TIGA Style: UK Games Industry Returns To Growth

By Adam Smith on March 18th, 2013 at 12:33 pm.

Two independent game developers take a stroll in London as the working classes look on.

The UK economy is about as healthy as the thousands of St Patrick’s Day revellers still clinging to the topsy-turvy floors of Irish pubs around the world. When they wake up on Wednesday, the shuddering of their bodies will be twinned with the shuddering of their minds as they face the new Budget, which has about as much chance of being ‘politically bold, economically effective and psychologically inspiring‘ as I have of winning Olympic gold in anything ever. And yet, even in these times of hardship, TIGA, the trade association representing the UK games industry, sends word that the games development sector has returned to growth.

The ‘I’ of this particular TIGA doesn’t stand for ‘industry’ but rather ‘independent’ and that’s the first clue as to where the growth is most evident. Dr Richard Wilson, CEO of TIGA, had this to say:

“The sector’s return to growth has been driven by three factors. Firstly, the increasing prevalence of mobile and tablet devices have 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, which TIGA was instrumental in achieving, is already stimulating growth.”

All of these new, smaller companies, many benefiting from the business and industry-specific experience of veterans, is a positive sign for gamers, bringing diversity and creative flexibility. It’s not all good news though.

“At least 21 per cent of start-ups in 2010 – 12 have already gone under. Our challenge now – and TIGA’s top priority – is to help build sustainable independent games development and digital publishing businesses. TIGA will do this by delivering services that improve developers’ access to finance and which enhance their commercial skills.”

Here are the figures, which will be fully detailed in an upcoming report, Making Games in the UK Today. A Census of the UK Developer and Digital Publishing Sector.

“…employment in the UK games development sector grew by 4 per cent in 2012, ending a three year decline in employment. Annual investment by studios rose from £411 million to £427 million between 2011 and 2012.”

Now, if only the rest of the economy would stop heading toward oblivion. We’ll be killing one another for a roll of Tesco Value loo roll soon enough, mark my words. But we’ll have plenty of indie games to play back at our shelters.

, , .

21 Comments »

Sponsored links by Taboola
  1. mickygor says:

    If I were fighting over tesco value loo roll, the only person I’d be killing is myself. That stuff’s not fit for purpose!

  2. Arithon says:

    As a software developer in the business arena, for a company just celebrating it’s 20th birthday, I would say that producing products people want, in a format they want and a price they can accept as fair, is the second most important goal, the first being the best customer relations you can manage.

    Recent events around Sim City, make me think certain companies are preparing for a nose-dive towards administration – and no, not even EA can avoid that if they keep behaving the way that they have towards their customers.

    Did those 12 companies that folded start small and build, or borrow money and jump at the deep end? More likely the latter.

    I’d like to hear from some small UK studios on how they are working to make end’s meet and have some success along the way. Here’s your challenge RPS, get some interviews with a few studios and publish their comments. Trade bodies are overpaid spinners of FUD most of the time. Skip talking to the monkey and ask a few organ-grinders.

    • Shuck says:

      “Did those 12 companies that folded start small and build, or borrow money and jump at the deep end?”
      Like other game companies that folded recently, they were a mixture of both. (As much as that’s been possible in the game industry.) Though publicized recent closures have included a good number of studios that had been around for a while (new studios that borrow lots of money and fail generally don’t get in the news, as they’ve failed before they’ve made a game, usually.) The industry has always been volatile and hit-driven, with studios needing a certain percentage of successful games to stay afloat, something that, when you’re discussing entertainment, is more luck than competence. With the budgets needed to produce hits increasing, and disruptions caused by social and mobile games, things have been extra-difficult in recent years. Higher dev costs required more and bigger hits to stay afloat, and AAA studios can’t really switch to making social/mobile games very effectively. So past competence hasn’t necessarily helped studios stay alive under current conditions. Plus the relationship between publisher and studio can mean that even a profitable studio can be destroyed by a troubled publisher.

  3. OverTheGun says:

    Hah at the toilet roll.. if shit did indeed hit the fan, you’d be a rich man (in whatever traded currency at the time) if you’d hoarded toilet paper.

    Seems like if you want to prepare for an economic collapse, you need to be half pirate king (invest in gold) and half toilet paper collector (odd, but a solid move.. pun intended).

