Computer games: Games industry welcomes extra help

Video game developers yesterday hailed Alistair Darling's decision to offer tax breaks to the industry in a move designed to head off an exodus of top talent from the UK.

Alistair Darling said he would "offer help to the computer games sector, similar to steps which are helping restore the fortunes of the British film industry", before adding: "We need to keep British talent in this country." There were few concrete details over the form of the tax relief yesterday, although the cost to the Exchequer is expected to be £40m next tax year.

Richard Wilson, the chief executive of Tiga, the trade body representing the UK games industry, called the move "inspired", saying the Government had chosen "the future over the past, growth over decline, success over failure". The body said the UK games development industry contributes over £1bn to the UK's GDP.

Tiga's research shows that Games Tax Relief over a five-year period should create or protect 3,550 graduate level jobs, and increase or at least safeguard £457m in development expenditure. It will "ensure that the UK remains a world leading developer of video games", Mr Wilson added.

Some of the biggest development names in the gaming industry are based in the UK, including Rockstar, which produced the Grand Theft Auto series, and Codemasters.

Piers Harding-Rolls, a senior analyst at Screen Digest, said: "Historically the UK has been a driving force in the global video games industry and has long punched above its weight." In a Develop 100 report ranking the most successful studios, nearly a quarter were in the UK.

In the past year companies such as Rocksteady, which produced the Batman title Arkham Asylum, has been bought by Warner Bros, and Eidos Interactive, the creator of Lara Croft, is now part of Square Enix Europe.

The UK faces competition from countries, especially Canada, which offers a salary rebate to studios and income tax holidays to game developers relocating from Britain. "This tax break is good news, and could prevent a talent drain," Mr Harding-Rolls said.