California Leads Video Game Industry, But Cost Concerns Mount

SACRAMENTO (CBS13) — California's video game industry is under attack.

The Golden State is the leader when it comes to gaming companies and revenue, but other states are looking at ways to get a larger piece of the pie.

The video game industry generates roughly $32 billion a year for California's economy, according to a new report from the Milken Institute.

There are only a handful of video game creators in California East of Silicon Valley.

"This is where we do all of our development," said Eve Milan, with 5th Planet Games.

The Rocklin company is pumping out one game a year.

"It's a lot of moving parts. It's kind of like a giant machine made up of a bunch of bits and pieces that have to work together," explained Milan.

She and the dozen other employees are just a small part of a massive industry in California.

With nearly 1,000 businesses, billions of dollars are pumped into the state's economy from video game development.

According to a Milken Institute report, California accounts for 27 percent of the gaming industry. No other state comes close.

But the state's high cost of living and taxes are being used against California by other states trying to lure companies away.

"There is a lot of developers making games, and it's harder to get users," said Milan.

States like Georgia, New York, and Massachusetts are offering tax credits and grants to pull companies and talent from California.

"Video games are among some of the most complex pieces of software out there," said Scott Gordon, a computer sciences professor at Sacramento State University.

He says it takes bright people to put these creations together.
At Sacramento State students are learning to build the games from scratch.

"Learning a whole bunch of technologies and programming techniques," said Gordon. "Algorithms. Physics."

Researchers point out that a well-educated computer programming workforce near major developers is a huge benefit to California's competitive edge.

But researchers also recommend more development of computer programmers in the state's schools. The authors also suggest making tax exemptions for video games and creating tax credits for video-game-related start-ups.