    Back on topic, it’s nice to hear of any growth nowadays, and especially nice that it’s in the gaming sector.

    As a quick snipe at the Tories, who consistently claim that cutting taxes won’t stimulate growth.. look at what it’s done for an ailing UK gaming industry (though granted, it had a couple of other factors at play).

    • solidsquid says:

      Not really, if shit hit the fan you’d be a rich man if you hoarded hose pipes. Who wants to clean a fan with tissue paper?

    • El_Emmental says:

      Cutting taxes only helps growth when some growth isn’t happening *because* of these taxes.

      If a sector, or more globally, an economy, isn’t growing because of other factors, reducing taxes won’t magically make the other factors disappear.

      Things like :
      – the financial crisis
      – the planned real-estate crisis (so all the single or duo-owners have to sell their property to pay the loan, while the bigger owners and banks can leverage enough funds to buy all these properties back)
      – the middle-class crumbling
      – offshoring production (while maintaining consumption in western countries)
      – energy availability stabilization (= no more growth)(and soon crisis)
      – exploding economies (with much more speculation potential) in less-developed countries (China, Brazil, etc)
      – etc…

      => all these things can’t be nullified with a simple tax break.

      The banks, investors and multinational companies aren’t going to change their plan if the tax goes from 10% to 8% – their speculations are in the 30% (minimum), 2% is laughable for them. The money gained with these 2% will go straight to their initial investment plan, and not turn into jobs, salaries or any investments helping the economy of the country setting up these tax breaks.

      Also, keep in mind tax evasion is MASSIVE, if taxes were really preventing all these big actors from creating jobs/companies, they would just very easily neutralize these taxes like they’re already doing with their profits.

      Just look at Google, Amazon, etc – all these fast growing companies making truckload of profits are “optimizing” their taxation and are currently in slight (ha ha) troubles with some EU authorities and EU coutntries because of that cheating.

      That’s why tax breaks are never reserved for smaller companies, with strong mechanism preventing the banks/multinationales from exploiting these:
      1) Corruption of the politics prevents that.
      2) Smaller companies are actually paying MUCH more taxes than the big ones, giving them actual tax breaks will really become a problem for the budget ; while mostly legalizing tax evasion (reducing the cost of a tax evasion networks, lawyers and overall corruption required for that) for the most rich ones is less of a problem.

      Also, give them 500M in tax breaks -> receive 100M for you political campaign and well-sheduled “job creating”/artificial economic growth right before the elections.

      • Ironclad says:

        are you telling me that a crisis of demand can’t be fixed by tweaking supply? Preposterous!

      • OverTheGun says:

        Great post, dude.. very detailed!

        At the end of the day, I’d agree with you.. It doesn’t seem any one measure currently suggested will sort the myriad of problems.

        In my defence, and regrettably sounding a bit Labour (I’m not.. can’t stand any party) I was meaning tax relief more along the lines of VAT/etc, as opposed to corporations. No guarantees of any growth though (given the immediate loss of tax), and certainly not the magic bullet Labour thinks it would be I’d suspect. Just makes things a bit easier on folk, while hoping for a translation to growth over the years, rather than being squeezed for effectively nothing currently.

        In a nutshell, I meant the Tories saying that ground level tax relief won’t stimulate anything doesn’t sound right, and to add, I highly doubt what Labour’s implying would solve everything either.

        Armchair politics over here, I don’t assume I’m completely accurate and knowledgeable, I just enjoy the discussion :]

        Good read!

        • mickygor says:

          I’m aware of the perceived issues of progressive taxes like VAT, but I actually think there would be more benefit to tweaking it in the other direction.Raise the threshold for paying income tax, whilst also slightly raising VAT, and you could give people the illusion of wealth without any significant loss of revenue (very few people without savings think to save when they have the opportunity).

        • El_Emmental says:

          Thanks for the reply :)

          First I need to indicate that as I’m not an englishman (nor being in New York), so Labour/Tories sounds more like Stargate’s Goa’uld clans to me (I’m obviously exaggerating, but their respective histories are still pretty unknown to me – I only started watching the show when Tony Blair showed up first, and few episodes later when the Iraq War happened, so that’s pretty late season).

