In October 2007, Phil Harrison hosted a meeting of some of the UK’s largest studios to discuss how to counter the negative perception of the industry in the media and the Houses of Parliament and inaction in Government. A handful of meetings with government ministers had taken place during the 2007 London Games Festival to discuss the competitiveness of the UK studio industry, particularly with regards to the impact of government aid overseas. GIC’s Playing for Keeps reported that in 2006 the UK was pushed from third to fourth place in the global rankings by Canada, and that Canada, having decimated the French development industry, was now targeting the UK.

That long term threat to the UK industry has immediate consequences, but the ministers the industry met – Stephen Timms, Margaret Hodge and Digby Jones – claimed the industry fails to speak with one voice, with one even saying that he was unaware that games was a ‘serious’ industry.

To solve this issue, some of the UK’s largest studios came together to fund a campaign to educate MPs, policy-makers and mainstream media about how important the industry is, and what it offers UK PLC.

Key to solving the single voice problem was the involvement of both trade bodies. ELSPA and Tiga quickly came together to draft the key policies of the campaign, which centre on the key issues of costs and skills. The campaign went on to recruit some of the UK’s biggest studios, including some of the large non-affiliated studios like Frontier and Real Time Worlds. In total, Games Up is backed by studios and trade bodies representing more than 75 per cent of UK games development, publishing and service companies.

Games Up is not a new trade body; it’s a short term campaign that runs in parallel with the trade bodies’ day-to-day PR and lobbying activities. The campaign will run until August, and possibly to the end of 2008, but no longer. The sponsoring companies nominated a steering group made up of SCEE, Frontier, GIC, ELSPA and TIGA to manage and report back on the campaign’s activities. The steering group ran a quick pitch process and nominated a pair of mainstream agencies – Precise Public Affairs and 3 Monkeys PR – to deliver the campaign. GIC was also tasked with providing background data and overall campaign administration.

The campaign will endeavour to balance the threat of heavy overseas competition with the massive opportunity that a buoyant, growing UK games development industry provides. The organisers are realistic in assuming that it won’t immediately deliver tax breaks or solve the skills shortage overnight. By targeting mainstream media and MPs, the campaign will tackle some barriers that a call for more substantial measures to support the industry will face.

The campaign responded quickly to the gathering news story around the US state Georgia’s introduction of a games production tax credit and launched in mainstream media and to policy makers on May 26th, with the first pieces running in the Mail on Sunday and the Financial Times.

Join up! If you would like to contribute to the campaign, either by hosting an MP visit or financially, please contact us: rick@gamesinvestor.com.

Snapshot of the Games Up campaign

Main targets: Backbench MPs and policy makers, and the mainstream media.

Main objective: Educate policy makers and the media about UK games development so that a more informed debate about substantial support can take place.

Policies: Long-term goals are production tax breaks and skills, with a focus on what the industry can give back to the UK, as well as receive from Government.

Methodology: National media campaign starting on June 8th and a lobbying campaign consisting of a constituency MP campaign plus a series of parliamentary events before and after the summer recess.

Delivery: A pair of experienced non-games agencies (a lobbying company Precise Public Affairs and a PR firm 3 Monkeys) have been contracted to deliver the campaign. Games Investor Consulting has gathered a large amount of background data for media and MP, Treasury and UKTI briefings.

Management: The agencies’ work is being managed day-to-day by a steering group consisting of SCEE, Frontier, GIC, TIGA and ELSPA. The trade bodies and key non-affiliated independents have agreed the campaign’s policies so we can speak with one voice about costs and skills.

Campaign contributors: Key sponsors are SCEE, Microsoft Games Studios, Activision/Bizarre Creations, Electronic Arts, Take Two, Codemasters, Eidos, Frontier, NCsoft, Real Time Worlds, Reflections Ubisoft, Blitz, Sports Interactive, Relentless and Exient.

Key messages of the campaign

There are three main issues which concern members of the video games industry: world-class status, high costs and skills shortages.

World-class status

UK games are a force for good – economically, culturally and socially
– The UK is a world-class centre for games development, and has been the third biggest selling games development territory for most of the last 25 years – until 2006.
– UK studios have generated more than £14 billion in global sales since the industry began.
– With average salaries of more than £30,000, this is a classic knowledge economy. The average British games studio employee generated more than £124,000 in revenue worldwide in 2007.
– 10,000 staff in 200 studios country-wide created games that are projected to sell nearly £4bn between 2006 and 2008, generating £1.4bn of expenditure on British jobs.
– We’ve created some of the world’s most successful games and revolutionised gaming by attracting a wider audience.
– Games are played by 60 per cent of the UK population, and we’re a responsible industry; only three per cent of games are rated 18.
– Games can be good for you – mentally, physically and socially.
– Games are the future: six to 15 year-olds regularly choose games over TV, internet and film.

