Tax Wars: Online v. Brick-and-Mortar Retailers

July 18, 2011 -

A war is brewing in California (and beyond) between traditional retail and online retailers on sales tax. For years politicians said they would not tax the internet, but a recent change in laws has made it so that Amazon.com has to collect sales tax from any affiliate doing business in the state. While traditional brick-and-mortar retailers applauded this change (they see it as leveling an uneven playing field) online retailers are, to turn a phrase, pissed off. Among other efforts, Amazon.com is seeking to rally anti-tax Americans by proposing a voter referendum in California to overturn the new state law.

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Game Industry Tax Relief Takes Center Stage at Develop

July 17, 2011 -

Vincent Scheurer of the London-based law firm Sarassin LLP passed us a note to let everyone know that he will be talking about game industry tax breaks in the UK at Develop. He will be presenting a talk called "Who’s Afraid of Games Tax Relief?" at the Develop conference in Brighton next week.

"This talk will consider, amongst other things, the arguments for and against games tax relief, together with an analysis of the lobbying from within the games industry which has recently been disclosed via the Freedom of Information Act," Scheurer wrote in an email to GamePolitics.

Scheurer's talk will commence at 4.30pm on Wednesday, July 20. Anyone with a free Expo pass may attend the talk. Scheurer says that he expects a "lively debate on the pros and cons of games tax relief."

You can find out more about Scheurer and his work by visiting his firm's web site.


Louisiana Enhances State Digital Media Tax Credits

July 12, 2011 -

Louisiana Governor Bobby Jindal has signed a bill into law that improves the state's existing tax credits for the entertainment industry - which includes game developers. The addendum to the state's Digital Media Tax Credit will soon offer game developers doing business in Louisiana benefits as a refundable credit rather than a transferable credit. This allows those that are eligible for it to receive a cash rebate if the credit amount ends up being more than the outstanding tax liability for the year. Of course, the law still gives game developers a 25 percent tax credit on software production in the state and a 35 percent credit for state payroll taxes devoted to software development.

Louisiana policy makers say that these tax credits have been "instrumental" in attracting large companies into the state. For example, EA recently announced plans for an expansion of its game testing facility on the LSU campus.

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TIGA Warns of UK Development 'Brain Drain'

July 11, 2011 -

UK video game industry trade organization TIGA issued a warning today that the video games industry in the region continues to experience a "brain drain of skilled development staff." TIGA said that this warning is based on the results of a new survey of 104 UK games businesses which showed that 20 percent of respondents had lost staff to foreign countries over the previous 12 months.

Many of those highly skilled workers have been lost to Canada because companies there can afford to hire and commit funds to research and development due to generous government tax breaks and incentives.. The Entertainment Software Association of Canada recently said that Canada's industry has been "successful in attracting investment and skilled personnel from jurisdictions like the United Kingdom.."

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GDAA: Tax Credits Will Make Australia Tops in Five Years

July 6, 2011 -

Game Developers Association of Australia predicts that in five year's time Australia will be one of the top game development territories in the world. Tony Reed, CEO of the Game Developers Association of Australia, credits the future benefits of the Australian Government's proposed research and development tax credits.

The new A$1.8 billion ($1.89 billion) research and development tax credit legislation will give developers a 45 percent refundable tax credit. The credit is meant for companies that have a turnover of less than A$20 million, a requirement that many Australian game development studios fall into. Reed says that this new tax credit bill will help the local video game industry become one of the top three game development territories in the world and he hopes this can be achieved in the next five years. Australian studios have to register with the government to apply for the tax credit and are required to show proof of research and development.

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California to Out-of-State Online Retailers: Collect State Sales Tax

June 30, 2011 -

California has told out-of-state online retailers to start collecting sales tax for customers residing in the state Beginning July 1. This includes Amazon.com, Overstock.com, and GameStop.com. Beginning Friday this new requirement for retailers takes effect, along with a 1-percentage-point drop in the tax. The new tax collection scheme is projected to raise $317 million a year in new state and local government revenue.

