Most UK game developers will be all too aware of the struggle studios can face when looking to secure access to finance.
Indeed, in a February 2016 TIGA conducted a survey, a significant 52 per cent of UK game makers identified lack of access to finance as the principal factor holding back their business.
Conversely, we all know what a great game development hub the UK is. There are almost 11,000 developers employed in the UK's game industry, which stands as the largest in Europe, contributing a significant £1.2 billion to the country's GDP.
Something to be proud of, certainly. But consider this; if that is the success the UK enjoys already, imagine the potential if over half the nation's game developers were not limited by underwhelming access to finance.
Unfortunately, traditional debt finance is not typically within the reach of game studios, and despite all the hype around investors' interest in the money made in mobile gaming, the likes of venture capitalists and business angels often see studios as too risky an investment.
This is a problem for teams large and small, but particularly the latter, who make up 63 per cent of the UK development base.
TIGA, of course, is motivated by finding solutions to such problems, and that is why, after much careful research and consultation, we recommend to the UK Government that a 'Games Investment Fund' (or GIF) should be established. It could be managed by the proposed British Games Institute. It's a solution with a great many benefits.
Such a fund would make grants or loans available on a match-funding basis. But the motivation behind establishing the GIF is about much more than giving single studios a cash injection.
With better access to finance across the UK game industry, I believe we would see more UK game studios form, and more of those studios last and thrive. In turn, that will, I am sure, lead to more British intellectual property, more success and growth for the UK game industry, and ultimately more contributions to the UK's GDP and tax system.
"Imagine the potential if over half the nation's game developers were not limited by underwhelming access to finance"
But that's not just blind optimism. We've crunched the numbers here at TIGA and at Games Investor Consulting, and the results are encouraging. If the GIF were established today, over the five years inclusive from 2017 to 2021, 600 new jobs would be made in the UK game industry, along with 1,000 positions for those in the game development supply chain. It would also increase the UK game industry's contribution to tax revenues by £74 million, benefiting the whole country, while seeing £81 million more invested by game makers into the development process.
Equally, I don't see the GIF as just providing a way to throw money at game studios. Rarely is that kind of approach a sustainable solution. But there are a great variety of benefits that the GIF would and should introduce.
Sadly, we all know of studios that have not survived a fallow period, perhaps sometime after a large release, but before gearing up to the next project. The GIF, as we propose it, would eradicate that funding gap that has been the death knell for many teams. Providing studios with a more sustainable, consistent financial foundation would in turn lead to more innovation, more confidence, encourage competition, generate growth, and very likely even engender more investment into the industry.
All of this isn't to dismiss the impact and effort of existing UK game funds, of course. They have been truly important in their positive influence. But so often existing grant models are for very specific studio types, particular circumstances or a limited region. Game prototype funds, for example, are great for getting studios over the first hurdles that face a game development project, but they can leave a studio in limbo at that stage.
All of which motivated our model for what the GIF can be: a way to provide funding of between £50,000 and £200,000 to game developers across the UK. Such funding would need to be matched pound-for-pound, encouraging game companies to find new investment from other sources. The GIF funding could be available as grants, soft-loans, or commercials loans. Over time, the GIF itself would then recoup the money from recipients, taking it from successful sales after a given amount of revenue is met, and over an agreed time period.
"Post-World War II Britain includes numerous industries where we once led the world, but sadly threw early success away. We must not let that happen with the games industry"
The GIF would be available to every game company in the UK, and those applying would retain majority ownership of their IP. Homegrown IP, after all, is so important to the ongoing health and growth and reach of the UK game industry, locally and globally. As such, we'd like to see GIF applicants focus on their own original game IP.
More details of exactly how the GIF would operate are available in TIGA's press release into the concept's potential, available here.
Of course, some may wonder why a country with such a thriving game industry needs a funding option like the GIF. The answer is simple: we need to reinforce success. The UK video games industry is a success story, creating great games, employing talented people, developing cutting edge technology and exporting content all over the world. If we reinforce our successful industry with sensible, considered and practical measures such as the Games Investment Fund, then our studios, our sector and our country will continue to grow, thrive and expand.
Additionally, the UK cannot afford to stand still. The history of post-World War II Britain includes numerous examples of industries where we once led the world, but sadly threw early success away. We must not let that happen with the games industry.
For these reasons, we at TIGA will continue to build a model of the GIF that benefits the UK game industry and do all we can to encourage the UK Government to see the value in our proposition; not just for game makers, but everyone in the UK.
The UK game industry is great. But together we can make it all the better. The GIF can be part of that journey.