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'I would've made a different choice': Axing tax credit concerns video game industry in Alberta

Last Updated Oct 29, 2019 at 11:00 am PDT

Summary

The Interactive Digital Media Tax Credit offered a 25% incentive to companies like video game developers

An investment from Calgary Economic Development through the Opportunity Calgary Investment Fund has been scaled back

CALGARY (660 NEWS) — One of the many cuts included in the 2019 Alberta budget has repercussions for a burgeoning industry in the province.

The Interactive Digital Media Tax Credit offered a 25 per cent incentive to companies, like video game developers, to come to Alberta and set up shop.

But this credit is one of the so-called “boutique tax credits” being shown the door in the United Conservative Party’s first budget.

The credit has already attracted some companies to move here, and now they are starting to feel regret.

“I am absolutely 100 per cent questioning our decision,” said Keith Warner, owner of New World Interactive and director of their recently opened Calgary office named New World North. “I would’ve made a different choice.”

He said even though the tax credit was not as much compared to what is offered in other provinces like Ontario and Quebec, it was just enough of a leg up to encourage them to take a chance on Calgary.

But now, he’s not so sure about that choice.

“This was going to help me do for this region and this city what they claimed they wanted to do,” said Warner. “I feel beat up on this one.”

READ MORE: Video game developer opening office in Calgary

Making matters worse, Warner was already having trouble attracting talent to his operation, which needs several dozen people to help manage existing games and maybe even develop a brand new game in-house.

He blames it on a resoundingly negative bias about the city.

“‘It’s desolate; there’s nothing happening there; it’s cold there; it’s in the middle of nowhere’,” Warner has heard it all. “We even had one person say, ‘I grew up there, I left 10 years ago, I’m not going back. There’s nothing going on there.'”

Giving an example of the struggle, Warner said in a recent push for talent they sent proposals to 141 different candidates to fill the role of Chief Product Officer.

Only two were willing to talk to them.

Also, an investment from Calgary Economic Development which would have provided funds to new companies through the Opportunity Calgary Investment Fund is also being cut back so now New World cannot get any cash from them either, even though it was CED that initially pushed hard for them to come into Calgary.

“I got a one-two punch,” he described.

Warner said he will cope as best as he possibly can, but without the credit, he is going to be forced to dig into his own pockets to find a way to essentially purchase talent and convince them to move to Calgary.

With Calgary city council also looking at how to handle the new financial plan for the province, this topic is causing some concern in city hall as well.

“It’s a $150 billion industry — it’s bigger than Hollywood,” said Mayor Naheed Nenshi. “We had a real opportunity and we started to attract some video game developers and companies here. Good, high-paying jobs in a growth industry. We’ve heard from one [company] that they’re not even considering Alberta anymore.”

Nenshi added this isn’t just about video games, as the credit could also attract many other emerging technologies, such as artificial intelligence or virtual reality.

Plus, the UCP’s plan to reduce the corporate income tax rate doesn’t help the situation because many of these companies are choosing to keep their head offices in different cities.

“The real question is what can you offer me in order to make investments in this community. It’s all about the investment tax credits,” said Nenshi.

Trent Oster is the CEO of Edmonton-based Beamdog and a co-founder of the world-renowned developer Bioware.

After investing a lot of his own money in the province, Oster feels like he has been left in the dust.

“Everybody just feels demoralized. It’s like we’ve just been cast out into the cold,” Oster explained. “You look at where the money has gone and you go, ‘okay, obviously nobody is interested in us being a part of Alberta’. Nobody is interested in new industry in Alberta, we’re only interested in old industry.”

“I liken it to being pioneers trying to get across the prairie, and they’re taking the slings and arrows of everyone who doesn’t want them there,” added Warner.

The Alberta government, in touting the corporate tax cut, has said this will recreate an “advantage” in the province to hopefully attract fresh investment, but Oster added that this digital credit still paled in comparison to other provinces but at least it was better than nothing.

“The tax credit in Manitoba is 40 per cent. The tax credit in Quebec is 35 per cent. In Nova Scotia, it can get as high as 60 per cent,” he said. “Personally, I’ve invested heavily in Alberta, and it just frustrates the heck out of me that Alberta won’t invest back.”

In addition, it can put a real damper on young Albertans hoping to stay close to home while chasing their dreams.

“If you’re in computer science, making video games is kind of like the dream job,” said Oster. “You can’t find more diverse jobs. Video games is just the tip of the spear.”

Warner is trying to stay positive as he continues to struggle in attracting talent, but it still sounded fairly bleak.

“How are you going to incentivize and get people here, when every other province offers these benefits but Alberta does not?” he questioned. “I’m shooting for 40, 50, 60 people. All in one location. And in order to get there, I needed some help.

Will I get there? I don’t know, I don’t have a crystal ball. I hope, I plan on it. I’m going to keep going, because when the going gets tough…you know the rest of the saying. I’m going to keep putting one foot in front of the other.”