New Orleans is celebrating 10 years of growth post-Katrina. One of the economic areas the city, as well as the state of Louisiana, has focused on since the Category 5 hurricane caused an estimated $150 billion in damage in 2005 is video game development. The state has offered as much as 35% incentives for game developers interested in starting up new studios or expanding existing studios.
Newport Beach, Calif.-based inXile Entertainment is the latest game studio to take up residency in New Orleans. The developer behind The Bard’s Tale franchise just opened up a new satellite studio in the Crescent City after exploring options in Colorado and Texas. Brian Fargo, CEO of inXile Entertainment, says the plan is to move the company’s quality assurance testing from outside contractors to internal oversight in the new studio. In addition, production will slowly be ramped up with a mixture of California staff and new hires. Overall, the new studio will allow the company to increase its development output by one game.
“Beyond the financial bonuses, we have access now to talent from the East Coast,” Fargo says. “It’s a tough pitch to get them all the way to California, but the South has already proven to be a viable option for people.”
InXile Entertainment is the second veteran game company to expand to New Orleans this year, following in the footsteps of Hoffman Estates, Ill.-based High Voltage Software. Kerry Ganofsky, owner of High Voltage Software, says like California, Illinois offers no tax incentives for game development. When Ganofsky decided to explore expansion cities, New Orleans won out over Austin, Dallas, and Atlanta. High Voltage Software has its new studio working on the virtual reality game, Damaged Core, for Samsung Gear VR.
“GNO Inc. and New Orleans support the video game industry, whereas Illinois doesn’t have us on the radar,” Ganofsky says. “New Orleans offers a better environment for our employees, more affordable living, and we now offer the option of no snow, which is great for recruiting out of the southern belt.”
According to Michael Hecht, president and CEO of Greater New Orleans (GNO) Inc., Louisiana provides a tax credit of up to 25.2% on qualified payroll and 18% for qualified production expenditures for software development through June 30, 2018. After that date, the credit increases to 35% of qualified labor and 25% of qualified expenditures. There is no annual cap on the amount of credits that a company can accumulate, there is no minimum requirement of jobs of expenditures, and the legislation has no sunset or end date.
Hecht says that Louisiana and New Orleans have traditionally been dependent on oil and gas, but 10 years ago—right before Katrina hit—a digital media incentive program was developed specifically for video games.
“Over the past 10 years we have focused on diversifying our economy and growing new clusters,” Hecht says. “Our digital media incentive has since been broadened to include all software development, but video games continue to be a focus. We feel our low-cost and high-culture value proposition is perfect for these types of companies. We were recently named the fastest growing market for IT job growth in the country according to Forbes, so our economy continues to shift toward knowledge industries.”
Grady Fitzpatrick, senior vice president of business development at GNO Inc., says Louisiana has been busy building out an educational infrastructure that can support new game studios as they open. Electronic Arts (EA) partnered with Louisiana State University to share a new $29 million Digital Arts Center, which houses EA Baton Rouge, the home of EA’s quality assurance testers. In addition, LSU is offering a master’s in digital media arts and engineering for aspiring game developers taught by former EA executive producer Marc Aubanel. Separately, LSU received a $14 million investment from the state over 10 years to triple the number of computer science graduates. This will help IBM staff the 800 positions for its new Baton Rouge complex.
Louisiana has also committed $4.5 million over 10 years to increase the number of computer science graduates at the University of Louisiana at Lafayette to help CGI find applicants. And the state is funding $5 million over 10 years to the University of New Orleans for academic programs as part of a deal with GE Capital. Louisiana Tech University has received $14 million over 10 years to increase the number of computer science graduates, which will help CSC.
“New Orleans recognizes that they need white-collar jobs,” Ganofsky says. “Video games are a pretty green industry. It’s a bunch of nerds sitting at desks who make a good wage and like to go out and spend money and have fun. New Orleans is perfect for that.”
Hecht says these recent deals will bring more permanent high-paying jobs to the city. High Voltage will grow to 85 employees and inXile Entertainment will hire 50 people with an average salary of $75,000.
French company Gameloft, which closed its New York City office and moved to New Orleans in 2011, currently has 50 employees and has developed mobile games like Ice Age Village and Cars: Fast as Lightning. Mathias Royer, the Gameloft New Orleans studio general manager, says the plan is to double the size of the studio in the coming years.
“With the recent addition of High Voltage and inXile, we’re getting to a point where more and more companies will have to consider New Orleans as a viable option when opening a new location,” Royer says. “More companies also means easier recruitment, since candidates from outside of Louisiana won’t be relocating just for us.”
Royer says leaving New York was an easy decision because of that state’s lack of incentives. And Louisiana allows Gameloft to operate “way below the cost of the West Coast, and even below a city like Austin.”
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