Since I’m British, and this is about Brexit (British Exit from the European Union), I will be speaking the Queen’s English. None of this Month-Day date formatting, none of this overuse of “z” instead of “s” and biscuits are what you dip in your tea, not the bready treat that we call “Scones”. Anyway, I hope you’re sitting comfortably, because I’m about to get into it…
On the 23rd June, the British public took to the polls in a historic vote on whether or not to vote on our continued membership of the European Union. I will not be going into the vast reasons for remaining nor will I be going into the vast reasons for leaving, but suffice to say, the Leave vote won by 52% to 48%, with over 71% of eligible voters turning out in record numbers not seen for over 20 years. As a direct result, Prime Minister David Cameron has announced his intention to resign in 3 months, the Pound has plummeted, the FTSE 250 is in turmoil, Sterling is falling even further and unfortunately, and ashamedly, repugnant racism has become the norm overnight in a country once famed the world over as a shining beacon of multiculturalism.
“But,” I hear you say, “Rich, this is being reported in just about every news outlet in the world right now. What are you here at Real Game Media going on about it now as well?”
Well Jimmy (that’s right, I’ve called you Jimmy), it’s simple. Everyone is going on about pretty much every aspect of Brexit, but because we are a games website, I thought I would do some digging and find out if Brexit will have any impact on the UK Games Industry. I mean the EU contributes vast sums of money to various entertainment industries like film, TV and – you guessed it – video games. I mean, even Game of Thrones was heavily funded by the EU…
So I looked up 2 different organisations, Ukie (United Kingdom Interactive Entertainment) and TIGA (The Independent Game Developers Association) to see what their take on Brexit is now that it’s the reality we live in.
Firstly Ukie, who on the day the Leave vote was announced released a statement, including a statement from Dr Jo Twist, Ukie’s CEO. Apart from them covering what I and every other source of information on the planet have already covered, they go on to mention the 4 biggest things that is of concern as a result of Brexit.
“Issues that will be particularly pertinent to the UK games industry in the coming months, and that Ukie will be working hard to fully represent our sector on, include securing access to overseas talent, ensuring we have the right investment in skilling up our homegrown talent, the continuation of the Video Games Tax Relief, and access to funding.”
Personally, I think they missed a trick and should have said “levelling up our homegrown talent” but then, that’s just me. In a paper that Ukie published on the 27th April, (Staying Connected) they make a very good point:
“… the ‘Leave’ camp points to the reinvestment of the UK’s £8.5 billion contribution to the EU in 2015 (around 1% of total public expenditure, equivalent to 0.5% of GDP). It is unclear how the UK tech or creative industries would fare from any such redistribution of funds, which would face strong competition from other sectors for prioritisation.”
For those who haven’t immersed themselves in this, let me break it down for you. The UK pay the EU a fee for membership, in return we get sizeable funding for farmers, redevelopment of underfunded areas (Cornwall for example), University funding, cultural funding etc. Leave argued that if we left the EU, we could redistribute the money that they spent ourselves, most notably on the NHS (National Health Service)…
But then the NHS didn’t receive much if any funding from the EU. And the figure in the above picture was thoroughly debunked multiple times, but up to polling day, it was still wrongly quoted. Now, I’m not saying that the NHS doesn’t require more funding, or that the UK Games industry should come first, but what I am saying is that the general public were told time and again that money spent on the EU could be funnelled into the NHS. So where does this leave the funding for agriculture, redevelopment, science, the arts and – back to the point of this article – video games development? Quite far down the list, clearly.
Now the UK Games Industry is enormous, in fact, according to figures from Ukie and TIGA, it’s value was about £4.2bn in 2015 and generates around £2bn in global sales every year (TIGA). I could go on, but the point is, is that the UK Games Industry is enormous, and continually growing, thanks in part to the EU and the funding and trade links within the European Union.
Dr Jo Twist of Ukie is resolute however in the way the games industry should react, saying:
“Ukie is committed to ensuring the UK is the best place in the world to make and sell games and although this decision and the political uncertainty it brings will have an impact on our businesses it is important to remember that we are already a globally successful sector and a leading exporter in the digital economy. Ukie will continue to work hard with colleagues in government and other sectors to ensure we continue to have the best possible business environment for our sector, and we will be following developments closely and advising members as they unfold.”
It’s by no means a confirmation of doom and gloom, but they are going to have to pull out all the stops to increase government spending in this area, when there the country is already buckling under the weight of imposed austerity and Brexit will only add to the weight bearing down on the Chancellor of the Exchequer.
Moving on for now to TIGA, who for your information describe themselves as the following:
“TIGA is the network for games developers and digital publishers and the trade association representing the video games industry. Our core purpose is to strengthen the games development and digital publishing sector. We achieve this by campaigning for the industry in the corridors of power, championing the industry in the media and helping our members commercially.”
TIGA, on the 24th June, results day, released a statement called “Brexit: Priorities for the Video Games Industry”. Now TIGA have gone a bit more full throttle on this issue, outlining the 4 key issues being faced by the Video Games Industry in the UK, firstly:
“Access to finance: Difficulty accessing capital has consistently been the top factor holding back many games developers. In an uncertain economic environment, there may be a reduced appetite for investment. Additionally, outside of the EU, the UK games industry will not be able to access schemes such as Creative Europe and Horizon 2020 programmes. The UK Government should promote policies that encourage investment, maintain sector specific schemes such as the Video Games Prototype Fund and consider a Games Investment Fund to help start-ups and small businesses.”
However with the point I raised just a few paragraphs previously, the current UK Government is imposing some of the most severe austerity measures ever seen, certainly the most severe in the UK’s history. Unfortunately, I can’t be certain that the current government will aid the games industry or will even consider listening, when – to be fair – there are more pressing issues on the table at present. If the government does do something to help, I would not expect it for a few years at least.
