A UK games plan: why Government needs a dedicated strategy to grow the sector: Video Games Industry Memo, 02/10/2023
Incoherent interdepartmental thinking and international competition means it’s time for a proper plan for the UK games biz
UK games scene needs a new plan from Government to succeed.
Bungie lays off 8% of its workforce as industry job losses continue
WarioWare: Move It! heads up releases with micro-game madness.
VGIM aficionado and noted newsletter peddler Matt Honeycombe-Foster wrote to me last week to say I could inject extra personality into my newsletter by adding a fun little line before the main story.
Given that I don’t have a personality, that’s a big ask. But I’ll give it my best shot properly - and in less meta fashion - from next week onwards.
The big read - A UK games plan: why Government needs a dedicated strategy to grow the sector
Last week, Ukie, the only video games industry trade association in the country worth listening to, launched the sector’s manifesto ahead of next year’s general election.
Backed on the day by Shadow Creative Industries Minister Sir Chris Bryant and a strong contingent of Labour MPs (and none of their Conservative counterparts), the launch saw calls for the creation of a Digital Creativity GCSE, a further bump to the UK Games Fund and reforms of the apprenticeship levy.
However, the friendly political sabre-rattling (and even friendlier post-event karaoke) was masking something.
Despite the positive posture and diplomatic poise of the event, the manifesto itself contains a number of subtle warnings that the UK sector’s position in the global games world is under threat.
And a big reason for that is incoherent Government policy. Rather than build a strategy for the sector, the UK has instead crossed its fingers and hoped it can keep growing without a plan to foster it further.
But with Government policy across departments inadvertently undercutting the domestic industry and international rivals building coherent strategies to grow their sectors, it increasingly looks like we need a dedicated video games plan of our own to keep pace with the competition.
Growing on its own?
The UK has long had a reputation as both an excellent place to make video games and to sell them too. But its also proven its worth as a surprisingly punchy economic contributor too.
Ukie quietly announced as part of the manifesto launch new figures that demonstrated the ongoing positive impact of the sector on UK PLC, such as the £6bn in gross value add it contributes to the economy and the 76,000 jobs it supports in clusters such as Dundee, Leamington Spa and Teesside.
But from a policy perspective, the success of the UK games industry has mostly occurred as a result of the entrepreneurial drive of the businesses within it.
In many ways, that’s a good thing. The sector was left with a free hand to grow, matching decades of experience building video games with ‘classic’ UK market strengths - such as access to finance, a stable legal environment, excellent universities and its creative history - to turn the country into a great base for domestic and international businesses selling into a global digital market.
However, it created an indirect problem: if the industry has grown effectively when left to its own devices, how much support does it really need from Government? And with games less understood and less glamourous than their more state dependent creative industry counterparts, why expend political capital on them?
The result has been an approach to industry from Government which veers between broad indifference to its needs or painful urgency to act.
For example, the introduction enormously valuable Video Games Tax Relief (VGTR) in 2014, which allows developers to claim 20% off the cost of relevant taxable expenses for culturally British games, was less an example of proactive policy making and more a reaction to Canadian tax reliefs sparking a brain drain in the late 2000s.
Meanwhile, the creation of a pioneering Video Games Research Framework in May 2023 was something that the industry had requested in its last manifesto in 2019. But Government only developed an interest in return when its extensive call for evidence into loot boxes didn’t turn up the robust harms it thought it’d find. Funny old thing.
Anyway, that slightly snoozy approach to supporting games has just about held up as the sector has expanded enormously over the past decade and through the pandemic.
But that position is increasingly unsustainable in the face of both an industry slowdown and, more importantly for our political overlords, two major changes within the games policy environment that makes laissez-faire a laissez-mare for the sector.
Ker-plonkers
First, the lack of a dedicated games strategy within Government has led to a range of departments and bodies simultaneously removing key policy rods sitting underneath the sector in an inadvertent game of regulatory Kerplunk.
In regards to access to talent, securing international talent has become an ongoing pain point for the sector. It broadly sucked up Brexit as best as it could - accepting that the cost of hiring key talent from the EEA (which accounts for 20% of the workforce) would likely increase as immigration lawyers, visa costs and NHS surcharges entered the mix.
But the Migration Advisory Committee’s recent recommendation to reform the shortage occupation list to remove games roles will force businesses to use the increasingly pricy Skilled worker Visa route to hire - adding costs and further diminishing confidence in Britain as a place to base talent.
On the funding front, the Government’s decision to rejig tax relief in favour of a Video Game Expenditure Credit (VGEC) has caused further grumbling.
This is in no small part due to a Sir Humphrey-esque stitch up from the Treasury, with VGEC’s headline rate of 34% masking the fact that it represents at most a minor 0.5% increase in available relief compared to VGTR or, in the case of projects with development talent based across borders, a reduction.
And as for the stable regulatory environment…well *gestures at the current UK political scene*.
But games has been affected specifically by the chaos, with its engagement with Government through the Department of Culture, Media and Sport (DCMS) not helped by *breathes deeply*: meeting 13 different culture ministers in a decade, the removal of digital from the department’s brief earlier this year and reported cuts in the head count of DCMS’s games team further reducing its bandwidth to help the sector.
