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The European Journal
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Dr Jo Twist OBE

From home brew heroes to global success

What policy makers can learn from the rise of the UK games industry

In the past year, games have reached heights that scarcely seemed possible even five years ago. The global market is worth $186bn according to Newzoo, over four times larger than global box office takings were in 2019. Games are played by well over half Europe’s population, despite the fact that the industry has only four decades under its belt. They’re even popular enough to sell out stadiums and draw crowds of millions online when played competitively by professional players. 

But despite the size, prominence and outright importance of the games industry worldwide, there is still an overriding sense that the political class haven’t fully plugged into it yet. The industry has received, in many places, comparatively strong support for its activities in the past five years from policy makers. However, there is a sense that this still lags behind the support provided to other parts of the creative industries.

This is where an opportunity emerges for policy makers. The games industry has grown to the size it has in large parts despite the lack of active support from government. The question, therefore, is what would happen if that backing was forthcoming? And how could it affect the prospects of the sector in the long term? We can’t fully know the answers to a hypothetical like that. But Europe is home to a market where government support is not antithetical. And while the impact of that engagement has helped make that industry arguably, pound for pound, the best in the world, the story of the UK industry shows that policy makers across Europe can deliver returns from their respective industries.

Understanding the UK games sector

The UK games market is a big one. With a consumer market valued at £5.35bn per year, and with nearly 37 million players across the country, it is considered to be the fifth biggest market for video games (and associated cultural content) in the world.

On top of that, the UK is also considered to be one of the most developed games industries globally. The country plays host to 2,200 businesses that support the employment of nearly 50,000 full time equivalents across the country. It also contributes £2.87bn in gross value add to the UK economy at large, with the average GVA per employee sitting at £83,300, making it twice the size of the country’s oft talked about fishing industry.

Importantly, the games industry in the UK is spread across the country. 55% of games development jobs in the UK are based outside of London and the South East. While the capital is the biggest cluster for games – driving over a billion pounds in GVA and supporting over 5,000 jobs – seven clusters around the country, including the likes of Leamington Spa, Edinburgh Newcastle upon Tyne and Guildford, contribute in excess of £80m to their local economies each year. And with more than 20 towns and cities across the UK that host more than 20 companies, the sector has a track record of creating high value jobs in a range of places across the country.

Not every cluster will be as large or as successful as the UK games sector is. But if countries across Europe back games makers, they are all potentially able to benefit by generating growing highly skilled, highly valued creative jobs across their countries.

It also supports a wide range of businesses too. The UK is home to a wide cross section of companies. Global platforms and publishers have bases in the UK to cater for the domestic market, but also to act as a bridge between Europe and the US. Home grown development heroes like Jagex, Codemasters and The Tonic Group have built successful standalone businesses, employing hundreds of people to create games. Then there are external development businesses such as Sumo Digital and Splash Damage, who have built substantial work forces to bring the expertise of the sector to bear on leading international IPs. And what can’t be forgotten are the hundreds of micro businesses, producing thoroughly creative standalone games and selling them to international markets through digital store fronts.

Alongside the wide variety of games businesses sits a plethora of service companies too. Many provide tangible direct support to the sector. The UK is home to businesses offering the development engines used to make games, outsourced services to produce creative elements of a game (e.g. motion capture or voice acting) and wider tools. But the sector is also supported by a wide range of dedicated business support companies offering industry specific advice on finance, PR & marketing and legal matters to support its growth.

Finally, the games industry in the UK is supported by some of the brightest minds in the world. 88% of workers in the UK games industry hold at least an undergraduate degree, making it one of the best qualified professions in the country. And while homegrown talent, developed in the many universities offering great quality computing and game design courses, has helped the sector flourish, nearly a third of the UK industry workforce is from the rest of the world. This international talent doesn’t just drive the creation of great games either; it also plays a significant role in diversifying the make up of industry’s workforce – increasing the number of women and BAME representatives working within the sector.

