Digital Games The UK. Supporting Your Growth CREATIVITY IS

Transcription

1 Digital Games The UK. Supporting Your Growth CREATIVITY IS

2 2 Digital Games Introduction The UK has one of the most advanced games industries globally, with over 30 years experience of producing some of the world s most innovative and commercially successful titles. It is underpinned by world-class universities producing a stream of talented developers and designers, an enthusiastic games-playing population as well as a business ecosystem that meshes creative and technical expertise. Thanks to improving data infrastructure, new business models and cutting-edge technology such as smartphones and tablets, the UK games development sector is ideally placed to take advantage of the massive potential of truly global, relatively cost-effective and almost infinitely scalable distribution. The UK is in a unique position to grow a global games business, given its rich games heritage and strengths across all aspects of the entertainment and technology industries. Not only does the country have the early-adopter consumer market to trial new games, but it is also home to all the major international technology and entertainment companies that are driving the market worldwide.

3 3 Digital Games UK Advantages 1 Large market opportunity The UK is Europe s largest digital games market, with an estimated 4bn set to be spent on titles this year. 2 Ease of doing business The UK is the number-one business location in Europe, with a business-friendly policy, regulatory and tax environment. It offers a rich and diverse ecosystem of talented people, research institutions, partners and suppliers. 3 Innovation and creativity The UK has an abundance of expertise in technological development and creative content. This is nurtured by the country s internationally renowned universities which support a world-class professional development pool of talent, from software engineers and developers to animators and games designers. 4 Supportive tax environment The UK games industry benefits from R&D tax credits and, from 2013, a new tax relief system for UK-developed titles. 5 London The UK capital is one of the world s largest digital entertainment hubs and home to booming technology clusters that are driving the traditional content industries onto new platforms and revenue streams. 6 International hub The UK is the ideal base to internationalise a business, with healthy domestic market demand, easy access to Europe, a strong research base and an ecosystem of partners, academic institutions and skilled people to ensure commercial growth.

4 4 Digital Games UK Opportunity The rise of connected gaming has led to a growing number of games companies publishing on a global platform more frequently. Such firms are finding that their users are not just coming from their own countries or those that share their language, but from places where game playing is an inherent part of the culture. There are 34m active gamers in the UK and 66 per cent are regularly paying to play games across all platforms. The UK market is characterised by early adoption of new technologies, as well as professional developers that are agile and innovative enough to turn users into paying customers. The freeto-play business model is very effective for rapidly increasing the number of users for a game, but the challenge for companies is to find ways for such users to be effectively commercialised. Overseas companies choose the UK as the location for their European Headquarters as it has the market, talent and business connections to ensure that their titles are given the best chance of succeeding across Europe. The UK Government has announced, subject to E.U. state aid approval, a tax credit for companies that produce games in the UK. This together with the current Research and Development tax credits, provides a boost to games companies developing core software and content for all gaming platforms.

5 5 Digital Games The UK Market Opportunities Gaming population: There are 33.6m active gamers in the UK, 25 per cent of the European total Social gaming: Facebook is the most popular website in the UK with over 31m users. Social games revenue in the UK is worth 250m in 2012 MMO (Massive Multiplayer Online): Along with mobile games, this is the fastest-growing segment of the UK games industry, worth over 400m in 2012* Mobile games: the 2012 UK app market is worth 450m and will surpass the half-billion mark next year. Over half is spent on games** Traditional games: The UK console market remains strong, providing revenues of over 454m in 2012 *** Great talent: The UK has the largest development community in Europe, with over 448 development studios and hundreds more small development teams and freelancers**** Network gaming: This is projected to grow by 21 per cent per year in the UK between now and 2015 **** * Newzoo/Distimo, **Research2Guidance, ***GFK. ****TIGA.

