about the digital gaming credit, he said. ”It’s always more challenging when industries want extra-special tax treatment, you have a lot of hurdles to clear,” he explained. “Then other industries also want special tax treatment.”
Rockstar Games, the NoHo-based company behind the Grand Theft Auto franchise, reportedly the highest grossing video game in history at more than $6 billion — may be one of the best-positioned to reshape the New York development community.
