In recent decades, video games have become one of the major engines of growth in the creative industries and one of the most important and dynamic segments of the media and entertainment sector. In 2009, video gaming’s global revenue was US$ 52 billion; now estimates anticipate a rise from US$227 billion in 2023 to US$327 billion in 2028.1
The sector, in spite of some turbulence, such as the industry crashes of 1976 and 1983, is a success story.2 It has managed to innovate constantly not only in terms of content (games) and technology (devices and interfaces), but also to usher in new forms of distribution and new business models, such as free-to-play. The industry has been widening its audience to include older and more female users as well as improving the gaming experience. Worldwide, there were over three billion players (roughly four out of ten people) at the end of 2022.3
The pioneer period
Between 1972 and 1985 the industry consisted principally of arcade games and bundled TV consoles and was dominated by American companies. In the following period, 1985 to 1994, home and portable consoles came to prominence, led by Japanese companies.4 During these two phases the video games industry grew without any support from policymakers beyond fiscal policies designed to boost innovation (although public research within US university labs, often working on artificial intelligence, led to spin-offs for arcade games companies).5
Apart from early initiatives, such as the support of multimedia publishing established in France in 1989 (and later in Quebec), it was not until the early 2000s that measures of support began to be adopted – hitherto policymakers had been more concerned about topics such as video games’ violence and (especially in China and South Korea) the toxic impact of video games on the young.
Since then , the sector has been progressively acknowledged as an economic and cultural asset. Policymakers began to intervene in numerous countries. This article concentrates on two case studies: supporting video games as part of a developmentalist model in Canada and South Korea, and renewed forms of support for cultural creation in Europe as illustrated by the French case.
Canada (Quebec) and South Korea: industrial policies to grow a new sector
In these two countries the economic dimension prevailed as the policies were part of a set of measures adopted to deal with economic difficulties.
Quebec: a tax credit aiming at increasing employment
As of 1996, Quebec was facing unemployment issues especially among young people, where it ran at 20 per cent. The tax credit for the production of multimedia titles (TCMT) was introduced in 1996 and designed to attract foreign subsidiaries and aid the growth of local firms and local employment. Quebec was an attractive location for companies because of labour costs (the main cost of the production of a multimedia title) that were 25 per cent lower than in Europe or United States, and among the lowest in North America
The policy aimed to facilitate the development of a digital culture, boosting the existing ecosystem which had benefited from the policies of the National Film Board of Canada and from pioneers of digital animation such as Softimage. Federal policies already enabled the creation of domestic animation cinema and the foundation of the documentary film school of Canada. The emphasis on employment also led to the creation of the school for videogames with the École des Arts Numériques, de l’Animation et du Design in 1997.
The tax credit was strongly linked to the creation of jobs. This measure signalled a shift from a strategy aimed at stimulating creativity and local enterprise to one of boosting foreign direct investment and it materialised with the arrival of the French firm Ubisoft in the Montreal region.6 It also meant the end of the involvement of an agency of the Ministry of Culture (SODEC)7 in the programme.
In 1997, Ubisoft opened a subsidiary in Quebec, encouraged by a subsidy of 25,000 Canadian dollars (CAD)per employee (c US$ 17,800) for five years, creating 500 (subsequently 1,000) jobs.8 Ubisoft Montreal became the French company’s most important studio and its arrival is generally considered to have been pivotal to the success of the video games sector in Montreal, particularly because of the broader benefits generated.9 The company trains its workforce on its own campus which is focused on computer science and graphics disciplines. It was intended to benefit the local multimedia industry as a whole, with Ubisoft recruiting only a portion of the students.
In 2005, the tax credit was reduced from 50 to 37.5 per cent of eligible salaries (up to CAD 37,500), but Quebec granted direct subsidies for job creation, first to Ubisoft to encourage the expansion of its Montreal studio (CAD 19 million to create 1,000 jobs over the period 2005 to 2013), then to other companies, including Warner Brothers, THQ and Square Enix.10
Since the implementation of this tax credit the video games industry in Quebec has grown significantly, particularly in terms of employment. There were 1,200 jobs in this industry in 2002. Now 200 companies employ nearly 15,000 people, a third of whom are employed by Ubisoft. The industry currently contributes CAD 1.3 billion to Quebec’s gross domestic product.11
The massive deployment of broadband networks, through the national broadband development plan at the end of the ‘90s, placed Korea in the front rank of technology
In 2024, the Quebec government, through the TCMT, planned to grant companies in the video games industry an estimated 295 million euros of tax reductions (increased from only 143 million euros in 2017).12 This tax benefit represents 5 per cent of the cost of all measures intended for businesses and is the largest sectoral credit granted by the Quebec government. The TCMT is relatively generous compared to the credits offered by other Canadian provinces or other countries such as France, Germany and the United Kingdom in particular. Thanks to these policies, Quebec retains 42 per cent of Canadian jobs in this sector.13 Other provinces have also adopted tax breaks specifically targeting the interactive media industry.
South Korea: ensuring growth by exporting technology
Asia experienced a major economic crisis at the end of the 1990s coupled, in the case of South Korea, with a financial crisis in 1997. The Korean government implemented large-scale public policies which mobilized the large Korean groups (‘Chaebols’ such as Samsung) and which were part of a development model in South East Asia oriented towards the export of cutting-edge technologies.14 Information and communication technologies became one of the main drivers of the country’s growth, driven above all by the equipment sector. This intervention enabled a notable reduction of the cost of PCs. In addition, the massive deployment of broadband networks, through the national broadband development plan15 at the end of the ‘90s, placed Korea in the front rank of technology.
