A state board is hoping Disney is enchanted enough with a Utah financial incentive that it grows its video-game development operations here.

The Governor's Office of Economic Development Board on Friday approved a $5.25 million tax-rebate for Disney Interactive Studios Inc. if the company adds more than 500 jobs in Utah over the next 10 years to develop video games based on intellectual property that Disney has developed.

Avalanche Software was founded in Utah in 1996 and was acquired by Disney in May 2005. Since then, the Utah operationhas produced games based on "Chicken Little," "Meet the Robinsons" and "Hannah Montana."

Disney created a sister studio, Fall Line Studio, in Salt Lake City in 2006 to focus on games for the Nintendo Wii and DS market. Both Avalanche and Fall Line are wholly owned subsidiaries of Disney Interactive Studios, the interactive entertainment affiliate of The Walt Disney Co.

"Their goal is to develop these two companies together here in Utah," said Jerry Oldroyd, chairman of the state board's incentives committee.

But he noted that Disney has other options, both in the U.S. and overseas. Board documents indicate Utah's competition includes Vancouver and Quebec in Canada and Shanghai, China.

"The real goal, for us anyway, is to make sure that as much of that as possible is developed here in Utah," Oldroyd said.

The company wants to expand its presence in Utah, spokeswoman Angela Emery said from Glendale, Calif.

"We're very pleased with the success that both studios have had so far," she said. "We'd like to grow our base of talent there."

Emery said Disney Interactive has 150 to 200 employees working in Utah. Those jobs can't be counted toward the financial incentives, but the company would receive partial rebates each year as it continues to grow.

Emery said the company is confident it can meet the job target.

If Utah does land the expansion, the new jobs are expected to pay an average of $75,000 per year, which is more than twice the Salt Lake County median annual salary of $32,828. New state revenue is projected at more than $15 million over a decade, and new state wages are expected to top $330 million during the same period. The capital investment is projected at $15.1 million.

Oldroyd said state officials also will be talking with Salt Lake City about its Disney Interactive Studio incentive, which currently is in the form of a low-interest loan of up to $1 million.

Computer animation is part of the software and information technology economic cluster that the state wants to see grow, and the state board has approved incentives in the past for Disney-related film productions — including the "High School Musical" movies and shows that aired at the Disney Channel.