Sacramento Moves to Protect Video Game Industry

Yesterday, legislation to protect California’s video game industry passed out of the Assembly Revenue & Taxation Committee. The bill, AB 2574, was introduced by Assemblymember Richard Bloom (D-Santa Monica) to provide financial incentives for video game companies.

“The video game industry fosters innovation and entrepreneurship in California, employing tens of thousands of developers and tech entrepreneurs,” said Bloom. “California has long been a hub for the $32 billion industry, but as other states increasingly poach video game companies, our share of the market is diminishing. AB 2574 combats those trends and provides incentives for video game companies to remain in California.”

Global consumer revenue in the video game industry reached approximately $116 billion in 2017. In California, the software industry contributed approximately $32 billion to the state’s gross domestic product and $13.2 billion in wages. California is home to more than 900 video game companies and a workforce of 33,000.

Despite these numbers, California’s share of the industry shrank from 38% to 21% from 2009 to 2012. While that number increased to 27% between 2012 and 2015, California’s market share gap compared to the next four states combined decreased from 4% to 2% in that same time. As the industry continues to grow in other states, California’s dominance will undoubtedly be threatened.

While California still remains the hub for the video game industry, it does not provide tax incentives, grants, or rebates like those available in 21 other states and two Canadian provinces. To remain a leader in the industry and continue reaping the significant economic benefits that accompany that position, California needs to promote policies that foster a more competitive business climate.

AB 2574, which creates California Video Game Production Preservation Act, applies the existing sales and use tax exemption to the video game industry, allowing California to remain competitive in a continually expanding industry.

– Nardos Girma

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