TIGA has called on the Government to introduce a Video Games Investment Fund (VGIF) in enhance studios’ access to finance, promote the development of original IP and to encourage studio growth.

VGIF Overview

TIGA proposes that the VGIF could 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 above £100,000 soft loans would be matched pound for pound to ensure that games companies find new investment from other sources.

The VGIF could be financed via Grant in Aid, the British Business Bank or the National Lottery. The Fund could be managed by UK Games Talent and Finance Community Interest Company, by the BGI, or by a fund manager with experience of partnering with the British Business Bank.

A commercial mentoring business advisory service, staffed by paid industry veterans, would be mandated for successful recipients of awards. This will help make recipients ready for investment, increase chances of award winners’ commercial success, and increase the number of potential investors in games.

Eligibility Criteria

The VGIF would require an application procedure for games developers. Each application will be evaluated, and award funding to projects that fulfil a predetermined set of criteria. The criteria would involve the following:

  • The company is based anywhere in the UK.
  • The company expends a minimum of 80 per cent of the development costs of this project in the UK.
  • The project scores a minimum of 60 per cent against innovation, diversity, new talent, experience and commercial potential criteria.
  • The company retains majority ownership of the UP during the term of the loan.
  • The company can demonstrate a robust business plan about how it intends to use the funding to enhance its prospects for commercial success.

Impact of the VGIF

According to research commissioned by TIGA, the VGIF would involve an investment of £26.5 million over five years, but it would provide a healthy return on investment. Over the five years from 2019 to 2023, the VGIF would:

  • contribute an additional £196 million in tax revenues over 5 years;
  • increase headcount by nearly 1,500 development staff;
  • create over 2,700 indirect jobs in the supply chain around games development;
  • encourage games companies to invest an additional £200 million in development expenditure;
  • help 175 studios (17 per cent of total); and
  • increase Gross Domestic Product (GDP) by an additional £477 million

Precedent for the VGIF

There are many examples of games-specific public funding providing this level and type of investment to be found in Poland, France, Scandinavia, Belgium, Germany, Australia and Canada, but the most effective and best documented is in Finland.

Tekes, an agency backed by the Finnish Government for over 10 years, provided €70m in matched loans or grants to over 100 games companies or 20 per cent of the entire industry’s studio population by 2014. The turnover in the Finnish games industry leapt from €40m in 2004 to over €1.8bn in 2014. 260 companies now employ 2,500 staff with turnover projected to hit €2bn in 2017.

Perhaps the clearest precedent for the VGIF is the BFI’s funding for the production and distribution of film. The BFI provides around £20m in production funding to film projects in a typical financial year. This funding takes the form of soft loans and recoupable advances, with profit sharing if a film performs well. Despite changing its funding guidelines to encompass narrative-driven games in 2017, BFI funded no games productions in its last financial year.

Tom Watson MP, Deputy Leader of the Labour Party and Shadow Secretary of State for Digital, Culture, Media and Sport, said:

“Britain’s video games industry is a world leader, and it’s vital that it stays that way. TIGA’s proposal for a Games Investment Fund is something Labour is seriously considering as a way to boost innovation, investment and jobs in the sector. We need to make sure we sustain success in one of our most important creative industries.”

Chris Law MP, Co-Chair of the All Party Parliamentary Group for Video Games in the Westminster Parliament, said:

“Establishing TIGA’s proposed Games Investment Fund would boost investment and employment and help to grow the video games industry in the all of the UK’s creative hotspots, including the Dundee and wider Scottish games development clusters.”