Opportunities and challenges
The games market is growing at around 7% per annum and the UK has produced some of the world’s finest games companies, whose products usually rank the UK in the top 5 games-producing nations globally. We have over 1,200 games development companies, including over 700 studios, and 12,000 in the development workforce, filled with creative technologists with uniquely transferable skills. The potential for break-out hits has no better poster child than the fastest selling entertainment product of all time, the Grand Theft Auto series produced in Edinburgh.
Despite this potential, most UK’s games developers face significant economic challenges:
- Most games companies struggle to raise finance above the £50,000 mark due to insufficient finance sources for this creative sector.
- Most of the UK’s smallest games companies are failing to grow their headcount. There are 5 times as many tiny companies (under 5 staff) today compared to 2010 but only 20% more small companies (5-15 staff).
- Up to 12% of all games companies close their doors every year, nearly 50% higher than other UK creative sectors.
- Hundreds of games studios starting up each year fail to access enough finance for production, which limits their scale and commercial potential.
Government supports other cultural sectors (such as film, television and opera amongst others) with very similar needs but much less growth potential more generously than it does games. It’s time for this to change.
How can the BGI address this?
The BGI is proposing a new production fund for cultural games:
- Finance £5m in games development using grants and soft loans to between 35-40 projects each year, disbursed across three rounds each year.
- Projects will be assessed by experienced games staff and scored against innovation, diversity, new talent, experience and commercial potential.
- Funding of £100,000 and above will require matched funding by other finance sources, with certificates provided for successful award recipients.
- All games will be reviewed against the same cultural test used for Video Games Tax Relief.
- Awards will be recouped where possible with returning funds used to create new programmes.
Widen the circle of investors in games
To create a sustainable sector, the BGI needs to bring more private investors into games
- Trigger £3.9m in co-investment by institutional investment houses, trade and private investors.
- Help make award recipients investor-ready by providing training from industry specialists, with the goal of making an investment deck.
- Promote recipients of larger awards to institutions, angels and other sources by showcasing recipients of BGI funding to potential investors and develop a formal relationship with other public sources of investment such as the Angel Co-Fund to multiple its funding.
- Provide paid mentors from a pool of experienced industry professionals to advise recipients on strategic issues from distribution to commercial models to growth and investment.
Support for the BGI’s finance programme
Some of the most creative and competitive games studios in the world are based in the UK, yet almost all UK games companies struggle to raise finance. The BGI’s finance programme will help address this market failure. As one of a small number of games angels investing in UK games studios, I’m convinced that the BGI can increase the level of investment and widen the investment circle to new investors. We’re calling on the games sector and investors to support the BGI’s bid for new government funding for games production, culture and skills. Ian Livingstone CBE
I think the BGI is an important and long overdue initiative. It’s time the UK had a national games agency that champions the talent behind British-made games and recognises the contribution games make to our culture and economy. The provision of skills, training, and funding for games production will not only incentivise investors, it will ensure British studios become more sustainable, competitive and successful. Chris Lee, games angel
We really need this kind of progressive, long-term thinking for the UK games industry. We’ve seen British capital flowing into Finnish games companies due to the success of the government-backed Tekes scheme. With the UK already a world-leader in games, the BGI’s plan for soft loans to games companies with mentoring and matched funding will help drive significant amounts of new inward investment. There should be no hesitation to fund this. Shum Singh, Angitio Capital
The global games business is huge, and British games talent is world class. If the BGI can help ready that talent, investors like LVP will rush to support entrepreneurial growth with our funds, expertise and networks. David Lau-Kee, London Venture Partners
I believe this is an invaluable approach to ensure that we support and expand the economically and creatively vital video games industry in the UK. As one of the leading fund investors into the games sector in the UK, Mercia Technologies plc would welcome the introduction of a body that supports and develops new start-ups and small companies making them fit-for-purpose for further growth investment. Mike Hayes, Investment Director, Mercia Technologies
New production funding from the BGI will help British games studios create and retain their IP, ultimately benefiting the UK economy. I’m delighted to join other investors to call on government to fund this important landmark initiative. I look forward to working with the BGI team to help grow the scope and quality of games investment opportunities in the UK. Ian Hetherington, games angel