Media

Game on as Netflix plan proves Irish tax credit is smart move

Time for the Government to give digital gaming businesses an extra life or two

Netflix is expanding into video games to keep the attention of customers in the increasingly competitive world of streaming television. Photograph: Olivier Douliery/AFP

Sat Jul 24 2021 - 05:08

Choose your weapon, but ideally make it a tax break. For the Irish digital gaming sector to develop and thrive, it needs a tax credit similar to those available in competing markets. Without one, the State risks losing control of the game.

Minister for Finance Paschal Donohoe confirmed as much in his budget day speech last October when he said work would commence on the development of such a credit "with a view to supporting qualifying activity from January 2022 onwards". This would spur Irish employment in a globally surging business – one that often isn't recognised for the colossus it is.

His announcement that day came three years after the 2017 economic analysis of the Republic’s wider audiovisual industry by consultants Olsberg SPI and Nordicity found that the Irish games sector had been “inhibited” by lack of access to reliable funding and recommended the extension of the section 481 tax relief to the games sector.

That report also urged the creation of a “prototype fund” to support companies making prototype games to take to the market for further financing – research and development grants, in other words.

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The “potential synergies” Donohoe envisioned between the State’s established film and animation sector and the games sector are not hard to spot: the same companies are often entangled in both.

Enter Netflix

Netflix’s second-quarter earnings update this week couldn’t have been clearer in showing that the same giant platforms want to make money from both.

Netflix has already dabbled in interactivity. An episode of dystopia-themed series Black Mirror called Bandersnatch had a "choose your own adventure" format, while mobile games based on 1980s-set science fiction series Stranger Things were mooted back in 2019.

Now with its subscriber growth rate starting to slow and key video-on-demand markets such as the US and Canada looking a lot more mature than they did a decade ago, the richly-resourced Netflix has extended its ambitions to conquering a substantial share of all screen time, not just television, with its new push starting with mobile games.

Its announcement suggests that 2022 would indeed be a good time for the State to let a games tax credit begin.

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