Besides the slight cost to California customers, there are other adverse effects for companies connected with Amazon and similar retailers. Amazon and online retailer Overstock.com have reportedly told thousands of California Internet marketing affiliates that they will stop paying commissions for referrals of click-through customers. This is due to the fact that the new requirement applies only to online sellers based out of state that have a connection to California, such as workers, warehouses or offices.

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Pennsylvania State Senator Pushes Videogame Tax Credits

June 22, 2011 -

Pennsylvania state senator Daylin Leach wants to give the video game industry a substantial tax credit to do business in the state, and he's pushing a bill that will provide the cash. Yesterday he introduced a bill that would give videogame companies in the state a 25 percent tax credit. Pennsylvania Senate Bill 700 calls for $20 million in tax benefits to be dedicated annually to videogame projects where at least 60 percent of the expenses are within the state. While Leach is the sponsor of the bill, the Senator has the support of seven other senators, who are all members of the minority Democratic party.

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UK MP Jim McGovern Pushes for Games Tax Relief

June 20, 2011 -

UK video game industry trade group TIGA today issued a statement supporting MP Jim McGovern's call on the Creative Industries Minister to review the issue of Games Tax Relief "as a matter of priority." The MP made his comments yesterday in Parliament. McGovern raised the issue in Culture, Media and Sport questions in the Westminster Parliament with the Creative Industries Minister, Ed Vaizey MP. Obviously TIGA supports tax incentives for the videogame industry.

"I discussed future Government support for the creative industries—including the video games sector—with the Chancellor of the Exchequer in the development of the plan for growth which was published alongside Budget 2011," said Edward Vaizey. "The plan for growth sets out the specific actions that we are taking to tackle major barriers to growth in the creative industries and to create the right conditions for creative businesses to flourish."

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Irish Culture Minister Considering Game Development Tax Breaks

June 8, 2011 -

The Irish government is seriously considering bringing tax breaks to the video game industry in the country, and UK industry trade group Tiga is obviously pleased. Irish Culture Minister Jimmy Deenihan spoke of the video game sector in Ireland as “an enormous global industry with great potential and benefit for job creation" during discussions in the Oireachtas, the Irish National Parliament. A development tax credit would certainly create jobs, which is important no matter what you believe about games.

The conversation among Irish government leaders is also getting praise from Tiga:

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California's Amazon Tax Bill Passes State Assembly

June 1, 2011 -

A bill passed by the California State Assembly on Monday aims to help California collect more than $1 billion in taxes from online retailers such as Amazon.com.

Assemblyman Charles Calderon, a Whittier Democrat, claims that the new legislation doesn't impose a new sales tax, but extends one that California should already have been enforcing. The bill, AB155, passed by a vote of 47-16, with the support of one GOP lawmaker. Now it has to pass in the Senate to become law in the state. The question for Californians that work for retailers like Amazon.com is how this might affect their future. If the tax burden is too much, maybe Amazon will simply go to another state where the tax situation is more tenable.

Most Republican lawmakers rejected the bill because they said it would drive businesses out of California, get the state entangled in Internet regulation, and force the state to defend the law in the courts.

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TIGA, EGDF Push Game Industry Agenda to EU

May 25, 2011 -

UK games industry trade group TIGA announced this morning that it has formed a partnership with the European Games Developer Federation (EGDF) to lobby the European Parliament for "improved access to finance for the video game industry." The EGDF has published a Report (Game Development and Digital Growth) which makes a series of recommendations for the European Commission and Members of the European Parliament. TIGA, along with other EDGF members, are pushing several game industry-related proposals to European policy makers in Brussels today.

Those proposals, according to TIGA's press announcement, include the following:

- Recognize video games as a form of cultural expression and make them eligible in all member states for public funding, as is the case with a growing number of non-European countries.

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Former IGDA Boss: Tax Breaks Aren't Everything

May 24, 2011 -

Jason Della Rocca, the former IGDA boss and founder of Perimeter Partners, says that the video game industry needs to start thinking globally and stop worrying about local and regional advantages such as tax breaks. The elephant in the room was Canada's tax breaks and how various territories in the Great White North are pealing studios away from the United Kingdom.