And while there is little direct link between the actions of these departments, aside from the parlous statute of public finances and wider political uncertainty at the top of Government, the absence of a coherent plan for games has made it harder for the industry to go from door-to-door asking how policy changes stack up with public commitments to support the sector - risking its growth in the process.
International games plans
Second, and perhaps even more importantly, the UK’s lack of a plan for games is particularly problematic because international rivals increasingly have one.
In Germany, the Federal Ministry for Economic Affairs and Climate released a strategy for games in June 2022 with the specific goal of growing the domestic sector to match the market’s consumer influence. The EU, meanwhile, has started to outline a clearer approach to supporting video games as seen in the Commission’s publication of an extensive study on the sector on 16th October 2023.
In Australia, the country identified the ongoing growth of the games sector as a ‘crucial’ part of its Revive cultural strategy. This was laying the ground for the introduction of its weighty national Digital Games Tax Offset in July 2023 but also reflected the success of games strategies pursued at state level by the likes of New South Wales, Queensland and Victoria.
And we can hardly go without mentioning Saudi Arabia’s determination to become a video games cluster, investing in major games businesses and paying studios to establish bases in the territory (especially in partnership with its Blade Runner-esque futuristic city Neom) as a dedicated part of its national Vision 2030 strategy to prepare for a post-oil future.
In this context, the UK’s failure to have a clear games strategy - aside from mostly passing references in documents like the Creative Industries Sector Vision - doesn’t just mean the sector has to pick up the slack from an indifferent Government; it means the country at large is at risk of missing out on game’s increasing economic and geopolitical significance.
Whether it is the emergence of Nvidia as a trillion dollar driver of the AI economy as an evolution of its games business, the presence of tech superpowers Apple, Google, Tencent and Microsoft in the top ten games companies by revenue or the increasing importance of games as a channel for mass communication, the medium - and the industry behind it - demands much closer attention from UK policy makers and politicians alike.
So it’s a good time for the Government to develop a coherent video games strategy to unlock growth within the UK sector and ensure it continues to go toe-to-toe with international rivals.
And if this one won’t…well, at least it looks like the next one might be more eager to after October next year, eh?
News in brief
Bungie jumps: More job losses in the global games industry this week, with Bungie announcing it was laying off 8% of its workforce. Despite the industry generating record revenues in 2023, the figure for job losses across the world now stands at more than 6,000.
Xbosses: Microsoft has shaken up the Xbox leadership team following its long awaited acquisition of Activision Blizzard. Eye-catching moves include the promotion of Sarah Bond to President of Xbox, Matt Booty heading up game content and studios and Chris Capossela stepping down from his marketing brief after 32 years.
Let’s pile in on Unity again (part 26): SensorTower reported that Unity’s disastrous efforts to impose a runtime fee on developers without consultation saw 15% of the company’s advertisers jump ship. I will stop going in on them one day, but it is genuinely fascinating to see how crippling one poorly implemented policy can be.
Crypt-no: Valve has provided a short term rejection of the use of NFTs in games in an interview in PC Gamer last week. While it didn’t outright comment on their deployment, it outlined how it enabled player accounts to carry over inventory from CS:GO to CS2 without the tech as a way of saying “we didn’t need it”.
Pro-Israel advert pops up in mobile game aimed at children: A graphic pro-Israeli advert appeared to a six year old child who was playing Angry Birds earlier this week, according to Reuters. A reminder for developers both to check their white/blacklists for advertising networks implemented in games and of the influential reach of video games (for better and worse).
Ins and outs
Anika Grant, Chief People Officer at Ubisoft, is leaving next month…Connie Booth has left her role as SVP and Head of Internal Product at Sony Interactive Entertainment after 34 years in post…Craig Chapple has returned to the warm embrace of Steel Media as Head of Content for Pocket Gamer Biz.
Events and conferences
Women in Games Career Development Expo, virtual - 9th November
Golden Joysticks, London - 10th November 2023
Unite, Amsterdam - 15th-16th November 2023
The Game Awards, Los Angeles - 7th December 2023
Pocket Gamer Connects, London - 22nd-23rd January 2024
Games of the week
WarioWare: Move It! - Unhinged micro-game collection gets players doing stupid things with their hands across 200 experiences.
Resident Evil Village - Capcom horror game intriguingly releases on iOS, firing the starting gun on mobile’s triple A revolution.
Talos Principle 2 - Sequel to popular first person puzzler arrives across platforms today.
Powerwash Simulator VR - Futurlab’s chill power-washing game comes to VR headsets this week.
Before you go…
There was much to be enjoyed at the YRS TRULY Halloween Party last Friday, but arguably the best part of the night was Lou Jones and Johnny Chiodini’s Disco Elysium inspired fancy dress effort.
Kim Kitsuragi would definitely approve of it, that’s for sure.
Got a tip for our ins and outs, events and conferences or games to watch sections?
Or want to chat to me about lending my keystrokes or brain to your cause?