The second key issue from TIGA was:
“A favourable tax environment: Video Games Tax Relief and R & D Tax Relief have been crucial in enabling the UK video games industry to compete on a more level playing field against the UK’s international competitors, particularly Canada. In a post Brexit world it will be even more vital to maintain, improve and enhance these reliefs in order to attract external investment and to maintain the competitiveness of the sector.”
Now something the current UK Government likes is tax relief to aid in bringing investment to the country. Hence why current Chancellor, George Osborne, actually has a mention in the credits of Star Wars Episode VII: The Force Awakens. Seriously. Anyway, this is something I could see happening, but again, not in the near future.
The third key issue was:
“Access to talent: the UK video games industry relies on a highly skilled workforce to compete. Until now, the industry has had access to a substantial pool of skilled EU workers who can work in the UK without serious administrative restrictions. Brexit is likely to result in new immigration rules requiring employers to secure some sort of visa and to meet certain skills/salary criteria in order to employ migrant workers. It is vital that any new arrangements are not onerous or complex and that industry is not held back by skills shortages.”
This is definitely a pertinent point, as one of the biggest issues surrounding this whole vote was immigration. “British jobs for British people” they said. But what if the jobs are in a highly focused arena such as, I don’t know, Video Games development? Are there enough out of work games developers in the UK to fill a potential void in talent that this could create? Are there enough university courses training people in games design and development? These are questions that organisations like TIGA and Ukie need to look into so work not just with the UK Government is required, but maybe further work with UK Universities.
The 4th key point was:
“Intellectual Property: IP is the lifeblood of the video games industry and the impact of ‘Brexit’ here could be significant. There are many commercial considerations. For example, the UK is part of both the Registered Community Design regime and the EU Trade Mark regime and also recognises the Unregistered EU Design Right. Such rights provide protection to rights holders across the EU Member States. Potentially such EU related rights might lose their validity in the UK. The implication being that those parties who originally held such EU rights may need to apply for UK trade mark and design rights to protect their rights in the UK. This may result in issues relating to existing development and publishing arrangements, IP licenses and security over IP rights.”
This one is a real biggie, and could have the potential to wipe out a massive portion of the UK Games industry. I fully expect the bigger companies to weather this storm with little problem, but there are over 1,900 games developers in the UK, (source link – Ukie) the vast majority of which are tiny independents, who will see this as their biggest obstacle, as they may be too small to have benefited from EU funding or workers but the protection of rights over their IP’s was something that was guaranteed through the EU. This was essentially some of the “red tape” that was so bemoaned from leave voters, who – for the most part – didn’t really have much of a grasps on what it actually meant.
TIGA CEO, Dr Richard Wilson, had this to say on the matter:
“The UK video games industry is a high technology sector that provides high skilled employment for over 30,000 people, including approximately 11,000 development staff and which contributes £1.1 billion to UK GDP. It is also export oriented, with at least 95 per cent of studios exporting. Following the referendum in favour of ‘Brexit’, it will be more vital than ever to strengthen (and avoid harming) those sectors where the UK has a comparative competitive advantage: for example, aerospace, defence, high-value manufacturing and engineering, high technology industries, higher education, low carbon technology and the creative industries, including the video games sector.
“For the video games industry, it is particularly important that policy makers ensure games companies have access to sufficient finance, benefit from Video Games Tax Relief and R&D Tax Relief, have clear and stable IP rights and can access highly skilled people from outside of the UK. Any new points based migration system must not be onerous or complicated, otherwise the industry’s growth could be held back.”
A clear and stark warning. Essentially, the UK Games Industry will require continued funding, or we could well fall behind other nations. It also needs to be able to hire at will those from outside the UK, without overly complex or hindering migration systems. But these things were already touched upon.
Finally, TIGA Chairman, and CEO & Creative Director at Rebellion, (the studio behind such games as Sniper Elite, Aliens vs Predator an Evil Genius). Jason Kingsley OBE (Order of the British Empire), said:
“The UK video games development sector is an export focused industry that sells content all over the globe. We have a highly skilled workforce, a creative and growing studio population and a heritage of thirty years of success. While uncertainty is unwelcome for business, the UK video games industry will remain strong, resilient and competitive.”
His message clearly a lot more resolute, but clear in it’s succinctness – this is not of benefit to the industry, but there is a certain British “stiff upper-lip-ness” to the situation. It’s the only way we can be in times like these.
My personal thoughts? Putting aside my personal feelings on the overall result, Brexit could have the potential to be catastrophic to he UK games industry. Bigger developers will weather the storms as they will already have significant support from outside of the EU anyway – companies like Rockstar – so they will most likely be fine. However not all 1,900 games companies are as big and successful as Rockstar Games – in fact not many developers in the world are, so that may be an unfair example! But it’s the overall point I’m making here!
So many start-ups, so many indy developers will be negatively effected, and not just in the short term, the economic and policy benefits from being in the EU cannot be understated and are unlikely to be rectified in the foreseeable future by the UK Government as they will certainly have more pressing issues to contend with.
The ironic thing could be that there could be a video games “brain drain” from the UK, where skilled writers, designers, developers, programmers and more emigrate to countries that still benefit from the schemes the EU provide. It’s a possibility for sure, but whether it will happen, only time will tell.
Now this whole issue has divided Britain more than any other issue since Oliver Cromwell decided he wasn’t too keen on the Monarchy, but we want to see your opinions on this. You don’t have to be British to comment – I’m not an isolationist! – let us know what you think of Brexit’s potential effects on the video game industry in the comments below or in the RGM Forums.