Speaking to GameIndustry.biz at the Nordic Game Festival earlier this month, Della Rocca talked at length about tax-breaks and why they are such a small part of a larger eco-system. Della Rocca thinks that chasing tax breaks alone is a waste of energy.

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UKIE Partners With R&D Specialist Jumpstart

May 20, 2011 -

British video game industry trade group UKIE announced today that it has signed a three-year deal with research & development tax credit firm Jumpstart, giving members access to the company's services at reduced rates. UKIE members will also be able to get free advice about how research and development tax credits benefit their businesses through an exclusive UKIE help line.

"I welcome this new partnership between UKIE and Jumpstart, not only as a UKIE board member but also as the MD of my own business Mastertronic," said UKIE chairman and MD Andy Payne.

"Mastertronic has recently worked with Jumpstart, to maximize our R&D tax break revenue and I personally recommend that all UKIE members make use of the excellent service that Jumpstart provide," he added.

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Massachusetts Bill Flirts With Video Game Tax Breaks

May 4, 2011 -

Developers could get a decent 25 percent tax credit on production cost if their products bear a "Made in Massachusetts" logo. According to data provided to Develop by a tax specialist firm, any developer making less $1 million would be eligible for the 35 percent payroll credit. The savings would not be transferred to individuals, but to studio accounts. In other words, if the bill were to be passed, Massachusetts studios could attract better talent with bigger wages.

The information comes from a new Develop feature that taps two executives from specialty tax services provider Alliantgroup, who details the benefits of the bill. Alliantgroup managing director Dean Zerbe and senior associate Angelique Garcia said that the proposed tax breaks for video game studios would turn Massachusetts into a "safe haven" for games studios.

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Viacom Realizes Major Tax Benefit from Harmonix Sale

April 29, 2011 -

Viacom has managed to generate a tax benefit of approximately $115 million dollars with the sale of Rock Band creator Harmonix Music Systems, according to a filing with the Securities and Exchange Commission. When Viacom sold the developer for $49.99 late last year, it was assumed by most in the media that it had done so in order to reap a major tax benefit for closing a sale by the end of 2010.

Of the $115 million, the company expects $45 million to be realized as a cash refund on previously paid taxes, with the remaining $70 million available to offset future taxes.

Speaking of its litigation with Harmonix, the company said it would "vigorously defend" itself and that it believes that the plaintiffs' position "is without merit."

Viacom acquired Harmonix in 2006 for $175 million.

Source: Gamasutra

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UK Secretary of State: Game Industry Tax Relief 'Constantly Under Review'

April 1, 2011 -

Jeremy Hunt, Secretary of State for Culture, Olympics, Media and Sport, claims that the much lobbied for tax relief for the UK games industry is "constantly under review." His comments were in response to a question from the Conservative MP for Folkestone & Hythe, Damian Collins.

UK games industry trade group Tiga welcomed Hunt's comments. Tiga CEO Richard Wilson said the following:

"Whilst, we were delighted that the government made changes to the R&D tax credits which we campaigned for in last week's Budget, the introduction of TIGA's Games Tax Relief is the one measure which would really power the UK video games sector forward," he said.

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UK Culture Secretary: Developers Need Canada-Style Tax Relief

March 28, 2011 -

UK culture secretary Jeremy Hunt knows that the Canadian government is leading his country's game developers away like the pied piper, with lucrative tax deals and incentives. Speaking to The Guardian, Hunt said that his country needs to provide similar incentives to keep developers in the country and entice other developers into the country.

"We need to offer the video game industry a package as financially competitive as Canada," Hunt told The Guardian. "I don't know if [a tax break] was the right way to go."

His comments come on the heels of last week's UK budget, which sweetened the pot for game developers with expanded research and development tax credits, but no tax breaks.

