Editor’s note (October 2026): This post was written in 2013 and is kept for historical reference. Michigan ended its film and digital media production incentive program in 2015: 2015 PA 117 barred the Michigan Film Office from entering into new incentive agreements, so the program described below no longer accepts new applications. The rates and thresholds below reflect the program as it existed in 2013.
GamesIndustry International has posted an excellent article on the tax credits available for video game developers. At the time, Michigan was among the dozens of states and Canadian provinces that provided tax credits for video game development. Under the 2013 Film and Digital Media Incentive, the State of Michigan offered a partial reimbursement of a video game developer’s eligible expenditures for producing a “digital media project” in Michigan. Producers of interactive games fell under this definition, which meant that video game developers were eligible provided they spent at least $100,000 in direct production expenditures and expenditures on Michigan personnel.
If a game developer met these requirements, it could be eligible for a partial reimbursement — namely, 32% of payroll expenditures and 27% of production expenditures. Thus, the theory went, video game developers were incentivized to do business in Michigan and hire Michigan employees. The Legislature ended the program in 2015 (2015 PA 117), and no new incentive agreements have been issued since then.
The Michigan Film and Digital Media Incentive Program
Michigan’s incentive program for digital media production was part of a broader effort to diversify the state’s economy by attracting technology and creative industries that can complement its traditional manufacturing base. Video game development fits squarely within the state’s economic development priorities: game studios employ software engineers, artists, designers, sound engineers, writers, and project managers — exactly the kind of high-value, knowledge-economy jobs that Michigan has targeted for retention and attraction.
The digital media incentive covered “interactive games” — a broad category that could include traditional console and PC games, mobile apps, tablet games, educational software with interactive elements, and emerging formats like virtual reality and augmented reality experiences. The key statutory definitions, and how particular projects were categorized, could significantly affect eligibility. Because the program no longer accepts new applications, developers evaluating a Michigan project today should not budget for this incentive.
Qualifying Expenditures: What Counted Toward the Credit?
While the program was active, understanding which expenditures qualified for reimbursement was critical to maximizing its benefit. Generally, qualifying expenditures fell into two categories:
- Michigan payroll expenditures — wages, salaries, and benefits paid to Michigan residents employed in direct production activities. The 32% reimbursement rate on payroll was particularly significant, as talent cost is typically the largest line item in a game development budget;
- Direct production expenditures — payments to Michigan vendors, contractors, and service providers for goods and services used directly in production, subject to the 27% reimbursement rate. This could include studio rental, equipment, software licenses, and certain professional service costs.
Expenditures that did not qualify typically included marketing and advertising costs, financing costs, and certain overhead items. The distinction between qualifying and non-qualifying expenditures could be fact-specific, and proper bookkeeping from the beginning of production — not just at the end — was essential for a successful incentive application.
Legal and Intellectual Property Considerations for Video Game Developers
Tax incentive eligibility is only one of the legal considerations that video game developers should address. Before and during development, studios should also ensure that:
- Copyright ownership is clear — all content created by employees and contractors should be covered by written work-for-hire agreements or copyright assignments. Without these documents, developers may discover that employees or contractors retain ownership of code, art, audio, or other elements of the game;
- Trademark protection is in place — the game’s title, logo, and distinctive visual elements should be registered as trademarks with the USPTO before public release to prevent competitors from free-riding on the brand once it has achieved recognition;
- Third-party licenses are properly negotiated — games that incorporate licensed intellectual property (music, characters, technology middleware, or other third-party content) need properly documented licenses that cover the specific platforms, territories, and distribution channels the developer intends to use;
- Employment and contractor agreements are comprehensive — non-disclosure agreements, non-compete provisions, and intellectual property assignment clauses should be standard components of every employment and contractor agreement in a video game studio.
Platform Agreements and Distribution Law
Video game developers must also navigate complex agreements with platform holders — including Sony (PlayStation), Microsoft (Xbox), Nintendo, Valve (Steam), Apple (App Store), and Google (Play Store) — that govern the terms of distribution, revenue sharing, content standards, and dispute resolution. These agreements are largely non-negotiable for smaller studios, but understanding their terms — including revenue splits, refund policies, take-down procedures, and intellectual property provisions — is essential for business planning.
If you are a video game developer seeking legal counsel on intellectual property, employment, or distribution matters, contact one of our video game lawyers today at 855-473-8474 or through our online contact form.
Michigan’s Video Game Industry: Growth and Opportunity
Michigan’s video game development sector has grown steadily alongside the state’s broader technology economy. The presence of major universities — University of Michigan, Michigan State University, and Western Michigan University, among others — provides a pipeline of software engineering, computer science, and digital arts talent. The state’s relatively low cost of living compared to Silicon Valley or Seattle makes it an attractive location for independent studios and growing teams that need to control their burn rate while building out their products.
The video game industry is also increasingly relevant to adjacent sectors that Michigan excels in. Automotive companies use game engine technology for simulation and design. Healthcare systems use gamification in patient engagement platforms. Training and education companies use interactive game mechanics for workplace learning. Each of these applications creates opportunities for Michigan developers to build products that serve industries with deep local roots.
Why Video Game Studios Need Specialized Legal Counsel
Video game development sits at the intersection of multiple areas of intellectual property law: copyright (for code, art, music, and story); trademark (for game titles, studio names, and character brands); trade secrets (for game mechanics, AI systems, and unreleased content); and patent law (for novel technical innovations). Managing all of these simultaneously while also handling employment agreements, platform distribution contracts, and investor relationships requires attorneys who understand both the law and the industry. Revision Legal’s video game lawyers advise Michigan developers at every stage of the business lifecycle, from formation through exit.
If you are a video game developer seeking legal counsel on intellectual property, employment, or distribution matters, contact one of our video game lawyers today at 855-473-8474 or through our online contact form.
Why Work with Revision Legal?
Revision Legal is an internet and intellectual property law firm. We represent startups, artists, e-commerce sellers, and established companies across the United States and around the world in trademark, copyright, trade secret, privacy, and internet law matters. That work is our entire practice, not a side line.
Our attorneys have litigated in federal courts from coast to coast, before the World Intellectual Property Organization, and in international arbitration. We have taken on overseas counterfeiting networks, domain name thieves, and some of the largest companies in the world on behalf of our clients. We also handle the day-to-day work that keeps a business protected: trademark clearance and registration, copyright registration, DMCA notices, and licensing agreements.
We answer the phone, tell clients the truth about their cases, and treat legal fees as a business decision. Most of our work is handled entirely remotely, so where you are located matters far less than what you need protected. Contact us at 855-473-8474 or through our online contact form to discuss your matter.
