Today, TIGA, the trade association representing the video games industry, has published a new report calling for the establishment of a UK Video Games Investment Fund (VGIF) to support the growth of the sector. Powering Up: A Video Games Investment Fund (February 2021) analyses industry survey data, international comparisons, and economic modelling to outline the case for a VGIF.
Difficulty accessing capital has consistently been one of the top factors holding back many games developers in the UK. UK games studios often find it difficult raise capital for growth. This finance gap means that many small, start-up and innovative companies struggle to scale up and are vulnerable to closure or collapse.
The VGIF would address this funding gap by providing 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 allocations above £100,000 would require companies to match pound for pound to ensure that games companies find new investment from other sources.
A survey of 45 independent and publisher development studios conducted in October 2020 found that:
- The top impediments to games studio growth were seen as access to finance and market saturation.
- Access to finance in general (whether equity, debt or government funding), was cited by 50 per cent of indie studio respondents as a barrier to their growth.
- 82% of studios see positive benefits to a VGIF and only 18% would not apply.
- Creation of original IP, company stability and headcount growth were the top 3 benefits.
The report calculates that the VGIF, costing an aggregate £26.5m over 5 years, would yield a net contribution to HM Treasury of £45 million (i.e. a 170 per cent return on investment) and would benefit the UK’s games industry and wider economy yielding the following impacts:
- 441 new full-time development roles would be created between 2021 and 2025.
- 806 new development support roles would be created between 2021 and 2025.
- £78 million in additional investment by studios between 2021 and 2025.
- £72m million in additional tax receipts to HM Treasury would be generated between 2021 and 2025.
- £174 million in additional GDP would be generated between 2021 and 2025.
The Government has stated that it is ‘looking closely’ at TIGA’s proposals for a VGIF. On 2 February 2021, the Minister for Digital and Culture, Caroline Dinenage MP, answered a written question on TIGA’s proposal, noting that the Department for Digital, Culture, Media and Sport is looking into the idea of creating a new, large-scale video games investment fund.
Dr Richard Wilson OBE, CEO of TIGA said:
“The UK video games industry is one of the sectors that the UK Government should aim to promote over the coming months and years. It is a high-skilled, high-tech, and export focused industry. Our sector has the potential to support employment and growth throughout the UK, with clusters of games development from Brighton to Dundee and 80 per cent of the workforce based outside of London.
“Difficulty accessing capital has consistently been the top factor holding back many games developers in the UK. This is why TIGA has called for the Government to introduce a Video Games Investment Fund to support the long-term growth of the video games industry. This initiative, alongside the improvement of Video Games Tax Relief, would allow the continued success and growth of the tech industry for years to come.”
TIGA is the network for games developers and digital publishers and the trade association representing the video games industry. For more information visit: www.tiga.org
For more information on TIGA’s proposal for a Video Games Investment Fund, see: https://tiga.org/policy-and-public-affairs/video-games-investment-fund
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