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Vaizey: "Mismatch" between game dev and finance communities

Thu 12 May 2011 12:53pm GMT / 8:53am EDT / 5:53am PDT
PoliticsBusiness

UK needs to replicate US "culture of investment and risk", claims MP

UK minister for Culture, Communications and Creative Industries Ed Vaizey believes there should be more co-operation between the game development and investment industries in this country.

In a visit to West Sussex studio the Creative Assembly to honour its planned expansion to 200 staff and new 10,000 square foot premises to work on an Alien game, Vaizey told GamesIndustry.biz that "I think that one of the great challenges for the industry is access to finance.

"We need to encourage people to understand that this is a great industry to invest in, but they also need to understand that there are hits and misses," he said when asked whether he feared for the long term future of small developers taking investment and loans for social network projects.

"But we did some analysis in our budget which I think showed that investing in the creative industries, as opposed to in say pizza takeaways, increases your risk by about 1 per cent - so what you lose on the swing you can gain on the roundabouts.

Ensuring successful projects meant more harmony between developers and financers, he felt, "and I think it's very important that we as politicians and I'm doing a NESTA conference at the end of May engage with the financial community along with developers and so on, because I think there is a mismatch between those communities.

"In fact, if you go to Silicon Valley, they will tell you that it's not necessarily IP or anything else that makes a difference to American success, it's a culture of investment and risk which I think we need to try and replicate here.

"Some businesses will work and others will fail, but the talent tends to move around pretty easily," he felt of prospects for UK game startups.

The MP also enthused to GamesIndustry.biz about last year's Eurogamer Expo appearance in an episode of the Apprentice last night. "That was quite good, I thought, for the games industry. It's quite interesting, I thought, that Sir Alan [Sugar] has woken up to the fact that future businesses are growing. When was the last time a gamer expo has gone mainstream on television?"

7 Comments

Clemens Wangerin
Co-Founder & Managing Director

8 0 0.0
I think it works both ways. I think developers can do more to understand the investment landscape as well. We have found there is an appetite in the UK for investment in games, if your proposition is right and the team involved in executing the plan is convincing. Investments are also often on the back of relationships, and it takes a while to foster those relationships.

Mr Vaizey has been true to his word in any event. He said to us earlier this year in Dundee that he would organise an event to get developers and investors in the same room, and the NESTA event on the 25th in London is the result of that. We'll be there.

Posted:3 years ago

#1

Wolfgang Stindl
International Business Development Manager

6 0 0.0
I think what Mr. Vaizey is justifiably referring to by the "hits and misses" as well as "silicon valley" is the fact that particularly the Californian investor is well accustomed to think in terms of "economies of scope" rather than in "economies of scale". Due to the almost culturally ingrained experience - also within investors - is the Hollywood experience, whereby one Blockbuster pays for a multitude for trails and errors, with a few more project just breaking even. This is actually very much the scenario into which the games industry is moving.... if it isn't already there. So this is definitively quite different from financing pizza takaways.

Not only Britain, but Europe in general will have to address said issue if they want to keep gaming talent and subsequently real success stories in this industry in Britain or else the economic history of the games industry might turn into a re-run of the film industries development.

Posted:3 years ago

#2

Leon Green
Political lobbyist & Gamers Voice Director

35 0 0.0
If the Minister really believes this perhaps he should go speak with his mate Gideon about tax breaks?

Posted:3 years ago

#3
Unfortunately Mr.Vaizey is a cog in the great chain of those who were elected to serve the British public. A important cog non the less, as one of the first MPs helping to provide some sort of voice for the entertainment industry.

What would really help the nation currently is

1/ Serious tackling of transport - i.e Rail fares need a serious head butting. By next year, fares would have gone up 13-15% whereas compared to Europe, travel is often a rational cost, allowing the public to get about their business effectively and reduce the overall carbon footprint. Taxation on oil is ridiculous. Even a 2-3% cut will help business UK wide. Attacks on the North Oil fields - wasted opportunity for growth.