6 6 Digital Games Ease of Doing Business According to the World Bank 1, the UK is the easiest major economy in Europe in which to do business and the seventh easiest in the world 2, with a GDP of around US$2,400bn 3. It is politically and economically stable, has excellent ICT infrastructure, global links and has one of Europe s most flexible labour markets 4. This pro-business environment, combined with the support available from UK Trade & Investment, ensures that a company planning to enter the UK market can get their business up and running quickly and easily. No. 1 No. 1 for European headquarters: The UK has consistently attracted more HQ operations than any other location in Europe 5, a clear endorsement of our business-friendly regulations and thriving environment for innovation and growth. Boasting the world s largest single market and over 500 million consumers, Europe offers a wealth of opportunity. 13 DAYS Easy to set up: Setting up in the UK takes an average of 13 days 6, and it takes as little as 48 hours 7 to register a company. Innovation: Innovation and entrepreneurship are prized in the UK which has been named Europe s strongest environment for research and development 8 and ranked fifth for innovation globally 9. The UK is ranked as the eighth most competitive economy in the world 10. 5th

7 7 Digital Games Ease of Doing Business 7.1% Professional services: UK professional services firms can play a vital role supporting new investors businesses as we are home to world-class firms specialising in accountancy, audit, legal services, information technology, property management, architecture, advertising, management consultancy, and engineering to name but a few. Our legal system is one of the best in the world for settling international and local disputes quickly and effectively. Investor confidence: The UK is the top destination in Europe for inward investment 11. Demonstrating continuing investor confidence in the UK, there were more than 500 expansions of UK investments in 2011/12, proving that the UK is an excellent location to establish and grow an international business. 500 Financial capital: London s excellence in financial and business services makes the UK an ideal location for international activity. London is ranked as number 1 in the Global Financial Centres Index 2013, Z/Yen Group. Strong and flexible labour market: The UK Government supports a framework of laws that ensures the labour market is flexible, effective and fair 12. We have the second-largest labour force in the EU, at over 30m.

8 8 Digital Games Ease of Doing Business There is a supportive funding environment for UK-based companies. Low tax burden: The UK has generous tax allowances and the most extensive network of double taxation treaties in the world. Our overall tax burden is well below countries such as Germany, France, the Netherlands, Belgium, Sweden, Denmark and Italy, as well as below the average for the EU as a whole 13. Employers pay less social security contributions in the UK than in most other European countries. The UK s corporate tax rate is the lowest in the G7 and is at 23 per cent in It will further lower to 20 per cent as of April , giving the UK the joint lowest tax regime in the G20. R&D tax allowances: We are actively promoting innovation through generous R&D tax allowances. The system, available for large corporations and SMEs investing in R&D, is easy to navigate, and self-assessment facilitates a simpler application process than elsewhere in Europe. 10% Patented inventions: UK-based companies benefit from a reduced 10 per cent 15 corporation tax rate on patented inventions. The Patent Box provides one of the strongest offers of its kind in Europe. Funding opportunities: There are numerous funds available, for example the Regional Growth Fund (a 2.6bn fund running to ) and Smart, offering funding to SME s engaged in R&D projects. 2.6bn smart

9 9 Digital Games A Rich and Diverse Ecosystem The UK is home to numerous games development clusters, notably London, the West Midlands and the North West. 160K 176K The UK has a consistent and a high-quality pipeline of industry talent. Some 160,000 UK computer science and engineering students graduated in 2011, alongside 176,000 creative and design graduates. The UK is at the heart of Europe s creative content industries from advertising, publishing and music, to TV, film, post production and games. London is second only to Los Angeles as a global entertainment hub and, as the world moves over to digital platforms, the UK capital is well placed, as a technology centre, to be the international leader in developing the next generation of innovative and dominant creative products. London is the leading European city in terms of recruiting qualified staff, with easy access to the 27 Member States of the European Union with a 500m population. 500m

10 10 Digital Games Market Strengths and Trends The UK is a unique market. Straddling both the USA and the wider European markets, it also provides fast-track access to the Middle East and India and has become the top inward-investment destination for companies outside of Europe. For early stage and new technology and content players, the UK is an essential first market due to its early-adopter environment, meaning companies can test their new applications in a well developed and highspending economy. Mirroring global trends, the core drivers of the UK digital games market are: Multiplicity of cheaper, more intelligent smartphones entering the market Continued growth of social networks Increased access to high-speed internet Growth of the tablet PC market Increase in the amount of leisure time enjoyed by consumers