The UK games industry has remarkably deep foundations for a comparatively young industry. And it becomes easier to understand why this is the case when we take a look at the environment in which the industry evolved and how policy has supported it.

Building for the long term

From an industry perspective, there are a number of key reasons why the UK games sector has developed into such a national success story so quickly into its existence. The first reason is the legacy of the bedroom coders of the 1980s. Historically, the individuals who made classic games like Dizzy, Manic Miner and Hovver Bovver have tended to be celebrated for their ability to code from home on rudimentary computing devices.

But their importance wasn’t just found in who they were; it was found in where they were. As explained in the Game Maker’s Toolkit documentary series The Rise and Fall of the Bedroom Coders, the shining lights of the UK video games industry blazed brightly in places such as Sheffield, Leamington Spa and Liverpool as much as they did in London. While the home brew computing revolution promised that programmers could take on the world, they were able to do so from within their communities – implanting the sector across the country from its earliest days.

As the industry grew, the early industry success stories – benefitting from the rapid growth of the sector – were able to begin to turn inadvertent regional distribution into coherent clusters.

 In Scotland, Dundee’s Institute of Computing (now the University of Abertay) and DMA Design – the creators of Lemmings and Grand Theft Auto – added ‘joysticks’ to the city’s reputation as a home for ‘jute’ and ‘jam’. Team 17, founded in Wakefield in 1990, helped establish a base for the industry in Yorkshire. The Guildford cluster grew successfully alongside Bullfrog and Lionhead, with the eventual closures of both leading to more studios founding in the area. And the success of the PlayStation in the mid 1990s helped the creators of WipeOut – based in Liverpool – and DRIVER – based in Newcastle – to survive in the area.

However, these points don’t adequately explain the UK’s success as a national cluster. While it is undoubtedly the case that the relative ease of setting up games businesses across the UK, and the access to a deep talent pool, helped companies to succeed, the sector also benefitted from a wider range of national support that ensured its growth was sustainable.

One of the earliest pillars of this was the early emergence of a trade organisation for the sector in comparison to the rest of the world. The European Leisure Software Publishers Association (ELSPA), the forerunner to the UK industry trade body Ukie, was first formed in September 1989 – making it the first such organisation to form for any national games industry in the world.

This was important for the development of the sector for a couple. First, it helped the industry to organise more effectively internally. It helped to bring together companies engaged in ongoing discussions on topics such as the reporting of sales data, the protection of intellectual property and the development of business in the sector to help the nascent industry develop further.

Second, it also provided the industry with a voice in early policy debates that gave it an opportunity to build relationships with government – even on challenging topics. In the early to mid 1990s, the iconic debate focused on the establishment and maintenance of an age rating system in response to moral panics around video game violence.

At the time, it led to the appointment of the Video Standards Council (VSC) to oversee the industry’s content through the lens of the British Board for Film Classification (BBFC) age rating standards. But nearly 15 years later, towards the end of the New Labour government, the debate culminated in the introduction of the Pan European Game Information (PEGI) age rating framework – something established and pushed forward in 2001 within the European political framework - in law following a review into the system by Dr Tanya Byron in 2008.

And while of itself this was an important development in the regulatory framework around games, the emergence of an age rating system is indicative of something much more important to the long term health of the industry: a relatively strong relationship with Government that has been established over many years.

Government has, for example, supported trade missions to international conferences for nearly two decades. The UK Games Fund, a dedicated funding pot designed to support prototyped games funded by Government to the tune of a million pounds a year, has been active since 2016 but was preceded by the Abertay fund that ran between 2010 to 2014. And Video Game Tax Relief (VGTR), the games industry’s dedicated tax relief scheme supporting the creation of culturally British games, has been running successfully for over half a decade – delivering £4 back to the taxpayer for every pound invested into it, according to the BFI’s Screen Business report.

This is where an opportunity emerges for policy makers. The games industry has grown to the size it has in large parts despite the lack of active support from government. The question, therefore, is what would happen if that backing was forthcoming? And how could it affect the prospects of the sector in the long term?

