2018 is looking positive for the video games industry’

By January 18, 2018 Press Releases

2018 has the potential to be a transformative year for the UK video games industry. 68 per cent of respondents to our Business Opinion Survey 2018 are planning to increase their number of employees. Markets are growing, while advances in technology will provide exciting opportunities for how we experience games. The Government should support the industry further to ensure it can take advantage of these opportunities. This is particularly vital in areas such as financing and access to workers with the right skills.

Our industry is growing for three reasons.

Firstly, the UK has a substantial consumer market for games. 33.5m people in the UK play video games and the latest figures show that the value of digital and physical games sales is now worth over £2.8 billion. The UK video games market is now 26 per cent larger than the UK video market and nearly three times larger than the UK music market.

Secondly, technology is providing even more avenues and markets for developers. Mobile gaming is estimated to be worth over $50bn globally, while it is predicted that it will represent more than half the global games market by 2020. At the same time, the advent of virtual and augmented reality has the ability to fundamentally change the way we experience games and has encouraged further investment in the industry.

Thirdly, the overall environment for video games development is positive. Significantly, 70 per cent of games businesses in our survey believe that the economic and business environment in the UK is favourable to the video games industry (up from 64 per cent a year ago). In particular, Video Games Tax Relief, which TIGA was instrumental in achieving, is fuelling growth in the sector. Games Tax Relief effectively reduces the cost and risk of games development and incentivises investment and job creation in the games industry.

The UK video games market is now 26 per cent larger than the UK video market and nearly three times larger than the UK music market.

Richard Wilson, TIGA

Video Games Tax Relief has been available to UK games companies since August 2014 and applications have grown each year. UK companies have claimed Video Games Tax Relief on 295 projects to date, representing £693m in UK-based production expenditure (£886m overall) and this has resulted in £119m being paid out to developers so far.

However, the clouds of Brexit and the UK’s relative economic slowdown are beginning to cast shadows on our games industry. A smaller proportion of games businesses plan to increase employment and investment in 2018 in comparison to last year’s survey. 62 per cent of businesses believe that they are performing well, but this is down from 72 per cent in 2017.

Overall, respondents to our survey are less optimistic about their prospects in comparison to a year ago. The key factors holding the sector back are still access to finance, discoverability, skills shortages, and skills gaps. While games businesses must take the lead in developing solutions to discoverability, the Government can help in respect of both finance and skills.

On finance, the Government should consider introducing TIGA’s proposal for a Games Investment Fund (GIF) to enhance studios’ access to finance, promote the development of original Intellectual property and to encourage studio growth. The GIF would make grants or loans of between £75,000 and £500,000 available to games businesses on a matched funding basis.

With respect to skills, the industry competes on the skills and abilities of its workers. It is the programmers, designers, engineers, artists and producers that create groundbreaking games and allow UK companies to compete globally. Our industry makes a real effort to train our employees, most of who are UK citizens. 80 per cent of games businesses provide on-the-job training, while 38 per cent provide formal training courses, both in-house and external. TIGA itself accredits high quality video games courses and works closely with universities to ensure our graduates can enter the industry with the right skills.

Already a British success story, we are looking to build upon our world leading reputation over the next twelve months and further into the future.

Richard Wilson, TIGA

We also need to increase the supply of well-educated school leavers. The Government’s emphasis on boosting STEM skills is therefore welcome. The breakthrough in the Brexit negotiations in early December on citizens’ rights (EU citizens living in the UK and UK citizens living in the EU will have their rights to live, work and study protected), the financial settlement and the Irish border means that Brexit talks are set to progress to trade negotiations. The single most important priority for the UK video games industry in the current Brexit negotiations is that we have access to highly-skilled employees from the EU, EEA and beyond. Currently, EU workers make up 15 per cent of the UK games industry, while 5 per cent come from countries outside the EU. This is a significant proportion considering EU workers make up 6.8 per cent of the UK workforce as a whole. In order to grow and thrive as it previously has, the UK video games industry will need to continue to recruit talent on a global level.

In our recent submission to the Migration Advisory Committee, TIGA set out a range of options for a future migration policy: reciprocal freedom of movement rights for workers in the video games industry; a general reciprocal freedom of movement rights for workers with a job offer; the provision of approximately 1,500 work permits per annum for the UK video games industry; the addition of roles (e.g. Games Analyst and Engine Programmer) to the Shortage Occupation List where there is a specific skills shortage so that employers can recruit the employees they need without undue delay; ensuring that any new immigration arrangements are not complex or costly for business; and the introduction of a fast-track visa programme for roles on the Shortage Occupation List. These measures could help to keep the UK open to global talent.

Overall, 2018 promises to be another successful year for the video games industry. Already a British success story, we are looking to build upon our world leading reputation over the next twelve months and further into the future. Our business survey highlights that it is an exciting time to be involved in the industry and with the right support from the Government we will continue to thrive.

 

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