          Second, lowering VAT may sound like making things easier for people, and it’s pretty legitimate (as the VAT is most unfair tax: by hitting consumers with the same force, it represents a much bigger % of a household budget for the lower-income ones, than for the more rich people (who won’t spend everything in VAT-products)).

          However, lowering the VAT will allow the companies to immediately adjust their prices to compensate the lower VAT, and the end result will be: same prices, less money for the state, bigger profit for companies.

          The only way to make sure that extra money go into consumers’ pocket would be allowing the state to control the prices (= through state-owned companies, or state-enforced prices).

          As nationalization and the concept of welfare state are both in severe decline (we’re currently in a privatization and “small gov”/liberalism era), it is very unlikely lowering VAT could result in lower prices.

          Still, the lowered VAT was tried in a few sectors several times, in many differents countries – and as far as I know, even when the main companies (and sector-wide unions/association/group) of that sector signed papers forcing them to lower (or at least, freeze the prices), less than ~5% of them actually didn’t violated the agreement – they all took the money and ran.

          What the govs could do ? Fine them ? They threatened to leave the country and cut even more jobs if the gov was making a single move… and all the govs crapped their pants.

          The only way to make it easier for the average Joe is empowering states to go after companies hidding their profits offshore in tax-haven (an activity that is currently greatly helping terrorists, drug lords, war lords, mafias and all other high-profits criminals launder their money), and make sure they pay their taxes.

          It will require the combined forces of police forces, intelligence agencies and the army to break into these offices, banks and private islands (well-guarded with highly competent mercenaries – half being retired commandos/agents from western countries), so the welfare state can provide services to its people (health care, transport and transport infrastructure, education, etc).

          It will be better, but not perfect: the companies will still form cartels/monopolies and raise prices on what’s not provided by the state, while they’ll make you feel miserable (through marketing) if you don’t: own a spacious house, own a “cool” car, own a giant TV, hang around your house with a simple t-shirt during cold winter, eat boatloads of food (and eat fruits/meats all the time, no matter what’s the season), etc.

          Should we ban marketing then, so people feel less like shit with what they currently have ? I wish we could… well, we’ll have to: when the energy crisis will roll in and people will start riots because they can’t afford everything the marketing told them they should have to live a happy life, we won’t be able to shoot at the protesting crowd for years – we’ll eventually run out of ammo.

  4. zachforrest says:

    good news. It’s such a shame that videogames are barely an after thought at DCMS

    • Binho says:

      I disagree. While most other parts of the DCMS are getting cut left and right, games are the only ones getting tax relief. The DCMS is already woefully underfunded and under staffed, and has taken a proportionally massive hit. Just at the end of last year, they had to let go of 80 their 400 staff members and are still required to cut 50% of their admin costs.

      Museums, Libraries, Theatres and art centres all over the UK are getting hit hard, many are being closed down or seeing massive cuts in their budgets. English Heritage as well has lost a lot of it’s funding. The Film Council was abolished, as was the Libraries and Archives council. Local Councils are cutting their arts and culture budgets, in some cases up to 100%. 400 museums jobs were lost across the UK last year alone.

      I think it’s ethically wrong that games in this environment are getting a tax relief, while the rest of arts and culture is getting hit so hard. I’m not a fan, to be honest. Sure, Museums aren’t directly losing money to games. But the money the government doesn’t earn through tax relief, which is a form of subsidy like it or not, has to be made up somewhere. And at the moment, the rest of the arts and cultures industry is seen as the easiest target.

      Plus, I’m skeptical of TIGA’s claims of how much the tax relief has helped. If a large chunk of the growth is from indies, how much of this is from unemployed people trying to start their own businesses because they can’t find jobs? Wasn’t the tax relief aimed at AAA studios who were fleeing the country to Canada? Maybe the report will clear this all up.

  5. Hoaxfish says:

    I wonder how much of this is because of Kickstarter

  6. Premium User Badge

    strangeloup says:

    The wonderful thing about TIGA, is that TIGA’s a wonderful thing.

  7. SuperNashwanPower says:

    You misread it. It said ‘returned with GROWTHS’. It was using the metaphor of anal polyps to describe DLC

  8. Mark says:

    Wonderful pic, anyone know where it’s from?