Game Over for UK developers?

This article has at its core quotes and statistics from Dr. Richard Wilson, CEO of The Independent Games Developers Association (TIGA), speaking exclusively to Critical Gamer.

The industry has much to thank British developers for. Grand Theft Auto (Rockstar North, formerly DMA Design); LittleBigPlanet (Media Molecule); Project Gotham Racing (Bizarre Creations); Burnout (Criterion); Tomb Raider (the now defunct Core Design); looking further back, Goldeneye 007 (Rare), Driver (Ubisoft Reflections, but then Reflections Interactive), and Lemmings (DMA Design again) to name but a very few. We could in fact fill this whole page with games developed in the UK that have met with huge worldwide success, or have in some other way had an important and permanent influence on the industry.

Our British readers – particularly the older ones – may raise a smile at the mention of games from much older platforms such as the Amiga, Spectrum and C64 such as Skool Daze, Cannon Fodder, Jet Set Willy, Manic Miner, and Dizzy. It was back when graphics were little more than carefully directed smudges on the screen, in fact, that much loved classic Elite was developed. British developers have given the games industry an incalculable amount of revenue and kudos, and players an equal amount of fun, in the past. What can we expect from the UK in the future?

The worrying answer is: possibly very little.

“Until 2006 we were consistently the third largest developer in the world in terms of revenue generation.” Dr. Wilson told us. “However, because many other countries provide generous tax breaks for games production, investment has begun to drift away to other countries and the UK is expected to slip to fifth position in the world”.

The British developed Grand Theft Auto IV, from Rockstar North (based in Scotland).

We all play games to escape prosaic concerns such as tax, business dealings, and government legislation. However, the industry that produces the games we play operates in the real world twenty four hours a day, seven days a week. Developers and publishers have long been vocal about the UK government’s need to afford them tax breaks, and it seems that in recent years the effects of the lack of any such tax breaks are becoming more and more visible. As Dr. Wilson says, projections are that things will only get worse.

There is no jingoistic cry of Britain against the world here. Developers from other countries, most famously America and Japan, are nothing short of invaluable. From a business perspective they have generated billions of pounds of profit for the industry as a whole across the years; from a gamer’s perspective, they have given us some of the greatest games of all time, which would never have come from a British studio.

The concern is that tediously prosaic problems can have depressingly prosaic consequences. Yes, it would be nice if British gamers could see a surge of British humour and culture in the games their native companies develop. However, developers leaving the UK en masse can and will have disastrous consequences on a very human level. Jobs will be lost. The more companies that leave, the less tax such companies will pay, and the less money their employees will be spending. The UK economy as a whole will shrink. Gradually, but – if enough developers leave – it will shrink. The effects will be felt, however slightly or gradually, by people who don’t even have an interest in videogames.

Dr. Wilson gave us the alarming news that between July 2008 and July 2009, 15% of UK games businesses went out of operation, and 4% of the workforce was made redundant. We must stress that he told us this in response to a question relating to the recession; but how much could tax breaks have cushioned the blow?

TIGA has proposed a Games Tax Relief package. It would, they are happy to admit, cost £192m in tax relief. But the benefits, in their own words:

  • Create or save 3,550 jobs
  • Increase and safeguard £457m in new development expenditure and ‘saved’ development expenditure that would be lost without tax relief
  • Increase and protect £415 million in new and saved tax receipts
  • Talent would have less incentive to leave the UK, and companies would be less likely to fold

Our research indicates that Games Tax Relief would stimulate the development of more new IP” Dr. Wilson adds, which is surely good news for you whether you’re a UK gamer or not. He also has a suggestion that would benefit many non – games related businesses as well as developers: “The Government needs to avoid adding to the tax burden on UK businesses in general and games businesses in particular. We also need to increase investment in higher education from 1% of GDP to match USA levels (2.9%) in the medium term. This is necessary to ensure that our universities have the resources to produce high quality graduates for the UK economy and for the games sector especially.”

Britain’s incumbent political party, Labour, seem to have been quieter on the issue than the industry would like. With a general election now due in just a few months time, the main opposition party – the Conservatives – have seized on this issue in order to garner support from the games industry.

Ed Vaizey

Speaking at last year’s London Games Conference in October, Shadow Culture Secretary Ed Vaizey (after first buttering up those gathered with praise for the industry) talked about the need for faster, more widely available, reasonably priced broadband. He even talked about promoting and improving the quality of courses related to games development, and the government allowing industry figures to communicate directly with them. He stopped short of supporting tax breaks for the games industry however, saying that they needed to “think more widely than that”. There was also plenty of talk of the need to “look at” what seemed to be policy proposals (such as the ideas mentioned above), but on closer examination proved to be ambiguous promises offered in exchange for votes.

Not that this is how politicians usually do things, of course.

Trade weekly MCV features a ‘quote of the week’ at the back of each issue. The most recent at time of writing (issue 572 January 29th 2010) sees Vaizey in the spotlight again. He is quoted as saying, regarding Labour MP Keith Vaz’s absence from last week’s Westminster eForum debate: “Tell [Vaz] that the Parliament website has a video game on its front page and no one has been killed yet”. For those who don’t know, prominent politician Vaz is a long – time vocal opponent of videogames, and the closest thing the UK has to its own Jack Thompson. For a detailed overview on his past attacks on games (as well as details of several non – games related scandals and questionable practices he has been involved in in the past) look him up on Wikipedia.

