Relates to enacting the New York state digital game development and incentive act

Summary of provisions

Section 1, Legislative intent.

§ 2 New section 433 of the economic development law to allow the commis- sioner to issue a certificate of eligibility for an eligible production by an anchor tenant in a game cluster. The credit (detailed later) is for 15% of eligible costs.

§ 3 New 16-w in the urban development corporation act, the NYS digital game development and incentive act. Key provisions: Raise NYS profile

* NYS digital game development advisory board - 12 member board of exec- utives of NYS companies, academics from game design programs, and entre- preneurs with at least five years experience in the industry, appointed by Governor & Legislature.

* NYS digital game summit, regional events, & representation at national events. The summit will be a celebration of New York's industry spon- sored by one or more private groups, and regional support is to include support of regional and local events. The purpose is to create an ecosystem of related gatherings, meetings, and competitions. Represen- tation at events will entail ESDC organizing and/or participating in representation of New York digital game companies, entrepreneurs, academics, and others at major game events and venues.

* NYS digital game development competition, a three stage judged compe- tition for prizes over a 24-month period. Judges are from industry, academia, and economic development. Competitors must be residents of the state, new and emerging talent, and early seed stage startup entrepre- neurs. The competition is as follows:

-First competition - 10 winners from each NYS 10 economic development regions. Prize is $10,000 Requires conceptualization, design document, and at least a digital prototype. Winners use the prizes to link with incubators and to develop business attributes and product completion necessary for the next phase of the competition.

- Second competition - 10 winners from the winners of the first competi- tion, scheduled at different venues around the state. Prize is matching funds of up to $100,000. Entrants should be in pre-production, with a vertical slice, and have raised funds for match. Prizes will include access to incubator space and mentoring

- Final competition - two winners from the ten, selected at the NYS digital game summit. Prize is $500,000. Entrants must have a completed game, and update the information required in the second competition.

-Competition 2 and 3 winners must agree to remain resident in the state for game development purposes for three years, and to return the award to the state should they leave or sell the game or the game company prior to that. Winners must also agree to contribute one percent of profits of the game to the New York state digital game development fund for three years after publication of the game, or until the amount contributed matches the amount of the award received, whichever time period is less.

Development using existing & new incentives

* Create 11 game clusters as all or part of STARTUP-NY zones, one in each economic development zone, and two in NYC. Sponsors are limited to colleges and universities that offer a BA or or master's degree in game design or a specialization in game programming as part of its computer science bachelor's or master's program. Eligible companies include digital game development and software companies and publishers and support companies, and one or more anchor tenants that are subsidiaries of or new ventures owned wholly or in part by companies resident in New York state. Clusters can be located in an eligible space in an urban core area or economical challenged area.

* Entrepreneurial training - Clusters must include an affiliation with a NYS incubator or innovation hot spot, to provide services to eligible companies.

* High Speed Internet development - grants of up to $100,000, expiring in two years, to STARTUP zones and incubators

* Digital game development tax credit - available to anchors in game clusters Credit is 15% of eligible expenditures, over a four year peri- od, for an eligible project. Credit amount can increase to 19% if anchor spends more than 25% on services, goods, and use of personnel from with- in the cluster. Credit is capped at $5 million for an individual through 2017, and raises to $7 million thereafter. It takes effect January 1, 2015.

Existing law

New bill.

JUSTIFICATION:S The digital game industry is $21 billion domestically (2012), greater than the music industry ($16.5 billion), the movie industry ($10.44 billion) and the DVD industry ($18 billion), growing at 10% per year, with an average salary for direct employees of $90,000.

New York ranks 4th among the top states, with 71 developers and publish- ers and 5,474 direct and indirect jobs. Average compensation is $96,602. Top states are California, Washington, Texas, with Massachusetts coming up behind.

The changes in this legislation will dramatically increase New York's share of the industry they are based on recommendations and discussions conducted with the industry in all-day roundtables and other discussions.

Fiscal implications

To be determined, but minimal in the current fiscal year, and then limited thereafter to appropriations and tax credit caps.

Effective date

January 1, 2016