Sacramento Bee: California must protect its video game industry

Friday, February 16, 2018

Each day, more than 150 million Americans turn to video games to be entertained, to learn a skill or to spend time with family and friends. Without realizing it, they’re also providing a major boost to California’s economy.

Given our dominant positions in both entertainment and technology, it’s not surprising that California is far ahead of other states when it comes to the entertainment software industry. California is home to 27 percent of the domestic gaming industry, with more than 900 companies and 33,000 jobs – seven times as many as our nearest competitor, Texas.

But we cannot afford to get complacent. According to a new Milken Institute report out Tuesday, California’s leadership is under attack from 21 other states and two Canadian provinces, which are rolling out a red carpet of production tax credits, grants and other incentives to lure away companies. Such deals are very appealing in an industry where most companies employ fewer than 30 people.

If we don’t take action soon, we are at risk of losing our competitive edge to states including New York and Massachusetts, Texas and Washington. The Milken study pinpoints several things that California can do:

▪ Adapt California’s existing sales and use tax exemptions to apply to video games.

▪ Expand or revise the state research and development tax credit to boost start-ups and small businesses.

▪ Consider a production-based tax credit for video games if our share of the industry declines.

▪ Train more computer programmers and game developers by strengthening relationships between the industry and colleges

Education and workforce development are vital to maintaining an abundant talent pipeline. California could set itself apart by making changes in the K-12 curriculum to encourage greater interest in science, technology, engineering and mathematics.

California has long been known as the home of innovation. If we are to maintain our leadership position in this important industry, we must take seriously the recommendations of the Milken report and work to ensure California continues to lead the video game sector.