The Louisiana Digital Media Act, sponsored by Senator Ann Duplessis, grants a 25% credit to game developers for digital interactive media expenditures, as well as a 10% credit on state payroll taxes. It's a very generous incentive that could see a growth in the number of development studios calling the state home. The Entertainment Software Association applauded the Governor's approval.

"We commend Governor Jindal for his strong leadership as well as that of Senator Duplessis for expanding the state's computer and video game development and production base, and helping lead the way in creating the next generation of entertainment innovation in Louisiana," said Michael D. Gallagher, president and CEO of the ESA, which represents U.S. computer and video game publishers. "Developers and publishers live and work for years in states where games are created, providing a higher return on investment than any form of entertainment."

Not too shabby for a state with baby bird vampires on its flag, right?

A growing number of states either have or are looking into implementing similar incentives, a reassuring sign that state governments are understand just how serious the video game business is.

Currently, a bill still in its early stages geared to provide subsidies for film studios that set up shop in the state includes similar support for game development. Game developers in Massachusetts would be able to claim tax credits for 20 percent of the cost of establishing a facility, if they invest at least $500,000 of their own money - the same initiative recently signed into law in Georgia.

With 1,000 video game industry employees, Massachusetts ranks fifth in the country behind California, Washington, Texas and New York as far as how many developers are employed in the industry there, according to the ESA. Turbine, Blue Fang Games and Harmonix are all headquartered in the state.

It remains unclear whether the bill will achieve final approval, but a legislative committee recently passed it by a narrow 5-4 margin.

Turbine CFO Peter Faubert talked to the Globe about how the tax credit might help the company expand:

Peter Faubert, Turbine's chief financial officer, said film-style tax credits could be a boon for video game companies. He said Turbine, which has been growing rapidly and recently raised $40 million in venture capital, is searching for a larger headquarters in the Boston area. The company has 300 employees, but plans to hire as many as 100 more by the end of 2009 and requires additional space.

Faubert said some towns have already mentioned the possibility of offering Turbine property tax incentives, though they probably won't be large enough to affect the company's decision on where to site its headquarters.

"We're trying to make our plans based on our business today, rather than a tax incentive," he said. But Faubert said tax credits could help the business expand further.

Game makers may get a break [Boston Globe via Develop]