The industry in the UK has also benefitted from a number of invaluable global developments too. Digital distribution through storefronts like the App Store and Steam turned every business into exporters, allowing them to reach markets around the world with a press of a button. The emergence of game engines such as Unity, Unreal and Game Maker democratised development, making it affordable and accessible to even the smallest businesses. And the emergence of social media provided a platform for games to build and reach enormous communities, giving them a practical way to manage the one to many approach of selling games online.

However, the combination of a deep pool of talent, a wide spread of business types across the country, the existence of a national framework for internal industry development and a conducive policy environment has played a major role in placing the UK in the position we find it today.

And, importantly, the industry looks relatively well set to continue this growth too. The impact of COVID-19 on most industries has been significantly negative, but the games sector in the UK has mostly ridden it out.

While companies did report a small reduction in productivity to 80% and concern about longer term access to finance, 49% of UK businesses surveyed in Ukie’s Playing On Report reported a rise in profits during lockdown and only 17% reported using the government’s furlough scheme to support their business. 24% even reported that they continued to hire through the process.

In short, the UK sector has been able to grow so effectively because the people talented enough to make games have ample support from Government, from within the sector and from the natural resilience of the sector in a digital age to build a business that can thrive anywhere in the country.

Moving to the next level

So what does the future hold for the UK sector? The immediate positive for the UK industry is that the profile of the sector is closely aligned with the Government’s ambition to ‘level up’ the UK at large.

The Social Market Foundation highlighted this point extensively in a recent paper. The location of high value games industry jobs across the UK, and particularly in areas close to ‘red wall’ constituencies that fell out of Labour’s grasp, make it a natural sector to back – especially given its potential to create hundreds of jobs off the back of hit games such as the UK’s 2020 breakout video game hit Fall Guys.

The industry has also seen its importance rise during the COVID-19 crisis. Alongside its aforementioned economic resilience, the sector has been able to point to the numerous ways it supported people across the UK during lockdown. This included giving away tens of thousands of free games to NHS workers through its Games for Carers initiative, its support for the Government’s #LetsTalkLoneliness campaign and its broader benefits on player mental health which included reducing feelings of anxiousness and isolation during lockdown.

However, the sector also has to negotiate its way through unprecedented regulatory scrutiny. The monetisation of a small number of video games through loot boxes, a paid random item that gives players content, led to Parliament’s Digital, Culture, Media and Sport Committee calling in September 2019 for it to be regulated as gambling The emergence of ‘gaming disorder’ in the World Health Organisation’s International Classification of Diseases has forced the industry to consider further its impact on players.

The sector also faces some long term issues that could affect its fortunes. The implications of Brexit remain unclear, but it is likely that access to talent will be disrupted and there is a risk that data flows will be undermined. The industry is also facing challenges in broadening the domestic talent pipeline, both to ensure the sector has enough talent across all disciplines to fill job roles and to make sure it diversifies entry to the sector for more women and BAME people.

Fortunately, the relatively long established framework of internal industry co-operation and an understanding policy environment has ensured that the sector is already well placed to tackle problems - and potentially seize the opportunities - presented to it.

On the thorny issue of loot boxes, the sector has moved quickly to assuage concerns on in game spend. It has strengthened its age rating system to ensure that any game containing them is labelled as such and that it displays the probabilities of getting items within each major platform. The sector has also run a major consumer awareness campaign called Get Smart About P.L.A.Y., which has sought to equip parents and players with the confidence to use settings on their devices to stop concerns about overspend or excessive screen time at source. This approach is consistent with the industry’s self regulatory approach during the early days of age ratings and is why it argues that any issues with loot boxes should be dealt with it – or through appropriate consumer regulation – rather than inappropriate gambling law. In regards to the talent pipeline and diversifying the sector, the games industry has also put in place a number of schemes and initiatives to develop the next generation of talent.

