Quick quiz: What entertainment industry generates about $185 billion worldwide per year; creates jobs that attract people with creative skills, technical expertise, or both; is generally loved by its customers; and already has a small but vigorous toehold in Wisconsin?
If you answered film, television, or music, you’re at the right theater but in the wrong seat.
The correct answer is video gaming, which by most global revenue estimates is bigger than all three of those sectors combined. Jobs needed to produce video games can be done by people in studios or by developers working at home; the jobs usually pay well; and Wisconsin already has some established studios and about 1,000 developers with a good chance to attract more.
That opportunity is reflected in a nascent proposal to create a video gaming tax credit in Wisconsin.
The state Legislature isn’t scheduled to return until after the fall elections, but the tax credit idea has been floated among some lawmakers as a strategy to attract and retain talent as well as create jobs in a booming sector.
If you have a dim memory of a similar proposal to create income and franchise tax credits for film and television production, that was also shopped in the Capitol this spring. While it’s not an “either-or” debate, there are strong reasons to believe video gaming incentives would quickly generate economic benefit for Wisconsin.
Wisconsin would be a “me-too” competitor with film and TV credits, as 38 states already have them. In contrast, Wisconsin would be an early mover with video gaming credits. New York and Michigan are considering such incentives, Louisiana has a limited credit, and New Mexico has a tech-based credit for companies established in certain parts of that state.
“If Wisconsin were to move quickly, it could stake out a preeminent position as the leading state to offer such an incentive,” said Tim Gerritsen, chief operations officer for the Lost Boys Interactive studio in Madison.
Film and television production credits don’t often create jobs in their wake. Wisconsin once had such a credit and it was used to attract production of movies such as Public Enemies, which premiered in 2009. But once Johnny Depp and crew finished shooting, they left town with few or any permanent jobs to show for it. Nearly half of all film and TV jobs are clustered in Los Angeles, while video gaming jobs exist wherever coders can access the right servers. Video gaming was a well-dispersed industry even before the pandemic changed work patterns.
An example of how video gaming credits can work lies just across the border in Canada, where British Columbia, Nova Scotia, and Quebec have offered employment tax credits ranging from 17% to roughly 40% for years. The result has been growth in offices for major developers such as Ubisoft, Square-Enix, and Electronic Arts and tens of thousands of full-time employees nationwide.
Video games are a global phenomenon, with an estimated 3.3 billion active gamers and 200 million in the United States alone. That demand helps to explain why Wisconsin has a strong start with companies such as Middleton-based Raven Software, one of the studios that developed the “Call of Duty” franchise. About 300 million copies have been sold.
“By structuring the tax credit correctly, Wisconsin can also collaborate with the Universities of Wisconsin and other educational institutions to train future game developers,” said Brian Raffel, head of Raven’s 340-person studio. “This partnership would create a pipeline of skilled workers who are educated within the state and are more likely to stay and work locally.”
It could also lure some Wisconsin natives back. “I can name a handful of companies that would immediately look to build large, 50 to 100 or more person studios in Wisconsin if this incentive goes through,” said Ben Kvalo, who worked with major studios elsewhere before returning to start Midwest Games in Green Bay.
With other studios such as Krafton, Bethesda-Zenimax, Respawn Entertainment, and Filament Games also having stakes in the ground, Wisconsin has a video gaming base that could grow into a secondary hub. Ample technical and artistic talent is here or willing to return; a carefully constructed tax credit could light up the screen.
