Science in the Triangle

Gears of War 3, a highly anticipated title from Cary-based Epic Games, is set to hit stores in fall 2011.| Photo courtesy of Epic Games

If North Carolina’s newly enacted tax incentives for the video game industry are anything like those in Texas, they could give the area some much-needed job growth.

A new report from the Lone Star State attributes the addition of 1,700 jobs in the gaming industry over the last year-and-a-half in large part to tax incentives passed in 2007. North Carolina’s own tax incentive package went into effect this week with the start of the New Year.

Signed at the Cary headquarters of Epic Games in July, the law grants a 15 percent tax credit to companies on development costs greater than $50,000, capped at $7.5 million. Working with community college and universities in the state boosts the credit to 20 percent. In Texas, qualifying developers get back 5 to 6.25 percent of what they spend in the state for projects greater than $100,000.

The prospects for job growth in North Carolina’s gaming industry are good, according to N.C. State economics professor Mike Walden, author of North Carolina in the Connected Age. But he said incentives might not be the main reason.

In an e-mail interview Friday morning, Walden said the state’s vibrant tech sector, higher education community and the presence of a young, well-educated workforce make the Triangle attractive to developers.

“Even without incentives, I think the gaming industry will expand in the Triangle region of North Carolina,” Walden said in an e-mail.

Walden points out that tax credits can certainly “sweeten the deal” for gaming companies looking to relocate or expand, but he said it’s hard to assess whether the incentives are the deciding factor.

“Before the state offers incentives, they make a projection of whether the incentives will ultimately ‘pay for themselves’ by creating enough additional tax revenue from the new economic activity,” he said in an e-mail. “Of course, the question is always whether the firm would have located here even without the incentives. We never know.”

In fact, Walden said the ground is so fertile for the gaming industry here in the Triangle those incentives might not be necessary at all.

“Only my opinion, but if there’s a high chance the firms would locate here without the incentives, then ‘saving’ the incentives for firms more difficult to attract would be the better policy,” Walden said in an e-mail.

With unemployment in the Triangle now up to 7.9 percent in November, the state could certainly use almost 2,000 more jobs from the growing gaming industry.

Hopefully, not everything’s bigger in Texas.