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High Tech Jobs Can Help Lead Ireland’s Recovery - News - Young Fine Gael

High Tech Jobs Can Help Lead Ireland’s Recovery

FG Jobs Plan to support new R&D spend, roll-out Next Generation Broadband and focus on the high value online games industry.

Fine Gael have made specific provisions within its 5 Point Plan to Get Ireland Working to support the high tech jobs sector in Ireland so that it can play a leading role in Ireland's economic recovery, according to Fine Gael Leader, Enda Kenny and Dublin Central Candidate Paschal Donohoe.

Enda Kenny was speaking today (Monday) as Fine Gael outlined plans to provide extra tax relief for R&D spending, accelerate capital allowances on software purchases against other income and corporation tax profits from eight years to three years and ensuring that all Government department and agency payments are made electronically.

Paschal Donohoe said that the potential in the gaming industry is huge and that, under Fine Gael plans, Ireland is well positioned to capitalise on this market (see doument at end).

Speaking at 'Popcap Games' on Pearse St, Enda Kenny also explained how Fine Gael, if elected to Government, would implement specific policies to support the high growth, high value gaming industry by, for example, providing €10 million from the Innovation Fund Ireland to support new start digital gaming companies.

"The high tech sector of the Irish economy can help lead us out of recession. It can create new jobs in high value added areas and offer hope for some of our best and brightest young people who otherwise might end up emigrating.

"Key measures in Fine Gael's Jobs plan to support the high tech sector include;

1. Companies with R&D expenditures of under €100,000 will be entitled to full tax credit on those entire expenditures as opposed to just the increment over the base year, with marginal relief for companies with expenditure just over €100,000. We will also allow companies to offset the R&D credit against employers PRSI as an alternative to corporation tax.

2. We will accelerate capital allowances on software purchases against income tax and corporation profits tax from eight to three years.

3. We will ensure that all payments to Government departments and agencies can be made electronically and we will enable all licenses and permit applications for business to be carried out online.

4. In the healthcare sector, we will invest in information technology so that hospitals and primary care centres can share information about blood test and x-ray and will allow for all referrals to be made online.

5. More and more public services to individuals will go digital such as applications for passport renewal, driving tests etc. There will be financial incentives for using the online mechanism and in time, services will be available online only.

"Crucially, Fine Gael will invest €2 billion in delivering next generation broadband as part of its NewERA plan to modernise the Irish economy. A Fine Gael Government will provide Next Generation Access (high-speed broadband) to every home and business in the State. This will be achieved by delivering fibre to the home or kerb for 90% of homes and businesses in Ireland with the remaining 10% provided with high-speed mobile or wireless broadband.

"If we do not invest today in the industries and sectors of our economy that can provide jobs and growth for the next 5, 10 or 20 years we are failing in our duty. Failing to plan and failing to be ready for the international challenges that lie ahead. We are competing on a global scale for investment and jobs and our ability to compete is determined by the actions we take right now. If elected to Government Fine Gael will start taking the right actions, for the right sectors, straight away."

Paschal Donohoe added:

"The potential for Ireland is huge. The combat shooter game 'Call of Duty: Modern Warfare 2' grossed almost $500m in its first five days of sale. This dwarfed the opening weeks of blockbuster movies such as The Dark Knight ($203.8m) and Harry Potter and the Half Blood Prince ($394m). I believe, under Fine Gael plans, Ireland is well placed to capitalise on this market, bringing high tech jobs and investment into the country."

Digital Gaming in Ireland: Fine Gael Policy Recommendations

Executive Summary

The digital gaming industry is a huge global business, with significant potential growth. With many indigenous and some international companies within the industry already operating out of Ireland, more can be done to accelerate our progress in this sector.

Ireland has enjoyed commercial success by supporting creative industries such as film making. An 'innovation' economy has been identified as a key component of sustainable economic progress. The digital games industry is a prime example of where creation and commercialisation meet.

Fine Gael will target this sector for enhanced development. We believe that opportunities exist to support Irish entrepreneurs who want to develop and launch digital games. We also believe that opportunities exist to attract into Ireland companies that will design and publish digital games, in addition to the current roles of some existing companies. The location of Facebook and Google in Ireland offers a huge opportunity to drive gaming industries that will utilise these platforms.

We recommend the following policies to support this sector:

1. That €10 million euro of the Innovation Fund Ireland be reserved for investment in new digital gaming ventures.

2. A campus presence be established for this Fund to invest in start up digital gaming companies.

3. Optimise the structure of R&D tax credits currently on offer to include the costs associated with the development and design of games.

