Ante Vrdelja: Tax incentives are a fundamental prerequisite for maintaining the competitiveness of domestic game producers

Visitors to the Zagreb Fair these days are pushing between the booths filled with books at Interliber, as well as among the exhibitors of the fifth edition of Reboot InfoGamer, where hardware, developers, VR hardware, analog games, international eSports tournaments, and novelties from the world of computer games are presented. At this year’s Reboot InfoGamer, included among the most significant gaming fairs in Europe, Ante Vrdelja, producer of the computer game development studio Croteam, which has produced one of the most successful Croatian games – Serious Sam, is also present. We spoke with him about the computer game industry in Croatia.

Let us remind you that Croatia is ranked 54th on the global ICT competitiveness index this year as well. However, if we were to look only at computer game publishers, we would likely rise a few places on that list. It is hard to shake the impression that the computer game industry in Croatia is unjustly neglected and that there is insufficient awareness in relevant structures that it can be one of the key drivers of economic growth. Croatia is experiencing a kind of boom in game development – over the last five years, the number of companies engaged in this field has continuously increased, along with revenues and the number of employees. It is important to note that these companies are almost exclusively export-oriented. Despite this, there is no competent ministry to deal with the development of this sector.

What is the situation on the domestic front in this branch of the entertainment industry, which generates twice as much revenue as the film industry, Ante Vrdelja, secretary of the Croatian non-profit organization Croatian Game Developers Association (CGDA), told us in an interview.

Earlier this year, various media reported that the targeted revenue of the computer game industry in Croatia for this year is 100 million kuna. As the year approaches its end, were those predictions accurate? What is the actual revenue achieved so far this year?

– In the case of the mentioned amount, it is a forecast based on research conducted by the Economic Institute on a sample. According to the research, which covered fewer than ten domestic companies in 2013, total revenues amounted to 37 million kuna, and we consider the average annual growth rate of revenue over the last five years to be a much more important indicator at 55.5%. Considering that many more companies operate in the Croatian market, as well as the growth rate, the amount of 100 million kuna for 2016 is the closest to the “official” data we have, while the actual amount, which we believe greatly exceeds this figure, cannot be confirmed without conducting a systematic sector research. This activity is planned by CGDA for the next year.

Croatia has been present at major gaming fairs in recent years; how competitive are we actually?

– Participation in fairs and conferences is of exceptional importance for domestic video game authors, who export their products almost entirely. Business contacts made at fairs are often transferred to multiple projects. Participation in the global market also results in global competition, so highlighting products, strengthening media interest, acquiring new knowledge, recognizing market trends, as well as activities and plans of competitors is essential, and these are also briefly the main reasons for participating in conferences and fairs. I must emphasize that CGDA has been organizing foreign appearances in collaboration with the Croatian Chamber of Economy for the third year now, currently the only institution that has recognized and supported this sector. If interest from partners and the audience at fairs is any indication, Croatian game authors and their works are very competitive.

What prerequisites need to be established in Croatia for this rapidly growing industry to contribute more significantly to economic growth? What are the biggest challenges you face?

– A burning issue is the lack of appropriate educational programs and consequently the shortage of quality personnel. The problem has been recognized, and the private sector has proven to be more agile in addressing it, as several institutions have already started conducting or planning courses. In the meantime, Croatian game producers are currently importing labor to bridge the gap, but we are at a disadvantage compared to many European countries that have tax-relieved this industry. We see tax incentives as the fundamental prerequisite for the long-term maintenance of competitiveness among domestic game producers.

Have you taken any initiative directed towards the new government to resolve the issue of double taxation?

– The issue of double taxation is a matter of a bilateral agreement, and we are confident that the current government continues its efforts in realization. Since this is just one of the problems (which we share with the domestic ICT sector), we believe that we will have an equally capable partner in the new government in other forms of cooperation, as our colleagues do in many European countries. In Poland, for example, which has recognized game creation and actively promotes and supports it for years, this sector today contributes 1% to GDP.

As for the initiative, perhaps it is best to start right away: if you are a member of the government or the relevant ministry, you are a younger person, you know what computer games are, and perhaps you play them yourself sometimes, and you are reading this text in Lider – get in touch with us. We will get along great!