In education, the UK industry’s flagship Digital Schoolhouse scheme has brought computing to life through play based learning to over 80,000 students through a network of schoolhouses across the country. BAFTA’s games team has run the inspirational Young Game Designer competition, giving students across the UK the chance to win awards for creating either the best game or the best game concept. Schemes such as Into Games have helped to collate a range of initiatives designed to help students into the industry, while also producing resources to explain the range of jobs. And companies themselves have developed the pipeline further, with the likes of The Sumo Group and Creative Assembly running entry level schemes to bring through the next generation.

The games industry in the UK is supported by some of the brightest minds in the world. 88% of workers in the UK games industry hold at least an undergraduate degree, making it one of the best qualified professions in the country.

The sector has also led the way on diversity. Following the UK Games Industry Census, the largest and most comprehensive survey of industry diversity done in any games cluster worldwide, the industry collectively launched the #RaiseTheGame pledge to commit companies to hire widely, foster inclusive workplaces and reflect diversity in game content. With nearly a hundred companies signing up in under a year, and schemes emerging from both companies and industry advocacy groups in response to it, it shows that the industry does understand and appreciate the need for diversity across it.

But what the industry also needs is additional support from Government to achieve what it can. While the UK industry does have a comparatively strong relationship with Westminster and elsewhere, the level of support for games lags well below the rest of the creative industries. And while they require support following the COVID-19 crisis, the games sector argues that ambitious support for games could lead to both widespread economic good for the UK and present a genuine opportunity to cultivate a home grown ‘unicorn’ business.

For the most part, the industry is looking for existing support to be boosted to continue to grow the industry further. In the Ukie Manifesto ahead of the 2019 General Election, the industry asked for an extension of the UK Games Fund from £1m a year to £25m a year to support games prototyping, to boost VGTR further in recognition of its great return for the taxpayer of £4 for every £1 put into it and to support regional organisations such as Creative England, Gameopolis for the North West and Scottish Games to ensure that growth is targeted at the grassroots. It also is seeking a beneficial Brexit outcome. While the industry has secured a number of roles on the government’s shortage occupation list to keep talent coming through, an agreement that maintains access to talent and keeps data flowing would be welcomed by the sector.

However, the sector also believes that rigorous support for games industry priorities could have benefits elsewhere. A significant investment into computing in schools could, for example, create a talent pipeline that benefits the industry as well as myriad sectors. Investing strongly into esports, a growth industry that’s already contributing £111m to the UK economy despite no backing, by developing a hub around an existing event space such as Birmingham’s NEC could deliver long term jobs in both the sector itself and wider tourism. And having the ambition to back games businesses by launching a UK wide accelerator, backed by significant funding, would give creators the chance to build big while also ploughing money back into communities based across the country in the process.

Conclusion: levelling up across Europe?

Though these issues may seem specific to the UK games industry alone, the truth is that the success of the sector is something that can be – and already is – replicated elsewhere. Already France and Germany are, in of themselves, European games market powerhouses. Poland is home to a thriving PC games cluster driven in no small part by the presence of CD Projekt Red; one of the biggest game developers in the world. The Balkans are waking up to games, with Serbia recently founding its first trade body and forging links with the UK through the British Council to share expertise. Greece has even set up its own version of video game tax relief, offering even more relief than the 20% provided to developers in the UK.

By backing growing games companies with effective policy measures, educating the work force to tackle creative digital challenges and sharing knowledge – either from internal clusters or from successful games industries abroad – policy makers can, in the spirit of those UK game developers in the 1980s, build their own remarkably resilient home brew success stories.

Not every cluster will be as large or as successful as the UK games sector is. But if countries across Europe back games makers, they are all potentially able to benefit by generating growing highly skilled, highly valued creative jobs across their countries.

The combination of a deep pool of talent, a wide spread of business types across the country, the existence of a national framework for internal industry development and a conducive policy environment has played a major role in placing the UK in the position we find it today.