Keith Vaz

So no matter which party wins the upcoming election, further help and support for the UK games industry is far from assured. There’s always plenty of lobbying and campaigning behind the scenes however (not least from TIGA) so there’s still hope. The battle, for battle it is, is far from over. But what are we as consumers doing? How did we spend our money last year, when the recession hit hardest and was the most widely reported? The following figures are those provided by ELSPA and compiled by ChartTrack, which were reported in MCV issue 570, January 15th 2010.

There were some positives; the Xbox 360 and PS3 both saw game sales increase last year over 2008, by 4% and 2% respectively. Game sales in the UK overall (for the first 52 weeks) totalled £1.529bn which, while 14% down from 2008, is still the second biggest year for videogames on record. In fact, TIGA told us that in the twelve months ending September 2009, revenues from UK game sales outperformed box office takings and DVD/Blu-ray sales combined by a massive 44%.

Looking again at the ChartTrack figures for 2009 as a whole however, the picture starts to look more gloomy. Sales were down from 2008 for Wii games (18%), DS games (27%), PSP games (37%) PC games (27% in terms of units), handheld consoles (27% in terms of units), console accessories (5%, again in terms of units), and less surprisingly, PS2 games (72%). The value of the UK console hardware market as a whole was down 24%.

So after wading through all those percentages, we can basically see that last year was a mixed bag of highs and lows for sales in the UK (and data for revenues from digital distribution was not available for these figures). Nothing new there; but the lows tended to be alarmingly low. These figures (combined with the spike in the speed of decline for the UK developing scene) has forever crushed previous claims that the games industry is ‘recession proof’.

The British developing scene is not dead; but it is clearly fading from the international stage. The need for government support is now more urgent than ever. Could we one day see British developers reduced to producing nothing but shovelware and sequels, with the best talent scattered across the world? We sincerely hope not. Like it or not money talks, and the UK games industry needs it to tell developers ‘stay here’.

This article has been full of dry facts and figures, and may at times have seemed a world away from the videogames this website was created to celebrate and critique. Such information couldn’t possibly be any closer to the reality of videogame development however, and where things go from here will determine what future – if any – UK developed games have. There’s no denying that no matter how much British developers rise or fall, there will always be fantastic games; but the more of them we lose, the more of our hobby’s past – and future – we lose with them.

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Written by Luke K

Luke plays lots of videogames, now and again stopping to write about them. He's the editor in chief at Critical Gamer, which fools him into thinking his life has some kind of value. Chances are, if you pick up a copy of the latest Official PlayStation Magazine or GamesMaster, you'll find something he's written in there. Luke doesn't have a short temper. If you suggest otherwise, he will punch you in the face.

8 comments

  1. Really, really interesting article. I keep being amazed by how you guys are able to pick out the most interesting and relevant issues, and write so passionately about it. This is an issue that is definitely worth being discussed about – kudo’s for bringing it to the light of the audience. I’m sure most people aren’t even aware of this issue. Here is Holland exactly the opposite occurs – game companies are very well supported, to the point even that some take advantage of it in a wrong way. Britain has given us some of the most brilliant games and especially in these times, support from the government is very much needed.

  2. rekonizakilla /

    I re

  3. rekonizakilla /

    i remember Keith Vaz (dodgey wanker). Lied about the circumstances of a school boys death to support his argument against the release of a video game.
    Good site, Good read.

  4. LordVonPS3 /

    “British developers have given the games industry an incalculable amount of revenue and kudos, and players an equal amount of fun, in the past. What can we expect from the UK in the future? The worrying answer is: possibly very little.”

    The answer to the question is actually regarding the risk companies want to take in terms of brand and reputation.

    How much are they willing to pay to get the job done – properly? The real answer is – quite a bit actually – especially when they don’t have the expertise, knowledge or skill to do it themselves.

    Since you seem to be debating the inevitable rise in offshore development, let me put it this way. Offshore development has brought you…

    * Broken online gaming.

    * Broken single player gaming.

    * No actual reduced cost in video game prices – but an increased cut in development skills, knowledge & expertise.

    * Job cuts and unemployment.

    The problem isn’t with politicians, it’s with private shareholders looking to make a quick buck and company executives taking home super fat pay-bonuses instead of paying their staff.

    The net outcome will be more British developers being contracted to do specific work and being paid – what they’re worth – to deliver demonstrably superior games.

    After all, if all your games are crap, (I’d hope) no-one will buy them.

  5. Zoibie /

    Fantastic article! I certainly agree that things are unlikely to change any time soon, not only is not very high on the agenda (especially with an election soon) but I’m a sure a majority of voters won’t care so long as they can keep swinging their Wii-remotes; there’s little potential for publicity.

    Still, I guess we should count ourselves lucky that the issue of videogame censorship hasn’t been brought up as much as in some countries

  6. steven g /

    I think it is very important to point out that these tax breaks are there at the point of development to encourage risk and investment. Should a project actually become profitable the government then recoups the ‘lost tax’ on top of any other company profit etc. So in effect its a system designed to encourage risk, but should the risk payout the government (and tax payer) doesn’t loose out. The problem of course is that many games don’t make a profit, and should the games be in the firing range of the daily mail then that too would complicate things.

    I suppose the government’s logic is one where they argue, why games? Why not other industries too. However, I think there is a cultural and job quality argument with regard to games, similar to that of film.

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