Linux Gaming News

EA expansion cements Austin as a top city for video game makers

Newest deal will add 300 jobs in Northwest Austin
By Sara Behunek

In an effort that reached to the highest branches of state government, Austin scored its second deal with Electronic Arts, one of the largest video game publishers in the world.

At a July 18 press conference, Gov. Rick Perry and EA Games President Frank Gibeau announced that the Redwood, Calif.–based company would expand its Bioware Studio at The Domain from 450 employees to 750 and move a portion of its popular EA Sports franchise, creator of the “Madden NFL” video game series to the former Freescale Semiconductor offices at Parmer Lane and Anderson Mill Road.

“We’re three out of four,” said Tony Schum, economic development director at the Austin Chamber of Commerce. EA has looked for expansion opportunities four times in the past seven years, has chosen Austin as its location three times. In 2008, the company expanded by 100 positions, and the following year added another 180 jobs.

Austin plays the game

Texas ranks second behind California in the number of video game industry employees in the U.S., according to the Entertainment Software Association, and to that, Austin, particularly Northwest Austin, is a major contributor.

Irvine, Calif.–based Blizzard Entertainment, maker of massively multiplayer computer game “World of Warcraft,” has 1,200 to 1,500 client and technical service employees at its Northwest Austin office at any given time. Junction Point, owned by Disney Interactive Studios; Vigil Games, a THQ Inc. development studio; and Nintendo’s Retro Studios are located nearby. In fact, all but one major global publisher in Austin, Sony Online Entertainment’s Zynga Austin, are in the city’s Northwest tech corridor.

However, it is the independent developers—small studios that range in size from five to 50 employees who typically work on digitally distributed games—that dominate Austin’s video game industry, said Dan Magaha, studio director at Seamless Entertainment, an independent developer located at Spicewood Springs Road and MoPac.

In all, the impact the video game industry has on Austin’s economy is “profound,” and the recent announcement will make it even bigger, Schum said.

“Salaries, for one, are nearly double the average salary in Travis County,” he said.

According to the Austin Chamber, the average county wage is about $51,000 annually. Most game development jobs pay between $80,000 and $90,000.

Also notable, Schum said, are the ancillary jobs that will be created.

“You’ll have companies like little sound engineering companies come in and make sounds for video games or musicians that make tracks for video games or payment companies,” Schum said. “Everybody that is related to the industry benefits when EA adds jobs here because there is so much that EA outsources, such as art, payment processing and IT.”

Texas as a competitor

Gibeau said that the choice to expand in Austin came down to the city’s talented and tech-savvy workforce and the state’s business-friendly environment.

The company would receive a 5 percent rebate on development expenditures per title under the Texas Moving Image Incentive Program, championed by Perry.

The incentive program, created in 2005 and put into action in 2007, has awarded nearly $11 million in rebates to video game development companies as of April, according the Bureau of Business Research at The University of Texas. So far, that investment has resulted in the creation of about 2,400 jobs.

That the incentive even exists is a boon to video game developers, but experts said that Texas’ incentives, compared with some other states and Canadian provinces, are relatively low.

Florida, for instance, offers a 20 percent tax credit and an additional 5 percent if the game is family friendly. Ontario has a 40 percent tax credit for qualifying labor expenditures and 50 percent of other expenditures.

“It’s a much more fair and stable business environment [in Texas], with much lower cost of doing business and, therefore, we don’t need those big incentives,” Schum said.

And unlike most states, Texas does not charge an income tax, which “changes the equation a bit,” Bioware Vice President Richard Vogel said.

Nonetheless, the video game industry is wrangling for more incentives, Vogel said—and it knows the governor is on its side. In 2009, Perry signed into law a bill that increased the rebate for video game developers that chose to locate in an economically underutilized areas to 6.25 percent and made it easier for companies to access the $80 million moving image fund.

“I think it’s unique to have a governor and legislature that are very sharp on the issues that drive our businesses and take [them] very seriously. The mix of enlightened government support combined with the local talent and the university system … makes Austin really attractive,” Gibeau said.