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Arts & Life

Michigan awards its first video game tax incentive

Person playing Wii
creative commons
Pixostar Entertainment in Royal Oak will get a 40% tax incentive to develop a Nintendo Wii game about golfer Ben Hogan

Pixofactor Entertainment in Royal Oak, MI will get a 40% tax incentive to develop a Nintendo Wii game about golfer Ben Hogan. It's the first video game company in the state to take advantage of the state's generous tax incentives.

It’s a little known fact that the Michigan Film Incentive, which awards up to a 42% tax break for movies made in Michigan, also applies to the video game industry. A spokesperson from the Michigan Film Office says only two other video game companies have applied for the tax credit: One company pulled its application, the other was denied.

Sean Herwitz is the founder of Pixofactor. He says landing that tax break was key for the company, which opened last summer. 

"Not only would we not have done the project, we most likely wouldn’t have set up shop here and built this company here."

Herwitz says the tax credit "will open up the door to many more projects. This project will help us move thru the start-up phase of our company and by the time we’ve launched by next Christmas the game, we feel that we’ll be north of 50 employees."

Herwitz currently employees 25 people.

And while this is the first video game incentive the state has doled out, a recent report says Michigan is expected to dole out more than $100 million in 2010 in film tax incentives. The public radio project, Changing Gears, did a story about the various film incentives offered in the Midwest.

As for the impact the incentives have had on Michigan?

"The state Senate Fiscal Agency released a report saying that the additional tax revenue generated by the massive program accounted to only $10.3 million in 2010."

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