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Report: Zynga Seeking Tax Incentives from San Francisco

March 25, 2011 -

According to a Market Watch report, Farmville maker Zynga is seeking a tax break from the city of San Francisco to keep its offices open there. The social game developer said that it is "encouraged" by ongoing negotiations with local government over the future of its San Francisco headquarters. Market Watch claims that Zynga recently threatened to leave the city if it did not receive tax exemptions similar to those recently given to Twitter.

A spokesperson for the company admitted to GameIndustry.biz that it is engaged in "serious discussions" with city officials, though it declined to comment further.

Zynga moved into its current location in September of last year and has space for around 2000 employees at the site, according to GI.biz.

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Amazon vs. The World

March 17, 2011 -

Retailers have been gunning for amazon.com for a long time and have tried in the past to use political muscle to "put them on a level playing field." When I say "level playing field," what that translates to in the eyes of retailers is "force them to pay state sales tax." Retailers have lamented that it is unfair that they have to make their customers pay sales tax while Amazon does not.

Now brick-and-mortar retailers have a new weapon to take on Amazon - the Alliance for Main Street Fairness. The group is pushing hard to change sales-tax laws in more than a dozen states including Texas and California. Before the group was associated with smaller, local businesses. Now it has the backing of retailers like Target, Best Buy Co., Home Depot, Sears, and Wal-Mart.

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Report: Square Enix Negotiating Canadian Tax Deal for Future Studio

March 16, 2011 -

Square-Enix plans to open a new studio with over a hundred employees in 2012, somewhere in Canada. The maker of Final Fantasy is reportedly negotiating with the governments of Vancouver, Toronto and Montreal. Whichever location offers the best tax incentives package will get a new Square Enix Studio that expects to employ over one-hundred new employees. Square Enix already has a studio in Montreal - which it acquired when it bought Eidos in 2009. But that doesn't mean Square Enix is giving the edge to that locale:

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Tiga Forms Casual Division

March 15, 2011 -

UK trade group Tiga has announced that it has established a new division to support the growing legions of casual and social game developers in the region. The group that represents the UK's game development industry says that the new division can help studios network, develop strategic partnerships, identify trends in the market and offer discounts on software and tools when possible.

The group has also opened a ‘Casual Games Committee’, designed to "support companies creating games of all formats with production budgets between £10,000 and £300,000." Tiga added that this move is a response to “exponential growth in casual gaming platforms" in the region. Tiga members working on a casual game can apply to join, as long as their game's budget is within the previously stated guidelines.

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New Tiga Report Calls for Better R&D Tax Credits

March 9, 2011 -

UK games industry trade group TIGA today published a new report called "Powering a high technology recovery: proposals for improving R&D tax credits," which continues to urge the government to improve the research and development tax credit to better support the interactive entertainment industry.

The report focuses on how the R&D tax credits system can be improved for the UK games industry. TIGA says that its proposals for the R&D tax credits would "deliver 60 - 75 percent more value to games studios than the current R&D tax credit regime." This, it says would enable studios to invest more in R&D, generate and retain new IP, and hire more development staff.

TIGA offers the following key proposals:

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CCP Plans Expansion, Staff Growth in Georgia

February 25, 2011 -

EVE Online owners CCP announced that it plans to relocate 150 people to a new U.S. studio in Decatur, Georgia. The company has a studio in Georgia already but plans to shift personnel to a 40,000-square-foot facility in Decatur. The company's long-term goal for the facility is to add an additional 150 developers by 2013.

Besides working on Eve Online related projects, CCP Games is developing two new original properties: World of Darkness and DUST 514.

"Decatur offers the perfect blend of big city accessibility with a hometown feel that we were looking for," said CCP North America president Mike Tinney. "Georgia’s financial climate combined with Decatur’s social climate provide the ideal conditions for continued growth."

Georgia is a popular state with the entertainment industry due to its generous tax breaks and pro-business attitude.

