UK computer games industry grows again

GROWING demand for mobile phones and tablet computers and an explosion in the number of start-up companies has helped the computer games industry return to growth.

The collapse of a number of studios – including Dundee-based Realtime Worlds in 2010 – and Sony’s closure of its Liverpool operations last year have triggered a wave of smaller companies being set-up, according to data from trade body Tiga.

Industry experts said that tax breaks that come into effect next month are expected to fuel further growth and have already stimulated overseas investment.

Richard Wilson, chief executive at Tiga, said: “The UK economy may be on the verge of a triple dip recession but the recovery in the UK games development sector has taken off.

“Employment, investment and start-ups are up. The games development industry is growing again.”

Tiga said that the sector’s contribution to the UK’s gross domestic product (GDP) climbed to £947 million from £912m, while the amount of direct and indirect tax generated for the Treasury increased to £400m from £376m. The number of people employed by video games studios rose to 9,224 last year from 8,888, with the number of studios increasing to 448 from 329.

A further 16,864 jobs are indirectly supported by the industry, Tiga said, up from 16,250, while companies invested £427m in their operations, compared with £411m during 2011.

Wilson said: “The sector’s return to growth has been driven by three factors. Firstly, the increasing prevalence of mobile and tablet devices has created a growing market for games: studios are setting up to meet this demand.

“Secondly, the closure of big console-based studios has been followed by an explosion of small start-up companies.

“Thirdly, the advent of games tax relief is already stimulating growth. Games tax relief effectively reduces the cost of games development and it has contributed to inward investment by major international games companies including Activision Blizzard, Gree, Konami and Microsoft in British studios in 2012.

“Jobs and investment in the games industry are set grow further once games tax relief comes into effect from April.”

Jason Kingsley, chief executive at games studio Rebellion and Tiga’s chairman, added: “The UK games development sector is back on track.

“Mobile and internet-based gaming provide opportunities for growth; we have access to a highly-skilled and creative workforce; and games tax relief will give a further boost to employment and investment from April. The UK has everything to play for.”

But Wilson warned: “The UK games industry suffered badly during the past four years without games tax relief: developer headcount and investment levels remain below the 2008 peak.

“Additionally, start-up studios are vulnerable. At least 21 per cent of start-ups in 2010 have already gone under.

“Our challenge now is to help build sustainable independent games development and digital publishing businesses.”