11 11 Digital Games Market Strengths and Trends The UK has over 30m smartphones, most of them high-end (e.g. iphone, Android, Blackberry, Windows). The UK app market is by far the biggest in Europe. Social networks, particularly Facebook, are very popular in the UK and are key to the development of mobile content as a platform for games. Consumers in the UK spend almost 50 per cent of their time on the mobile internet on Facebook, with over 30m unique users. The MMO, Casual and PC download markets are also growing in the UK, underpinned by changing consumer attitudes to gaming and improved infrastructure to support the fluctuations in gaming traffic across the networks. The public and private investment in the mobile and fixed internet, alongside the success of the cloud computing and data centre sectors, have made the UK the best place in Europe to grow a consumer base. The first 4G mobile licence has been let this year to the largest network operator, Everything Everywhere, with others rolling out in This is supplemented by the UK s network of WiFi hotspots, the largest in Europe. The UK is one of the strongest markets in the world for cloud computing and data centre companies. The UK cloud computing market is forecast to more than double by 2014 from 2.4bn to 6.1 bn, while the UK data-centre market is currently worth US$3.35bn, second only to West Coast, USA. A key challenge for digital games businesses is the ability to effectively market their products. Games companies in the UK are increasingly expanding or opening offices in London to be close to the myriad marketing, search and advertising industry players that can help their games rise above the pack. To succeed in the digital games market, companies are realising they need more than just a developer who can build a good game. They also require experienced content developers, with tested design and interaction skills, as well as strong partnerships across traditional and new media sectors. Again, the UK, home to all the world s largest media platform and content businesses, is uniquely positioned to take the lead in this area.

12 12 Digital Games Case Study Konami Japanese gaming giant Konami relocated its European Headquarters to the UK from Germany earlier this year, announcing the opening of a new games studio at the same time. The company is keen to capitalise on the UK s strengths in cross-media markets to propel its games business across Europe. In a changing market, the company decided to move its European HQ from Frankfurt to the UK and contacted UK Trade & Investment (UKTI) to provide advice. UKTI was able to give invaluable assistance and thus ensure Konami could undertake a smooth transition. Simon Li, Overseas Business Strategy, Konami

13 13 Digital Games Case Study Jagex Ltd Jagex is an independent developer and publisher of over 40 online games titles. Based in Cambridge, England, it has over 470 staff. Built exclusively on Jagex s own proprietary platforms and tools, the company is a leader in innovation and technology within the online games space. Its popular browser-based game, RuneScape, was awarded the Guinness World Record for the world s most popular free-to-play MMO for three years running, while Jagex.com, the studio s captivating free browser games website, offers numerous, varied games to a wide audience. In September 2012, Rob Ollett, previously Managing Director of Bigpoint, joined Jagex as the new Vice-President of Third-Party Publishing. This signals the firm s intention to scale its business and become one of the world s largest online games companies. We have the ambition to become the Google for online games over the next couple of years. Operating from the UK, with the talent and access to technologies, has been key to our success. Mark Gerhard, CEO Jagex

14 14 Digital Games Talent Pipeline Some 160,000 graduates of Computer Science, Engineering and Technology will graduate from UK universities this year, as well as 176,000 from Creative Arts and Design. Although only a fraction of these will enter the games industry, these statistics illustrate the depth of the talent base constantly being refreshed in the UK. The quality of the education and training being delivered is exceedingly high. The UK is home to three of Europe s top five technology universities and produces 9 per cent of the world s scientific papers, with a citation share of 12 per cent - second only to the USA. A number of university courses in the UK are explicitly focused on producing graduates for the games industry. Creative Skillset, the UK s skills organisation for the creative industries, awards special status to the best games courses nationwide. They are currently as follows: BA Game Art Design, De Montfort University, Leicester BA (Hons) Games Art and Design, Norwich University College of the Arts BSc (Hons) Games Software Development, Sheffield Hallam University MSc Games Software Development, Sheffield Hallam University MComp Games Software Development, Sheffield Hallam University BA (Hons) Computer & Video Games, Southampton Solent University BSc (Hons) Computer Games Programming, Teesside University BA (Hons) Computer Arts, University of Abertay, Dundee BSc (Hons) Computer Games Technology, University of Abertay, Dundee MSc Computer Games Technology, University of Abertay, Dundee MProf Computer Games Development, University of Abertay, Dundee BA (Hons) Computer Animation, University of Glamorgan - Cardiff School of Creative and Cultural Industries MSc Games Programming, University of Hull BSc (Hons) Computer Games Technology, University of the West of Scotland

