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Bill for state's burgeoning video game industry gutted in legislature

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Gears of War, a popular game developed in the Triangle by Epic Games, has spawned a sequel due out in November.
  • Gears of War, a popular game developed in the Triangle by Epic Games, has spawned a sequel due out in November.

My friend Steven Allison recently left his job to become a game master for the online role-playing game Age of Conan: Hyborian Adventures at the Durham office of Norwegian game developer Funcom. He works third shift, playing the game and monitoring bugs for eight hours, then drives home and heads straight back to his XBox 360 console for a few rounds of BioShock or Rock Band before heading off to bed. At least 10 to 12 hours of his waking life involves playing video games. "I'm living the dream," he says.

With more than 30 video game-related companies based in the Triangle, including such major players as Epic Games, Red Storm Entertainment and Destineer Studios, the potential exists for the area to become the East Coast hub of game development. The question is whether the state government can develop an incentives package to help this nascent industry grow.

"Five years ago, when you said you were a game company in the Triangle, people would say, 'What's that? The Bermuda Triangle?'" says Alex Macris, president and CEO of the Durham-based Themis Group, an interactive marketing company that also publishes the online game culture magazine The Escapist. "Nowadays, there's a lot more awareness of the fact that Raleigh/ Durham/ Chapel Hill are real meccas of game development. We really could explode over the next five to 10 years."

Though tax incentives from the Canadian government helped Montreal attract numerous major game companies, efforts in N.C. have proven unsuccessful. In a recent session of the General Assembly, House Bill 2509 called for tax credits for producers of "digital interactive media" in its first draft. By the second draft, the "digital interactive media" section had been gutted, and the bill now authorizes sales and uses tax refunds for nonprofit organizations that provide services to the UNC system. There is no mention of the video game industry.

The bill was introduced by state Rep. Pryor Gibson, a Democrat representing Anson and Union counties. He says the change was typical of the law-making process. "There's no snake in the woodpile there; we needed a bill for UNC," Gibson says. He adds that he's been working closely with game companies to help develop future bills for incentives.

The problem might be creating an incentives package that meets current industry needs. "We haven't been successful on a state level yet because, quite frankly, these guys are so nimble and so quick that as soon as we've developed something we think can help them, they've moved past it," Gibson says.

Indeed, the video game industry moves so quickly that the Wall Street Journal contains almost daily updates on all the mergers, acquisitions and developments of the multi-billion dollar companies. It's become increasingly apparent that video games have come a long way from the days when N.C. State students killed time between classes with a round of Joust at Starcade on Hillsborough Street.

It's not just that the U.S. video game industry generated $17.9 billion in business last year, up 43 percent from 2006. It's that the games themselves have evolved in appearance and complexity. Last year's breakout hit BioShock is, from all appearances, a standard first-person shooter where you hit mutants with a wrench, but its lush Art Deco look and complex, Ayn Rand-influenced storyline make it as absorbing as any movie.

Games are even beating out films at the box office, as exemplified by Grand Theft Auto IV taking in $500 million worldwide its first week, overtaking Iron Man's first-week worldwide gross of about $200 million. "I absolutely see video games as the most important entertainment medium of the 21st century," Macris says. "In the way TV defined the 20th century, video games will define the 21st."

The Triangle is uniquely poised to cash in on the industry's breakout success. The area is home to such successful platform game developers as Epic Games, whose blockbuster Gears of War was the fastest-selling game of 2006, and it's a leading center of developers of "serious games"—those used for non-entertainment purposes, such as military simulation.

There's also a strong base for local employment. Several schools have instituted game-based programs, such as N.C. State's Digital Games Research Center, UNC-Chapel Hill's work in graphics and Duke's studies of artificial intelligence. Even Wake Tech offers an associate degree in Simulation and Game Development, whose first class graduates this month.

"If you take the sum of the parts, you have a great variety in the gaming companies, and you've got the three anchor universities involved in complementary aspects to it," says Wayne Watkins, a project manager with Wake County Economic Development. "And the two-year degree folks [from Wake Tech] can segue into complementary programs at the other universities, letting folks plug into this industry straight away."

Watkins has spent more than a year working with local game companies to better understand the industry, which he believes could become a major cluster of industry for the area. "[Tax incentives] would send a message that we are serious about solidifying and growing the cluster," Watkins says. "For this regional economy, we're not going to attract heavy manufacturing-based industry here—we're a knowledge-based economy. This industry absolutely fits that profile."

A tax incentives package for game companies could be achieved by classifiying games similar to film and television. Destineer Studios' Studio Director John Farnsworth and Creative Director Juan Benito both support this idea. "It should be a state-driven business development process where film and entertainment. like games, come together and their incentives are the same," Farnsworth says.

Benito says many elements of film production, ranging from costume design to audio production, overlap with game development. "Games are a very inclusive medium," Benito says. "They can absorb music and video and performing arts, as well as engineering and more technical backgrounds. It's a total work of art, in the sense that it draws on every possible medium."

Benito has a point. In May, Georgia signed into law the 2008 Entertainment Industry Investment Act, which includes game developers alongside movie, TV and music production companies eligible for greater tax incentives. For his part, N.C. Film Office Director Aaron Syrett is open to the idea of bringing the game industry into the office. He's working closely with Destineer to develop a better understanding of the game industry and how incentives might be developed.

"We're still, in the Film Office, trying to understand the video game industry," Syrett says. "In the video game world, it's almost all virtual. We're not sure if our incentives would help them at all. Film incentives incentivize production-related stuff, but what does a video game need? Bricks and mortar?

"It's mind-blowing, the numbers the video game industry is doing," Syrett adds. "There's definitely an overlap in producing and writing; you're finding these video games have more of a feature feel to them. You're just not going to have camera guys or grips and gaffers everywhere."

As government officials work to better understand the game industry, legislators might also face the challenge of getting statewide incentives approved for an industry primarily based in the Triangle. "To go into the legislature and say we want state incentives, but they're not going to affect 99 percent of the counties, is very difficult," Farnsworth says.

However, Benito believes Triangle-based companies could create offshoots throughout the state. "It's going to be a matter of time before some group in the Triangle is going to say, 'Let's live at the beach and make games,' and start something in Wilmington," Benito says.

And if the legislators can't come up with an incentives package this session, perhaps the next generation of legislators will. Benito notes the median age of a gamer these days is around 30. "It might be a generational thing," Benito says. "I'd like to know what games the legislators are playing, but they're probably not playing any, as they're very busy as politicians. But we're going to have gamers entering into the House over the next few years, and they'll have a better understanding."

All it could take to help the Triangle game industry explode is one lawmaker who goes home at night to play a couple rounds of Rock Band.

For more information on game companies in the Triangle, visit the International Game Developers Association's Triangle Chapter online at www.igda.org/nctriangle.

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