TIGA, the network for games developers and digital publishers and trade association representing the video games industry, has called on the Government to introduce a Games Investment Fund (GIF) to help small developers improve their access to finance and to become more productive.
Responding to the Government’s business productivity review, TIGA argued that improving access to finance would allow small firms to thrive and invest in measures that would help them become more productive and competitive.
Currently, some games developers struggle to access both debt and equity finance. Often, this is because of the high levels of uncertainty about whether games will be successful, as well as the intangible nature of Intellectual Property. Difficulty accessing finance can in turn limit the ability of firms to invest in measures that could increase productivity.
A GIF would make grants or loans available to games businesses on a matched funding basis. The GIF would provide funding of between £75,000 and £500,000 to games developers nationwide. Funding between £75,000 and £100,000 would be delivered as grants, while soft loans above £100,000 would be matched pound for pound to ensure that games companies can find new investment from other sources.
According to TIGA’s research, the GIF would provide a healthy return on investment. The return on investment of £26.5m over 5 years therefore represents good value for money. Over the five years from 2018 to 2022, the GIF would:
- increase headcount by nearly 1,600 staff;
- create over 3,000 indirect jobs in the supply chain around games development;
- encourage games companies to invest an additional £231 million in development expenditure;
- contribute an additional £210 million in tax revenues over 5 years;
- help 175 studios (22 per cent of total);
- increase Gross Domestic Product (GDP) by an additional £514 million.
In its response, TIGA also highlighted the need to offer training and advice to entrepreneurs, so that they can make the best possible investment decisions. As part of larger grants, we want to see entrepreneurs given the opportunity to participate in investment boot camps run by industry specialists. Meanwhile, commercial mentoring should be available through paid industry veterans. The GIF would also promote recipients of its larger awards to investors through roadshows. This will help make recipients ready for investment, increase chances of award winners’ commercial success and boost the potential of exporting more games.
Dr Richard Wilson OBE, Chief Executive of TIGA, said:
“TIGA’s plan for a GIF would be an important step for the video games industry, helping small firms crack a tough global market and export their games around the world.
“It would improve developers’ access to finance, encourage new intellectual property, and strengthen the resilience of the UK video games industry. Importantly, the GIF would enhance productivity growth in the sector by catalysing investment in capital, skills and innovation.”
“We look forward to continuing our work with policymakers to make sure that the GIF becomes a reality.”