A leading consultancy has warned that the UK video games industry risks ceding talent and intellectual property to more flexible foreign rivals unless Whitehall quickly tightens its tax and investment incentives.
As France, Ireland and Australia aggressively woo studios with increasingly generous relief, Britain’s reputation as a global gaming powerhouse, home to franchises from Grand Theft Auto to Tomb Raider, could be in jeopardy, according to accounting, tax and business advisory firm Blick Rothenberg.
Speaking during London Games Festival week, Mandy Girder, a partner at the firm, said the sector urgently needed “increased” government support if the UK was to retain its place at the forefront of global games development.
“Without decisive action from the government, the UK risks losing both talent and intellectual property to other countries,” she said. “France, Australia and Ireland are offering increasingly generous and accessible incentive schemes to attract investment.”
The London Games Festival, now a fixture in the industry calendar, has put British creativity in the spotlight, but Girder warned that creativity alone will not keep the UK at the top.
“The festival highlights the UK’s undeniable creative strength, but creativity alone will not secure long-term global leadership,” she said. “The government must increase tax relief and investment in the sector.”
While the UK’s video games spending credit and wider relief for the creative industries have supported growth in recent years, Girder warned that the regime was increasingly seen as cumbersome by studios when compared with rivals overseas.
“Key interest rates are competitive, but the system is often seen as more complex and in some cases less flexible or accessible than the incentive systems in countries such as Ireland and Australia,” she said.
The recent tightening of the admission rules is already starting to have an impact. Under the revised framework, at least 10 percent of development costs must now occur in the UK rather than across the European Economic Area. This change is intended to boost domestic employment, but has derailed projects aimed at continental teams.
“Although this was intended to encourage the use of UK-based talent, it limited the number of successful applications for projects already underway targeting European teams,” Girder said. “This has resulted in a decline in the availability of these tax credits.”
It calls for a simpler, more generous regime, supported by targeted incentives explicitly aimed at attracting foreign investment.
“Simplifying and improving the UK’s tax framework and introducing targeted incentives to attract foreign investment would significantly strengthen the UK’s global positioning,” she said.
Access to funding is another ongoing issue, particularly for studios trying to get past the startup phase. While seed capital is relatively easy to come by, comprehensive funding that allows mid-sized studios to expand internationally and retain their intellectual property remains difficult to come by.
“Early-stage funding is relatively accessible, but mid-sized studios often face obstacles when seeking the capital needed to expand internationally and maintain valuable intellectual property,” Girder said. “This funding gap risks limiting the UK’s ability to fully exploit its creative strengths.”
The government’s newly launched Creative Industries Sector Plan, which provides £28.5 million in funding for the next generation of games developers, is a step in the right direction, admitted Girder.
“The UK has long been recognized as a creative powerhouse with world-class studios and exceptional talent behind globally successful titles such as Grand Theft Auto and Tomb Raider,” she said. “The sector plan is a positive step forward.”
However, she 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,” she said. “A more comprehensive approach that combines competitive tax relief, grants and alternative financing options will be crucial to enable sustainable growth.”
Her message to ministers was blunt. “Now is the time for industry and government to work together to simplify incentives, unlock greater funding and ensure the UK remains a preferred destination for global gaming 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 must take to ensure its future competitiveness.”
