Britain’s video games industry is at risk of bleeding talent and intellectual property to overseas rivals unless Whitehall moves quickly to tighten tax and investment incentives, a leading consultancy has warned.
As France, Ireland and Australia aggressively court studios with increasing ease, the UK’s reputation as a global gaming powerhouse, home to franchises from Grand Theft Auto to Tomb Raider, may begin to slip, according to audit, tax and business advisory firm Blick Rothenberg.
Speaking during the week of the London Games, Mandy Girder, a partner in the company, said that the sector urgently needs the Government to “step up” its support if Britain is to keep its seat at the top table of world sports development.
“Without decisive action from the Government, the UK risks losing both talent and intellectual property to other countries,” he said. “France, Australia and Ireland offer growing and affordable incentives designed to attract investors.”
The London Games, now a fixture on the industry calendar, has put British art in the spotlight, but Girder warned that art alone will not put the UK ahead of the pack.
“The festival highlights the UK’s undeniable creative potential, but art alone will not secure long-term global leadership,” she said. “The government must strengthen tax relief and investment in the industry.”
While the UK’s Video Games Expenditure Credit and wider support for the creative sector have fueled growth in recent years, Girder warned that the regime is proving too much for studios to struggle when set against rivals overseas.
“The subject standards are competitive, but the system is often seen as more complex and, in some cases, less flexible or accessible than incentive regimes in countries such as Ireland and Australia,” she said.
The recent tightening of eligibility rules is starting to bite. Under the revised framework, at least 10 percent of development spending must now be made in the UK instead of the wider European Economic Area, a change aimed at boosting local employment but which has boosted projects built by teams across the continent.
“Although it is intended to encourage the use of UK-based talent, this has had an impact on the number of successful applications for projects that have already been developed and planned for European teams,” said Girder. “It has led to a decrease in the availability of these tax credits.”
You want a simple, generous program, backed by targeted incentives clearly designed to attract inward investment.
“Simplifying and improving the UK’s tax framework, coupled with the introduction of targeted incentives to attract inward investment, will significantly strengthen the UK’s global standing,” he said.
Access to finance is one of the constant headaches, especially for studios trying to get past the early stages. While seed money is easy to come by, scale-up funding, the kind that allows medium-sized studios to expand internationally and retain their IP, remains difficult.
“Early-stage funding is relatively accessible, but mid-stage studios often face obstacles when seeking the capital needed to expand internationally and secure valuable intellectual property,” Girder said. “This funding gap threatens the UK’s ability to fully exploit its creative potential.”
The government’s recently launched Creative Industries Sector Plan, which unlocks £28.5 million in funding for the next generation of game developers, is a step in the right direction, Girder agreed.
“The UK has long been recognized as a creative powerhouse, home to world-class studios and the exceptional talent behind globally successful titles such as Grand Theft Auto and Tomb Raider,” he said. “The industry plan is a great step forward.”
But he questioned whether the intervention goes far enough to address structural weaknesses in the industry’s funding pipeline.
“The question remains whether this level of support is sufficient to address the structural funding challenges facing the sector,” he said. “A comprehensive approach, including competitive tax relief, subsidies and other financial measures, will be essential to unlock continued growth.”
His message to the ministers was straightforward. “Now is the time for industry and Government to work together to simplify incentives, unlock funding, and ensure the UK remains the preferred destination for global sports investment.
“The London Games Festival highlights the UK’s role as a leading force in the global video games market, and the steps the Government needs to take to safeguard its future competitiveness.”