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Michigan Governor Targets Entertainment Industry Tax Breaks

February 21, 2011 -

Michigan Governor Rick Snyder has proposed a new budget that severely limits the amount of tax bonuses to game developers and other entertainment enterprises that want to operate out of the state. Under the new budget, tax rebates that currently cover up to 42 percent of an entertainment company’s tax expenditures would be limited to an annual cap of $25 million.

The tax incentive program was introduced in 2008 to much fanfare. Since that time nearly 130 entertainment projects have received an estimated $648 million in tax savings. The governor is targeting the tax incentive plan to make up for a $1.4 billion budget gap. He claims that lower corporate tax rates for all companies would probably be a better idea for the state and for companies in general.

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Axis Animation: Level Playing Field Not Possible in UK Even with Tax Relief

January 31, 2011 -

In an interview on GameIndustry.biz Axis Animation Managing Director Richard Scott said that - even with tax breaks in the UK - it would be impossible to create a "level playing field" with the international development community. Scott explained to GI.biz that because his company works across the mediums (games, film and TV) he was able to see the effects of the UK's positive tax environment. He says that if tax relief ever becomes a reality for the game industry, the government needs to offer incentives that help "local creatives" and not attract international companies.

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Harvard Professor: Mass. Targeted Industry Subsidies Unfair

January 28, 2011 -

The Boston Herald offers an editorial on state representative Vincent Pedone's proposal to offer tax breaks to the game industry in Massachusetts. The author, Edward L. Glaeser (professor of economics at Harvard University and author of the forthcoming book "The Triumph of the City"), compares it to the disastrous results of Evergreen Solar and ponders aloud if this is all "throwing good money after bad?"

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Texas Business Incentives Help Create 1,700 Jobs

January 4, 2011 -

A new report from the Texas Comptroller of Public Accounts (an analysis of Texas economic development Initiatives) shows that the video game industry has created well over a thousand jobs in the last two years. This is due mostly to the state's Texas Moving Image Industry Incentive Program, which offers incentives to the film, television, commercial, and video game industries.

The report found that the state’s incentive program (enacted in 2007 and expanded in 2009) contributed to the computer and video game industry’s growth in Texas by helping to create an estimated 1,700 jobs between April 2009 and August 2010. The incentive program provides grants for "qualifying productions" including movies, television shows, commercials, and computer and video games that create jobs for Texas residents. Other states have followed the state's initiatives with similar programs including Florida, Georgia, Louisiana, and North Carolina.

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Massachusetts Gets Serious About Video Game Industry

December 22, 2010 -

Becker College administrators, elected officials and other interested parties want the video game industry to grow in Massachusetts. A recent series of pitches at the Southboro, Mass.-campus attempted to kick start the process at the college level. Through education and tax credits and other incentives at the state level, Massachusetts can be a more attractive location for game companies, echoed many of the speakers.

To that end, Massachusetts Lt. Gov. Timothy P. Murray announced at the conference held at Becker College this week that a campus-based policy and research institute will be established.

Over the next 90 days, state officials and administrators at the college will work to establish that institute. Murray said the state would also work toward implementing a broader plan to support the video game industry.

"We think there's a unique opportunity right now to begin work on this comprehensive statewide plan," Mr. Murray said.

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Grants for Gaming Make Government Waste List

December 21, 2010 -

A list called "Government Waste: 20 Of The Craziest Things That The U.S. Government Is Spending Money On" finds several projects funded by the government related to video games. Of course lists that are considered "waste" by some groups actually have a deeper purpose than what is listed in the descriptions, but the people that put this particular list together (I hope) would know that.

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Zombies, Atlanta, and Tax Credits

December 8, 2010 -

Menue Americas Corporation launches its new free-to-play online video game, Zombie Mosh on Facebook and takes advantage of Georgia Entertainment Industry Incentive Act. The Georgia Entertainment Industry Incentive Act gives "qualifying" game developers and publishers a transferrable 20 percent base tax credit on all "qualified expenditures" within the state, such as labor, materials and services. The Act gives an additional 10 percent tax credit if the company promotes the state by placing a Georgia promotional logo in the video game.

