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Level up – Building a Stronger Games Sector

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Level up – Building a Stronger Games Sector LU/31 / Published: December 2008 Policy Briefing 1. PricewaterhouseCoopers Level Up – Building a Stronger Games Sector (2006) ‘Global Entertainment and Media Outlook 2006-2010.’ Over the last 30 years, video games have grown from a niche hobby into London: PWC. 2. According to MMOGChart a global entertainment industry. The arrival of a new generation of game there are currently 17 million consoles, alongside innovations like social and online gaming, has dramatically active subscribers in Multi-Player Online Games. enlarged the size of the market, creating substantial opportunities for 3. Nintendo’s Wii and DS consoles targeting demographics entrepreneurial companies. traditionally neglected by the video games industry, such But games have not just come of age in mainstream culture. They are also a as women, families and older people, have respectively sold source of innovation that benefits the broader economy. Technologies and 30 and 81 million units since business models developed in the video games industry are being applied their launch. 4. Holding, M. (2008) ‘Video to areas such as health, defence and architecture. The popularity of video games to become UK’s top entertainment form.’ Reuters, 5 games amongst young people makes them a promising potential source of November. Available at: http:// www.reuters.com/article/ educational innovation. technologyNews/idUSTRE4A46 1720081105?feedType=RSS&fee But if the UK is to continue as a global industry leader, important challenges dName=technologyNews 5. PEW/Internet American Life need to be tackled. These include skills shortages, unsustainable business Project (2008) ‘Teens, video models and barriers to accessing finance. The industry must also raise its games, and civics.’ Available at: http://www.pewinternet.org/ game in the rapidly expanding online market, and face up to intense – often PPF/r/263/report_display.asp 6. ISFE (2008) ‘Video gamers subsidised – competition from overseas. in Europe 2008.’ Available at: http://www.isfe.eu/ tzr/scripts/downloader2. php?filename=T003/F0013/3e/ ba/10udqgsz3qaghqd4alr5p A mainstream medium with a strong and 2006, video games exports contributed 0p3l39&mime=application/ UK presence £200 million to the UK balance of trade.9 pdf&originalname=Key_Facts_ English_final.pdf 7. ELSPA (2005) ‘The Games Video games are a rapidly growing creative There are currently around 10,000 developers Industry: A UK Success Story 10 – call to government for more sub-sector with a promising future employed by UK studios. They have been support for one of the UK’s most The video games industry is rapidly expanding, behind some of the most memorable franchises successful industries.’ London: with annual growth of 11.4 per cent, and and path-breaking genres,11 and enjoy a ELSPA. 8. Games Investor Consulting projected global turnover of $46 billion in world-class reputation for their ingenuity and (2008) ‘Raise the Game: The 2010.1 No longer are video games the preserve technical skills.12 competitiveness of the UK’s games development sector and of young men: a new generation of hardware the impact of governmental and new ways of playing2 have enlarged the While other creative sub-sectors concentrate support overseas.’ London: GIC Limited. market beyond its traditional demographics to in London, video game development takes 9. ELSPA (2005) ‘The Games embrace women, families and older people.3 place across the UK, with significant clusters Industry: A UK Success Story – call to government for more Video games sales continue to grow fast, even in Dundee, Cambridge, Brighton, Bristol, support for one of the UK’s most in the current economic downturn, and are Birmingham and Leeds.13 successful industries.’ London: expected to overtake music and DVD sales in ELSPA. 4 10. Ibid., p.9. the UK by the end of 2008. 11. Including Tomb Raider, SingStar, Fable or Grand Theft Of course, video games remain particularly Video game innovation creates Auto. 12. Twenty-five out of Develop popular with young people. A recent survey value beyond the boundaries of the Magazine’s Top 100 developers showed that 97 per cent of US teenagers play industry are based in the UK. See http:// 5 www.develop100.com/ video games, while 48 per cent of UK 16 to 13. CIO (2008) ‘Game On! A 29 year olds classify themselves as ‘active A highly creative and innovative creative Report on the Interactive Leisure 6 Software Subsector in London.’ gamers’. sub-sector London: CIO. Few industries rely on sustained innovation 14. NESTA (2008) ‘Hidden The UK is a global player as much as video games, with new hardware, Innovation in the Creative Industries.’ London: NESTA. The UK is the third largest video games market software, user interfaces and content driving in the world after the USA and Japan,7 and the sector’s growth.14 Today, highly interactive its development sector is the fourth largest gaming experiences can be enjoyed on almost NESTA Policy & Research Unit revenue earner, behind the USA, Japan and all digital platforms, and there is an explosion 1 Plough Place London EC4A 1DE Canada, whose subsidised industry captured of ‘genres’ that cater for the demands of an [email protected] 8 third place from the UK recently. Between 2004 expanding and diverse audience. www.nesta.org.uk 15. Vamey, A. (2007) ‘London in Oblivion.’ Available at: http://www.escapistmagazine. com/articles/view/issues/ issue_109/1331-London-in- With outcomes that can be applied in the with increasing frequency in classrooms to Oblivion broader economy complement traditional teaching. One pilot 16. See http://fold.it/portal/ The technologies developed by video games study in Scotland has shown that pupils who info/science 17. Lohr, S. (2006) ‘IBM studios are being successfully deployed in other add to their maths lessons with sessions of Unveils Server Line That sectors. Sophisticated game engines enable Nintendo’s puzzle game ‘Brain Training’ obtain Uses Game Chips.’ New York 22 Times, 9 February 2006. architects to produce virtual models of their better test scores. The capacity of games to Available at: http://www. building designs before construction begins.15 emulate real-life environments and complex nytimes.com/2006/02/09/ technology/09blue.html And, in the puzzle game Foldit, users ‘fold’ real scenarios also makes them very suitable for 23 18. These include large protein structures, collective activity that could training purposes. corporations such as MTV or lead to the discovery of new proteins with Disney, which have launched 16 virtual environments where their health and environmental benefits. users can meet up, socialise, play games and access content in new ways. The sector’s demand for high performance The strong position of the UK games 19. Hiatt, B. (2008) ‘Rock Games hardware, software and networks also sector cannot be taken for granted Battle for Bands.’ Available at: http://www.rollingstone.com/ encourages innovation in the ICT industries news/story/21896070/rock_ as a whole. These have wider applications: The UK development sector is projected to games_battle_for_bands/1 chips originally designed for the PlayStation decline in the coming years 20. NESTA (2007) ‘The New Inventors: How users 3 console now power servers that can process Despite all this, the UK industry is in danger are changing the rules of and display huge amounts of data during drug of decline. Recent research has forecast a drop innovation.’ London: NESTA. 17 21. Little Big Planet and discovery and research activities. in the number of UK video games studios and Buzz (two games respectively developers in the coming years, as well as a developed by Guildford-based Media Molecule and Brighton Many video games are distributed and played slide in global sales rankings behind countries studio Relentless Software) online. So, companies in the sector are such as China and South Korea.24 Several provide users with tools they can use in order to create experimenting with new technologies for digital structural weaknesses explain these growing their own content as well as distribution and community engagement, as difficulties. platforms for distribution. This increases the quantity of well as creating new business models based on complementary content available micro-transactions and virtual markets. These • Unsustainable business models and for these games, and their commercial attractiveness. See innovative approaches have been emulated by barriers to finance reduce the scope for http://www.guardian.co.uk/ other creative and media firms as they move innovation technology/2008/nov/06/ 18 little-big-planet-lbp-indiegames- their own activities online. UK studios have historically excelled at the games development of globally appealing original 22. The Guardian (2008) Increasingly, video games are also a platform genres and franchises – a high value- ‘Computer game boosts maths scores.’ 28 September 2008. through which other creative content and added activity that generates revenues for Available at: http://news.bbc. intellectual properties can be exploited in reinvestment. Creativity and innovation have co.uk/1/hi/scotland/7635404. stm innovative ways. As traditional CD sales fall, the helped to differentiate UK developers from 23. Virtual Heroes, which revenues that musicians earn from music video their less expensive Eastern European and simulates emergency scenarios, is one example of the emerging games such as Guitar Hero, Rock Band and Asian competitors. ‘serious game’ genre. See SingStar are starting to take their place.19 http://www.virtualheroes.com/ index.asp However, the growing levels of investment 24. Games Investor Consulting At the forefront of user-led innovation required to produce global blockbusters, and (2008) ‘Raise the Game: The competitiveness of the UK’s Previous NESTA research has shown the risk-aversion amongst publishers who prefer games development sector and growing importance of users as a source of to develop such titles ‘in-house’, have made the impact of governmental 20 support overseas.’ London: GIC new products, content and expertise. Perhaps it more difficult for UK studios to launch Limited.
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