4. Trial a sectoral specific plan to attract global game designing talent to Ireland.

5. Develop the 'Digital Docklands' concept and promote Ireland internationally as a digital gaming hub.

6. Introduce a Digital Media Component to Transition Year Programmes.

7. Ensure Ireland is marketed as a location of digital gaming investment.

The Global Games Industry

The combat shooter game 'Call of Duty: Modern Warfare 2' grossed almost $500m in its first five days of sale. This dwarfed the opening weeks of blockbuster movies such as The Dark Knight ($203.8m) and Harry Potter and the Half Blood Prince ($394m). Sales of the game now amount to over $1bn, a result replicated by just four movies - Titanic, Lord of the Rings: The Return of the King, Pirates of the Caribbean: Dead Man's Chest and Avatar.

The success of 'Call of Duty: Modern Warfare 2' is impressive, but not unprecedented. Grand Theft Auto IV experienced first day sales amounting to $310m, while the hugely popular 'World of Warcraft' games generates $1bn per year from the online subscriptions of more than 12 million unique users.

Analysts Pricewaterhouse Coopers (PwC) predicts this worldwide gaming market will be worth $48.9 billion by 2011, with a compound annual growth rate of 9.1% over five years. In 2008, software sales (including the sale of subscriptions to online games) surpassed $40 billion.

Asia Pacific is predicted to remain as the region with the highest overall spend on gaming through 2011, though it's annual growth will be exceeded by the Europe, Middle East and Africa region (EMEA), which is pegged by PwC for a 10.2% compound annual gain, making it the second highest spending global region.

New consoles, such as the Nintendo Wii, have proved hugely popular, broadening the appeal of games by promoting them as an activity for the whole family.Tied to this is the rise of social network games - which are played through sites such as Facebook - by over 200m users worldwide. These games are designed to assimilate into people's lives, so that many users would not even think of themselves as 'gamers'. In Britain, 73% of people play games regularly, including 40% of the over-50 age group.

Growth Areas in Digital Gaming:

The area of 'casual' games is rapidly becoming a huge growth area. With over 45 million iPhones sold globally since their launch, smart phones are becoming increasingly ubiquitous, allowing users to download games and other applications, or 'apps', to play while they are on the move. In the 12 month period between July 2008 and July 2009, over 1.5 billion apps were downloaded from the iTunes store. Meanwhile, social networking sites such as Facebook provide another forum for casual game play. These games are generally free to play, making their revenue from either advertising or the sale of in-game 'virtual goods'.

Case Study: The United Kingdom

The United Kingdom has an established and successful gaming industry, largely centred on publishing games for the console market. The games development industry contributes over £1 billion a year to UK GDP when direct, indirect and induced impacts are considered. The direct contribution of the games industry was £386 million in 2008.

Within the UK, there are roughly 10,000 games developers employed. These developers are highly skilled, with 69% educated to at least degree level, compared with 20% of the UK working age population. These skills are reflected in the above-average earnings for those employed in the industry, whose earnings are more than one-fifth higher than the UK national average. It is estimated that every job in the UK games development industry supports another 1.8 jobs in the UK economy, suggesting in total the industry supported 28,000 jobs in 2008.

The Digital Games Industry in Ireland

In the last seven years, employment in the gaming industry in Ireland has grown by roughly 400%. In the last available industry study, more than 1,400 people were employed in games development and related industries and almost 43% of employees in these companies were aged between 26 and 35 years, with a further 30% between 18 and 25.

There are a number of successful indigenous Irish companies including Demonware, Jolt Online and Havok. Most of these focus on a single function, such as creating 'middleware' - software used in the development of games - or 'localising' games for the European market. Many of the indigenous Irish start ups have been bought by industry leaders such as Intel, allowing the entrepreneurs involved in their development to go on to launch new initiatives.

Many international companies now operate Irish bases. Blizzard employs 600 people in Cork while Big Fish, Pop Cap games, Gala and Goa, the online games unit of Orange mobile phones also work from Ireland. Crowdstar, one of the largest social gaming companies on Facebook, has recently launched an Irish operation. Ireland has a supply of skilled employees coming out of courses in digital gaming from Trinity College Dublin, Dublin Institute of Technology and Carlow Institute of Technology. In addition to these specialist courses, Ireland's traditional success in the creative industries of film and animation can be built upon, as the games industry also requires people with creative skills such as scriptwriters, animators and designers.

The presence of Facebook and Google in Ireland offers a huge opportunity to the Irish gaming industry, as many future gaming technologies will utilise these companies to develop casual gaming businesses.