Zombie Mosh's creators are not the only zombie-related action in town - Atlanta is also home to AMC's new zombie-themed TV series The Walking Dead.

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Matthew WilsonI am going to pax east, any games you guys want me to check out?03/02/2015 - 11:23pm
ZippyDSMleeNo one remembers the days of Cinemagic and Cynergy eh? :P, meh even MGS is getting to film like....03/02/2015 - 8:44pm
MechaTama31I was about to get all defensive about liking Metal Gear Solid, but then I saw that he was talking about "cinematic" as a euphemism for "crappy framerate".03/02/2015 - 8:29pm
prh99Just replace cinematic with the appropriate synonym for poo and you'll have gist of any press release.03/02/2015 - 5:34pm
PHX Corphttps://www.youtube.com/watch?v=vZQDFO2KEPo Jim Sterling Makes Fun of "Cinematic" Gaming03/02/2015 - 3:39pm
Matthew WilsonWOW is copping EVE. http://us.battle.net/wow/en/blog/18141101/introducing-the-wow-token-3-2-2015 I think its a smart move to deal with gold farmers in this way.03/02/2015 - 1:16pm
Matthew WilsonI guess epic is tired of having their lunch eaten by unity. https://www.unrealengine.com/blog/ue4-is-free03/02/2015 - 12:50pm
Andrew EisenNot much to follow. Kern is being silly and... nothing much else is happening.03/02/2015 - 11:40am
Papa MidnightI ask because, having only just heard of it, I have not, and I was hoping for some insight.03/02/2015 - 11:39am
Papa MidnightHas anyone been following this petition by Mark Kern regarding Kotaku, Polygon, and VG247? https://www.change.org/p/kotaku-lead-the-way-in-healing-the-rift-in-video-games03/02/2015 - 11:38am
ZippyDSMleePaypal shuts down Mega's payment system. https://torrentfreak.com/under-u-s-pressure-paypal-nukes-mega-for-encrypting-files-150227/03/01/2015 - 3:25pm
Matthew Wilsonvalvle planning to release a vr headset this year wtf http://www.pcgamer.com/valves-vr-headset-is-named-vive-and-htc-are-making-it/03/01/2015 - 1:05pm
ZippyDSMleeuuuhhhggg in other news been sick since last night.....uuhggg.....I iwsh it did not hurt so much when my tummy wants to leave my body..02/28/2015 - 11:39pm
ZippyDSMleeBrings me to the Q why alt costumes would be needed in competition anyway... http://www.eventhubs.com/news/2015/feb/28/dead-or-alive-community-aims-ban-over-120-overly-sexualized-costumes-dead-or-alive-5-last-round/02/28/2015 - 11:36pm
MonteThough from a business side, i would agree with the article. While it would be smarter for developers to slow down, you can't expect EA, Activision or ubisoft to do something like that. Nintnedo's gotta get the third party back.02/28/2015 - 4:36pm
MonteThough it does also help that nintendo's more colorful style is a lot less reliant on graphics than more realistic games. Wind Waker is over 10 years old and still looks good for its age.02/28/2015 - 4:33pm
MonteWith the Wii, nintnedo had the right idea. Hold back on shiny graphics and focus on the gameplay experience. Unfortunatly everyone else keeps pushing for newer graphics and it matters less and less each generation. I can barely notice the difference02/28/2015 - 4:29pm
MonteON third party developers; i kinda think they should slow down to nintendo's pace. They bemoan the rising costs of AAA gaming, but then constantly push for the best graphics which is makes up a lot of those costs. Be easier to afford if they held back02/28/2015 - 4:27pm
Matthew Wilsonhttp://www.forbes.com/sites/insertcoin/2015/02/28/the-world-is-nintendos-if-only-theyd-take-it/ I think this is a interesting op-ed, but yeah it kind of is stating the obvious.02/28/2015 - 2:52pm
prh99The government probably doesn't need an app, but I was think more along the lines of a company that was going to sell the collected info. “If you're not paying for the product, you are the product” sometimes even if you pay.02/28/2015 - 1:50pm
 

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