2/ London: Union terrorism is too rampant. Strikes at a drop of a hat, overpaid inflation busting transport workers and union leaders (laughing to the bank and then some). Potholes and congested roads due to potholes and random non rational utility works. A bill to prevent transport strikes should be on the agenda. This will allow international investors to see UK as a worthwhile place to invest in, with decent terrestrial transport links (especially for game folks wanting to set up shop outside London)

3/ Inflationary cost of higher fuel & food prices, including speculation on food stocks. These are serious things to be tackled, and we should invariably grow more of our own food stock, and not rely so much on overseas imports to be more self reliant. Should any disruption from mainland Europe occur, we have a 60% deficit in energy and food (i.e UK will collapse after 1-2 weeks)

4/ Re divert charities to be reinvested in UK. Totally draw a line in the sand with regard to IMF and EU bailouts. If we have no vote on EU, we should not participate in any of Brussels silly quangos and legislations that really hit on business in UK. Try sorting out basic VAT and reciprocal VAT, and you'll know balancing the monthly books are nightmare on its own.

5/ Invest in long term growth. Make it a great place to invest in - this means having a good continental culture, food and lifestyle. This means having good liquidity and rational taxation, and decent educational investment. Lets not even get started on Universities (its a fiasco)

6/ Local councils. If frontline council services are cut, and management & its respective executives keep their pay wages, or increase it even surely something is wrong. In fact, the total lack of transparency of councils on their expenditure is a good way of increasing efficiency. Local residents of councils should have absolute say in the running of a local council, its services and its employment of staff. Chances are, its unlikely to happen. Dont even get started on the wast spent using various PR and advertising billboards/such utilized by local councils.

Alright, once these issues are remotely tackled - there is a real chance of making UK plc a nicer place to work, game and invest in.

Posted:3 years ago

#4
I engaged a lot with Ed by email over the last couple of years. Whilst I think he's genuinely a nice guy, I personally don't think the coalition really has any interest at all in helping the games industry here.

Posted:3 years ago

#5
As Fran said - Vaizey talks the talk well, but the coalition is unwilling to walk the walk. Most likely because they can already see the Daily Mail headlines - "NEW SUBSIDIES FOR MURDER SIMULATORS!" Also, we're neither bankers nor involved in creating complicated financial products, so we're not important. Many of us even have the gall to be located outside London - I've even heard some games companies are located in *shudder* The North!

Maybe when Scotland votes for independence we can get parity with the film industry there, at least the Scots seem to be aware that we actually bring money into the place. I'll make my moving plans just after I watch the flying pigs go by.

As for investment, I find the 1% value a little difficult to believe, or at the very least misleading. Certainly pizza places go under quickly, but I would assume they require a hell of a lot less funding to get moving than any serious development house (excluding tiny 2-man shops like mine, of course). The other problem is lead times. If someone invests in a pizza delivery place, they can expect to see strong returns almost immediately. If someone invests in a dev studio, you won't see returns for a year or more, with more the most likely possibility.

Posted:3 years ago

#6
All fine reasons for why there is a 'mismatch', I agree with lots of what's been said so far. Personally I see a lot of these breakdowns between investor/publisher/developer expectations are to do with the changing landscape of the industry: nobody on any side is willing to admit it's no longer really about business plans, or targetred markets, or projected ROI. It's to do with the fact that we are now in a highly professionalised creative industry, where people and talent are the great movers and creators of wealth. Unable to admit that we may not be in Kansas any more, Investors, publishers and most developers are still trapped in a 'software production' mentality that successful games is about iron planning and canny targeted projects and licences (market tested, of course...), as though we were knocking out data software for accountants. The reality is that we are much more like the music and movie industry - talent based and somewhat beyond mere marketing being the main road to success. There's an unknown quantity - the stuff dreams are made of - that all great successful games/movies/music have and only the authors and their direct audience know and feel what that is. But I think Creative control, and rewarding creatives for success, is still terrifying to many many folks atm - and not just publishers :P

Posted:3 years ago

#7

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