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The Economist: Games are not just Games!

Oct. 8, 2011 at 5:08 a.m.


By Ray Perryman

The Texas Film Commission (housed within the Governor's Office) indicates that film, television, commercial, video game, animation and televised sports industries accounted for more than half a billion dollars in spending in Texas in 2009. If you had to guess which type topped the list, would you say video gaming? Would you guess that it's now nearly half of the total?

Some media categories, such as studio feature film production, vary significantly from year to year depending on whether the Lone Star State serves as backdrop for a major project. Others have a notable presence, but aren't changing all that fast. The commercial and corporate production segment has been a large (and growing) industry cluster for many years, with spending of about $140.8 million in 2009.

The new kid on the block is video gaming, which has quickly risen to the forefront of media industries in the state. Not so long ago, spending for video game production was too small to even be tracked as its own category. By 2006, when the Film Commission began to track it, some $80.7 million was spent for production. By 2009, that total jumped to $234.4 million, more than 46 percent of the Texas total media industry spending for production that year of $505.8 million.

The Austin area is home to the largest cluster of gaming-related production, with about 87 businesses employing 2,556 persons and spending almost $174.8 million per year (as per the Texas Film Commission's 2009 data). Austin also topped the list for studio feature films, while Dallas/Fort Worth dominates spending for commercial and corporate productions.

Nationally, computer and video gaming software is a multi-billion dollar industry. It is growing significantly faster than the U.S. economy in general and is characterized by high-paying jobs. California remains the largest player in most segments of the market, but Texas has some advantages and is gaining ground.

Financial incentives are one way the state is attempting to lure new locations and expansions. Just last month, the Texas Film Commission announced it was increasing incentives for gaming to equal those for television and films. Such incentives are important tools in economic development. A recent report by the University of Texas' IC2 Institute linked 2,400 full-time jobs in the gaming business to incentives.

EA Games pointed to incentives as an important factor in a recent announcement that the firm was expanding its Austin operations, creating 150 full-time jobs and 150 contract positions. EA's presence in the city will include a sports division, one working on a multi-player online game based on the Star Wars films, various administrative offices, and more.

These incentives help leverage other Texas advantages such as a large talent pool, lower cost of living, presence of support industries and others. An estimated 4,000 Texans are already working in the industry, and although precise figures are hard to come by, the Entertainment Software Association estimates that average compensation topped $87,600 for industry jobs in the state.

Developers in Texas produce games for PCs, consoles, phones, and online play. Texas-based firms have produced groundbreaking and wildly popular games. There are even some in the industry using these skills for more serious purposes such as education, training, medical, and even military uses.

Without a doubt, this activity is providing a nice boost to the state economy, with thousands of well-paying jobs. The Lone Star State's position as a center for the gaming industry is an excellent example of the capacity to establish and sustain a presence in an emerging high-growth sector, one of the key elements in assuring long-term prosperity and opportunities.

Dr. M. Ray Perryman is President and Chief Executive Officer of The Perryman Group (www.perrymangroup.com). He also serves as Institute Distinguished Professor of Economic Theory and Method at the International Institute for Advanced Studies.

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