A network of cybercafés was created with the support of the cultural industry and aided by low-rate loans. Online games like StarCraft had become a social phenomenon.16 The first legal framework, the Recorded Music, Video and Games Law was adopted in 1999. It created the Korea Game Industry Agency (KGIA) responsible for monitoring, a loan system and incubators for gaming start-ups. A games academy was opened for training and Korea adopted a legislative framework for the promotion of the creative industries which included games.17
The Korean government extended to the video games sector the benefits of an alternative to civilian military service, which, from 2000, allowed the sector to benefit from a qualified workforce. In 2006, the Game Industry Promotion Act of 2006 was adopted. Agencies such as the Korea Creative Content Agency (KOCCA) and the Game Industry Total Information Service System were established to support developments. In 2009, all agencies were grouped together within KOCCA, attached to the Ministry of Culture, Sports and Tourism.
In 2008, the public authorities announced support amounting to 220 million euros for the period 2008 to 2012.18 At the end of 2023, the Ministry of Culture, Sports and Tourism announced it would spend around 45 million euros from 2024, with 16.2 million euros allocated to finance gaming.19 20
The 2006 Game Industry Promotion Act also introduced a means of regulating the sector, including the creation of a games rating board to authorise games, which also serves to regulate the entry of foreign games, and a certification system for games planners, computer graphics designers and programmers.
Other measures were added such as the ban preventing those under 16 from playing online games between 12am and 6am.
Korea was an early adopter of e-sports (electronic sports). Created in 2000, the Korean e-Sports Association (KeSpA) is attached to the Ministry of Culture, Sports and Tourism. It manages more than 25 of the main e-sports tournaments, organises events, and broadcasts and defines working conditions. A first plan was launched in 2004 to support development, followed in 2010 by a five-year plan aimed at developing e-sports into a national sport. In 2012, the Act on Promotion of E-sports was adopted, which allowed the ministry to allocate resources nationally and internationally.
The government has invested in the construction of specific arenas, such as the Busan e-sports arena built outside greater Seoul. This stadium was co-financed by the Korean Ministry of Culture, Sports and Tourism and the city of Busan. Korea, which was the originator of the launch of this activity, considers itself the world capital of e-sports.21
These policies highlight the connection between the promotion of e-sports, the development of the gaming industry and the need for a cutting edge communications infrastructure to achieve the policy goals.
France and the European Union: continuity
Five countries (Germany, France, Italy, Spain and the United Kingdom) accounted for 75 per cent of the European video games market as of 2022.22 Public intervention varies widely within Europe. Germany, France and the Nordic countries are providing the most financial support. Italy and Spain introduced a tax credit in 2021 and 2022 respectively. The United Kingdom, although an important producing country, has been inconsistent.
French cultural policies are all-encompassing. National, regional and local governments allocate meaningful funds to various segments of the cultural and creative industries, besides administrating legal and regulatory aspects. A large array of public bodies is in charge of managing these various fields and of liaising with the main stakeholders.
As of 1989, a fund for multimedia publishing was introduced to promote the creation of interactive titles. The first support for pre-production was set up in 2003, followed by the creation of a tax credit for video games in 2008 based on the model of the tax credit for research and meant to contribute to the diversity of French and European creation. Eligibility criteria were broadened in 2014 and, in 2017, the rate cap was raised from 20 to 30 per cent of eligible expenses with a maximum threshold of 6 million euros per project and an annual fund of around 40 million euros. Since its creation, over 150 games studios have benefited from the fund, contributing to over 370 projects.
Since 2009, the support fund for video games, managed by the Centre National du Cinéma et de l’Image Animée (CNC)25 Projects must spend at least 50 per cent of their production costs in the region. Cities can also intervene as has, for example, Montpellier.26
The CNC claims that the French tax credit is ‘one of the most competitive video games support systems in the world’, turning France into ‘a particularly attractive country for the development of this art and this industry’.27 Assessment reports are positive. A 2021 PwC report, commissioned by the French government together with the video games trade associations, deemed the growth of the sector over the last decade to be correlated with the creation and implementation of these support mechanisms.28 A 2023 EY report for the CNC was positive as well, assessing that the policy had had an impact on employment.29However, the report stresses that, although it does increase the competitivity of beneficiaries, their number remains limited. Recently, as of 2019, France launched its own e-sports strategy for the years 2020-2025 with the explicit goal of promoting France as the European leader in the field of e-sports.30
Continuity of public policies
It took three decades for the entertainment video industry to be recognised as a major industry. Over this time global competition intensified and the barycentre of the industry shifted from west to east. The public authorities of many countries started developing specific support policies. Often these policies depended on the interventionist (or non-interventionist) traditions of the countries involved, as well as on the initial situation in each case. Even if the interventions are ultimately about supporting the industry, the hierarchy of goals differs.
In the case of France, the emphasis is placed on supporting creation, an emphasis also found at the European level in the interventions of the European Commission. The heritage dimension is also important. For South Korea, this is clearly an industrial policy intended to integrate an emerging sector into the portfolio of new technologies developed by the country through large-scale exports. The bet was just as risky in the case of Quebec, since it was a question of building an industry from (almost) nothing. It appears that highlighting economic factors leads to higher levels of financial support, as illustrated above all by the case of Quebec.