15 15 Digital Games UK Companies and Clusters There are many clusters of games companies across the UK, in the cities of London, Manchester, Sheffield, Newcastle, Liverpool, Birmingham, Dundee, Guildford, Oxford, Cambridge and Brighton. More concentrated clusters are mainly based in the West Midlands, North West and Greater London regions. There are over 250 professional game developers in the country, with many more freelancers and smaller studios producing mobile and social games. 67 per cent of the UK games development sector is working either exclusively or in part on network gaming mobile, MMO, social and online gaming Only 33 per cent of UK games companies work exclusively on retail games 71 per cent work on both network gaming and retail. Just 19 per cent of these new UK games development businesses work exclusively on retail gaming 80 per cent of new UK startups between 2010 and 2011 were independent developers Less than 5 per cent of a UK developer s games are made purely for the domestic market. The USA, China and Japan are the top three target markets for UK developers wanting to expand their business

16 16 Digital Games Investor Activity A key indicator of the global success of the UK games industry is that the majority of the world s leading games companies have a presence there. They are attracted not only by the country s strong consumer market and talent, but also for its global connections, particularly with Europe and the Middle East. Examples include: GREE Headquartered in Tokyo, Japanese mobile social gaming company GREE established an office in the UK after receiving support from UK Trade & Investment (UKTI). Following an introduction made by UKTI, GREE struck a deal with the UK s Moshi Monsters, which led to it publishing some Moshi games in the Japanese market. In recent months, GREE has expanded its UK operation to 25 staff and relocated from temporary office space to a new bespoke site in London s Tech City. It aims to have 100 UK staff by the summer of gree-corp.com Capcom/Beeline Japanese games firm Capcom set up its European Headquarters in London in Since then, it has worked closely with UKTI to strengthen its UK presence, resulting in the establishment of a London-based R&D operation, Beeline Interactive. This has already launched two successful titles Smurfs Village and Snoopy s Street Fair, both of which were the work of UK developers.

17 17 Digital Games UK Digital Games Networks UKIE is the trade body for the UK s wider interactive entertainment industry, championing the interests, needs and positive image of its members. TIGA is a non-profit trade association representing the UK s games industry. Members include independent games developers, in-house publisher-owned developers, outsourcing companies, technology businesses and universities. The Internet Advertising Bureau in the UK is the trade association for online and mobile advertising. It promotes growth and best practice for advertisers, agencies and media owners. AIME is a UK trade organisation representing the commercial interests of member companies involved in the interactive media and entertainment industry.

18 18 Digital Games UK Digital Games Events The Edinburgh Interactive Festival brings a mix of business, education and fun through a focused industry conference. There is a selection of free public screenings of new games and technology, plus public sessions and information on how to get involved in interactive entertainment. edinburghinteractive.co.uk LAUNCH: Future Gaming & Digital Conference, held each November in Birmingham, features expert speakers and demonstrations from the games industry for nearly 300 people as part of Global Entrepreneurship Week. Digital Content Monetisation is held in London each January and is Europe s only event dedicated to monetising digital content within the media and entertainment industry. Each year, DCM Europe brings together over 300 senior experts across the region in TV, film, sports, music, publishing, gaming and mobile. Social Gaming Summit, which has been running in London for the past three years, is focused on the intersection of mobile gaming, immersive worlds, real-life brands and social networking. The London Games Conference is the only event that brings together gaming executives across the disciplines of marketing, sales and media. London MCM Expo is a showcase of cult entertainment and popular culture from various segments of the entertainment industry, attracting 50,000 visitors every October. Develop, held in Brighton every July, is one of the longest running and best-attended games conferences in the UK. The three-day event features a main conference session and a series of independent showcases for games companies. Mobile Games Forum (MGF) is positioned as the definitive forum dedicated to all aspects of mobile games, and is the highest-rated event in Europe for commercial and business exchanges and networking.

19 Contact us UK Trade & Investment can offer practical help and advice for inward investors and it is free and confidential. Our industry advisers can provide information such as specific market opportunities, local skills, clusters, universities, incentives and funding support.

20 20 Digital Games Sources 1 World Bank World Bank IMF 4 The Global Competitiveness Report p 19. www3.weforum.org/docs/wef_globalcompetitivenessreport_ pdf 5 Financial Times fdi Markets database Elsevier, World Economic Forum s Global Competitiveness Report www3.weforum.org/docs/csi/ /gcr_countryhighlights_ pdf The Global Competitiveness Report p 19. www3.weforum.org/docs/wef_globalcompetitivenessreport_ pdf. 13 Eurostat,