Calif. Video Game Industry Faces Growing Competition: Report

SANTA MONICA, CA – California's video game industry, part of the state's $32 billion software publishing sector, is facing growing domestic and international competition, according to a report released Tuesday by the Santa Monica-based Milken Institute.

"No other industry reflects the convergence of technology and entertainment as well as the video game industry," said Kevin Klowden, executive director of the nonprofit and nonpartisan think tank's Center for Regional Economics. "As the industry grows, cities, states and countries are offering economic incentives – such as tax credits, rebates or grants – and creating, attracting and retaining strong talent pipelines that compete with California."

California is home to more than 900 companies that employ more than 33,000 workers in the industry, far outpacing other states, according to the report titled "Future-Proofing the Video Game Industry in California." Overall, the video game industry generated global consumer revenue of about $116 billion in 2017, the report says.

The report draws on publicly available data, along with proprietary information, to assess the industry's contribution to economic output, employment and wages, incorporating case studies from Texas, Georgia, Washington, New York and Canada. It concludes with the following recommendations for consideration by state policymakers:

– adapt California's sales and use tax exemptions to apply to video games;

– expand or revise the state R&D tax credit to better serve startups and small businesses;

– explore developing a production-based tax credit for video games if California's share of the video game industry declines; and

– improve the development of in-state computer programmers and developers by strengthening relationships between the video game industry and two- and four-year colleges.

The report, which was made possible with support from the Electronic Software Association, is available online at www.milkeninstitute.org.

City News Service; Image via Patch staffer Carly Baldwin