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WHEN JACQUELINE BEAUCHAMP decided to move her videogame company from Dallas to Baton Rouge, La., even a six-month delay because of Hurricane Katrina didn't deter her.

The main attraction?

A digital-media tax credit, which offers videogame developers and other interactive digital-media companies based in Louisiana a tax credit of up to 20% against expenditures.

"Those incentives weigh on you in making decisions on whether you relocate from one state to another," says Ms. Beauchamp, who is president and chief executive of Nerjyzed Entertainment Inc., a 45-employee company which released its first videogame in November, "and they ultimately end up impacting your bottom line, in a positive way."

For small companies, such financial incentives can help rein in costs and even kick-start an expansion. But while packing up and moving to another state can be an initial logistical and financial burden for a small business, the payoff of relocating in an area that's more welcoming to a certain industry can be handsome.

Ms. Beauchamp and three partners founded Nerjyzed (pronounced energized) in 2003. By 2005, the company had six employees and plans to expand. But Ms. Beauchamp says she didn't want to do so in Dallas, where growing expenses like equipment and facilities would have constrained the company's bottom line.

So, she began exploring alternatives, visiting Austin, Atlanta and New Orleans.

Then a friend from Baton Rouge, where Ms. Beauchamp was originally from, told her about the changes that had taken root in the area since Ms. Beauchamp had left 20 years earlier. Among them: The city had begun courting the digital entertainment and videogame industry to complement the growing number of movie and music-production companies in the state. Louisiana adopted the Gulf Opportunity Zone Act of 2005, aimed at making the region more business-friendly.

"I didn't realize all these things were taking place here," Ms. Beauchamp says.

While the other cities Ms. Beauchamp explored had their advantages -- Atlanta had passed a tax-incentive program for digital media in 2005 -- she settled on Baton Rouge.

She says she liked the combination of incentives, educated work force and the area's success in attracting the film industry, which Nerjyzed already is tapping for other projects. One example is the company's first documentary, on the evolution of historically black colleges and universities, which is coming out in February.

The tax credit, Ms. Beauchamp says, has shaved Nerjyzed's costs by about 25% to 30% from what they were in Dallas. The company declines to disclose dollar amounts.
Baton Rouge also is home to Southern University, a historically black college from which Ms. Beauchamp graduated, which added to its appeal for the company. Nerjyzed's flagship videogame is the Black College Football Experience, featuring teams from historically black colleges.

This year, Ms. Beauchamp plans to hire another 35 to 40 employees. "We're staying here," she says.

Write to Raymund Flandez at raymund.flandez@wsj.com