The UK’s world-class studio sector is under threat
– Making games in the UK is more expensive than every competitor territory.
– Foreign subsidies, tax credits and better access to finance are diverting investment from the UK.
– Skills shortages are hampering growth for most studios.
– Despite being a UK success story, there is negative perception in mainstream media and Parliament.
– UK games fell to fourth place globally in 2007, and will slide further in 2009.
– Many UK games studios are growing faster in overseas subsidiaries than in their UK head offices and some are relocating altogether to subsidised territories.

CONCLUSION: Government and the industry should join forces to promote the UK development industry

Via Games Up the industry has come together to speak with one voice to Government and policy makers about what we offer and what we need from government.

Skills

The problem: Skills shortages
– Studios face a worsening recruitment crisis in the UK.
– There have been 15 per cent fewer science graduates over the last decade, and falling numbers of computer science graduates – less than 20 per cent of games graduates get industry jobs because courses are not fit for purpose.
– 2006 Skillset accreditation – only four out of 81 courses are accredited by Skillset but their graduates are two and a half times as likely to get games jobs.

The solution: collaboration on education
– A Government-assisted programme which enables undergraduates studying maths, physics and computer science to get work experience in real games studios.
– An increase in the supply of computer science and mathematics graduates without sacrificing quality.
– More courses recruited to Skillset’s accreditation scheme.
– Centres of Excellence in video games, similar to the Film School, to improve standards in education, training and qualifications.

How industry will help: education growth and engagement
– Job creation – The industry will need to recruit at least 1,700 more staff in the next five years.
– Liaison with education – We will continue to work with universities to improve courses and prepare students for real world jobs using internships.
– Promoting science – We can use the appeal of video gaming to help government promote computer science, physics and mathematics in schools and universities.
– Engagement on Games Schools – The industry will work with Government on its recommendation to establish Centres of Excellence for Computer Games.

Costs

The problem: High costs and low government assistance will lead to job losses and falling investment
– Major competitor territories offer substantial industry-specific assistance but UK studios get little support.
– Canada, France, Australia and US offer either games-specific tax credits, subsidies or higher access to finance, and are winning more inward investment.
– The UK is struggling to compete on uneven international playing fields and our home-grown talent is being targeted and wooed by competitor countries.
– Without substantial support, the UK studio sector will shrink, resulting in 1,700 jobs losses and more than £180m of falling investment in UK studios.
– This shrinkage is already starting to cause loss of ‘critical mass’ with key industry-supporting businesses such as testing moving offshore.

The solution: EU-approved production tax credits
– A games production tax credit for games that pass the cultural test, on the same EU-approved grounds as the French games production tax credit (20 per cent).
– Maximise the number of games businesses that can benefit from the R&D tax credit scheme.
– Create an environment for a new generation of entrepreneurial studios to find finance, start-up and create more world-class games.

How industry will help: growth and new investment
– With a production tax credit, the industry expects to invest an additional £220m over five years in British jobs.
– With a tax credit, staff numbers will rise to a total of 11,500 in five years.
– Drive new games, start-new studio start-ups and new inward investment into the UK.

Case study: How Quebec invested in games to create the world’s third largest games centre

The Quebec government decided to attract the key knowledge economy industry of games to its shores in late 1990s. In the past four years, Montreal has invested £500m in tax credits to generate an estimated £1.5bn in inward investment by global games firms. Quebec is now home to the world’s two largest studios – EA and Ubisoft.

This is how Quebec persuaded Ubisoft to locate a 3,000-man studio in Montreal:

– Quebec offered a 37.5 per cent tax rebates on games development salaries, amongst a range of other incentives including a three year income tax holiday for emigrating foreign specialists.
– Quebec negotiated $1.1bn in investment from Ubisoft, from which the Government rebated $400m in tax credits and awarded an additional $50m in grants.
– Ubisoft built a graduate school to generate 2,000 new jobs over five years, investing $16m vs. Quebec Government’s $5m.
– Quebec’s studio staff numbers have grown 33 per cent in two years (vs. 8 per cent in UK), with an additional 25 per cent growth projected for next two years (vs. 3 per cent decline in UK).