Building a Stronger Games Sector in the Downturn

Yesterday I chaired a roundtable discussion at NESTA to mark the launch of o ur new policy briefing on the video games sector: Games are one of the UK's great unsung creative success stories. But games studios must innovate if the UK is to maintain its position as a global industry leader. With more urgency than many other sectors, this will require supportive measures from policymakers.

The UK's video games sector is a major source of economic growth, with games expected to have overtaken music and DVD in overall sales by the end of 2008. Games are also a source of innovation that benefits the broader economy, with technologies and business models developed in the games industry now being applied in areas as wide as health, defence and architecture.  The popularity of video games amongst young people also makes them a promising potential source of education innovation.

But, the briefing argues, a number of pressing challenges must be addressed, including skills shortages, unsustainable business models and barriers to finance.  The industry must also raise its game in the online market, and face up to intense - often subsidised - competition from overseas. NESTA makes a number of detailed recommendations which policymakers and the sector must implement if the challenges are to be addressed.

Our roundtable brought together some of the industry’s leading figures and policymakers to debate the issues. There was a disconnect between the impassioned calls by developers for support measures and the evidence base that policymakers felt they needed if such measures were to be introduced.

A particular bone of contention concerned the evidence for the existence of market failures. Such failures were self-evident in the eyes of industry representatives, as demonstrated by the difficulties independent studios face in accessing equity finance, the low numbers of cases where developers of successful games hold on to their own intellectual property, high-profile cases of relocation of games operations from the UK to subsidised countries like Canada, and in the persistent skills shortages faced by the sector. There was much discussion on what was needed if these points were to constitute a robust case of market failure in the eyes of economic policymakers.

These are of course inherently complex issues, but a clear sense was emerging of the sector and policymakers beginning to bridge the gap in their understanding of the challenges. There was certainly a consensus that the problems faced by the sector were of an urgent nature, and that there might only be a finite window in which games businesses and policymakers could act.

As ever, I look forward to hearing others’ thoughts and reactions.