Policy Recommendations and Rationale

Ireland has traditionally performed strongly in the creative industries such as film and animation, and it can be useful to look at digital gaming as a creative industry. However, care must be taken that the funding structures in place are appropriate to the specific needs of the industry.

1. Target funding from the Innovation Fund Ireland seed capital scheme to Irish Digital Gaming start ups.

The Innovation Task Force report recommends the implementation of a new State-funded seed capital scheme, to fill the current gap in private seed capital and ensure the adequate provision of capital for new and early-stage businesses. This will be implemented through the Innovation Fund Ireland scheme.

Fine Gael believes that the digital gaming sector could be of strategic commercial value to Ireland. We would therefore prioritise investment of €10 million euro in this sector from this fund.

This scheme would see milestone-driven funding of between €50,000 and €100,000 awarded to approved projects. This should significantly increase the number of projects able to secure funding by relaxing the current requirements of co-investment from other sources.

This recommendation would allow funding for between 10 and 15 local gaming initiatives. Fine Gael would review the success of this scheme after one year of implementation.

2. Channel this funding through Game Development Education Programmes.

This funding would be open to all domestic entrepreneurs and companies. However, priority would be given to driving awareness of this scheme at third level institutions and ensuring campus access is available to all potential applicants.

While this scheme would be administered through Enterprise Ireland, integration with education programmes and university departments would be emphasised. All efforts will be made to ensure that students of game design based in Ireland are aware of this scheme and have the opportunity to access it.

3. Amend the R&D tax credit legislation to make it more 'software' friendly.

Many state agencies, such as Enterprise Ireland, currently employ projects-based grants models which fail to address the needs of the many companies who provide ongoing services to their users. Even where grants exist, there is insufficient awareness of the support available. Feedback from some international gaming companies based in Ireland, indicated they were unaware they qualified for R&D funding in their early years.

For the majority of digital gaming companies, the creation and launch of the game is only the first step. Support must be provided to users on an ongoing basis, so that successful games evolve with new levels and challenges to keep users playing.

There is a need to redefine what can be considered R&D to include research and innovation by gaming companies. This would also raise the profile of the available R&D credits and promote Ireland as a progressive economy to invest in.

We will therefore amend the R&D Tax Credit Scheme to ensure that commercial innovation in the form of digital game design is given tax credit status. Commercial innovation would include expenditure on IP development, software development, creative design and other expenditure that develops truly original gaming concepts and products for business success.

4. Trial a sectoral specific plan to attract global game designing talent to Ireland.

The talent that designs and produces globally successful digital games is limited and highly mobile. Fine Gael in government would trial a relocation incentive plan to attract this talent to Ireland. This plan would consist of a contribution to defray a portion of the costs to attract and retain strategically important skilled individuals to the Irish digital gaming industry.

Participation in this plan would be based on two criteria. First – that 'local' employment is triggered by the attraction of scheme participants to Ireland. Second – that these 'star' employees would play a clear and quantifiable role in training local employees.

5. Develop the 'Digital Dockland' to promote Ireland internationally as a digital gaming hub.

The Digital Hub provides an invaluable service to start up companies, enabling them to keep the costs of their overheads to a minimum. The facilities currently available, however, are more suited to start up companies than to established companies looking to expand into Europe.

Industry leaders such as Google, Facebook and Linkedin already have their European Headquarters in the Docklands area of Dublin. The availability of high quality office accommodation within the Docklands development presents a real opportunity to create the 'Digital Docklands': a space which would provide an attractive location for established digital games companies, with the provision of conference rooms and other facilities appropriate for their increased needs.

Ireland has already achieved great success in the attraction of Digital Gaming companies into Ireland. Fine Gael will develop a plan to emphasise national success at the attraction of companies such as Blizzard into Ireland. This will be marketed abroad to attract further investment.

6. Introduce a Digital Media Component to Transition Year Programmes.

A wider understanding of computer programming and project development would benefit the entire technology sector. A digital media component would sit well with the ethos of Transition Year, allowing students to engage in the practical applications of subjects such as maths and science. This would not only add real value to the Transition Year programme, but also provide insight to students about to select their Leaving Certificate subjects.

In tandem with the Transition Year programme, a prize for developing digital gaming could increase the real life applicability of the course and promote a deeper interest in and understanding of programming.

7. Ensure Ireland is marketed as a location for digital gaming investment.

A critical mass of digital gaming companies already exists in Ireland. We must ensure that this is marketed to investors and international gaming companies. This strategy is successfully implemented in relation to Facebook and Google – the same can be done in relation to digital gaming.

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