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Political chaos threatens the whole games business

From Trump to Brexit to the rise of anti-globalisation rhetoric, the conditions that allow games companies to do business are under attack

If you're someone who makes a living from videogames - as most readers of this site are - then political developments around the world at the moment should deeply concern you. I'm sure, of course, that a great many of you are concerned about things ranging from President Trump's Muslim travel ban to the UK Parliament's vote for "Hard Brexit" or the looming elections in Holland and France simply on the basis of being politically aware and engaged. However, there's a much more practical and direct way in which these developments and the direction of travel which they imply will impact upon us. Regardless of personal ideology or beliefs, there's no denying that the environment that seems to be forming is one that's bad for the medium, bad for the industry, and will ultimately be bad for the incomes and job security of everyone who works in this sector.

Video games thrive in broadly the same conditions as any other artistic or creative medium, and those conditions are well known and largely undisputed. Creative mediums benefit from diversity; a wide range of voices, views and backgrounds being represented within a creative industry feeds directly into a diversity of creative output, which in turn allows an industry to grow by addressing new groups of consumers. Moreover, creative mediums benefit from economic stability, because when people's incomes are low or uncertain, entertainment purchases are often among the first to fall.

"Regardless of personal ideology or beliefs, there's no denying that the environment that seems to be forming is one that's bad for the industry"

Once upon a time, games had such strong underlying growth that they were "recession proof," but this is no longer the case. Indeed, it was never entirely an accurate reading anyway, since broader recessions undoubtedly did slow down - though not reverse - the industry's growth. Finally, as a consequence of the industry's broad demographic reach, expansion overseas is now the industry's best path to future growth, and that demands continued economic progress in the developing world to open up new markets for game hardware and software.

What is now happening on a global basis threatens all of those conditions, and therefore poses a major commercial threat to the games business. That threat must be taken especially seriously given that many companies and creators are already struggling with the enormous challenges that have been thrown up by the messy and uneven transition towards smart devices, and the increasing need to find new revenue streams to support AAA titles whose audience has remained largely unchanged even as development budgets have risen. Even if the global economic system looked stable and conditions were ideal for creative industries, this would be a tough time for games; the prospect of restrictions on trade and hiring, and the likelihood of yet another deep global recession and a slow-down in the advances being made by developing economies, make this situation outright hazardous.

Consider the UK development industry. Since well over a decade ago, if you asked just about any senior figure in the UK industry what the most pressing problem they faced was, they'd give you the same answer: skills shortages. Hiring talented staff is tough in any industry, but game development demands highly skilled people from across a range of fields, and assembling that kind of talent isn't cheap or easy - even when you have access to the entire European Union as a hiring base, as UK companies did. Now UK companies face having to fill their positions with a much smaller pool of talent to draw from, and hiring from abroad will be expensive, complex and, in many cases, simply impossible.

"Even if the global economic system looked stable and conditions were ideal for creative industries, this would be a tough time for games"

The US, too, looks like it may tighten visa regulations for skilled hires from overseas, which will have a hugely negative impact on game development there. There are, of course, many skilled creatives who work within the borders of their own country, but the industry has been built on labour flows; centres of excellence in game development, like the UK and parts of the US, are sustained and bolstered by their ability to attract talent from overseas. Any restriction on that will impact the ability of companies to create world-class games - it will make them poorer creatively and throw hiring roadblocks in the path of timely, well-polished releases.

Then there's the question of trade barriers; not only tariffs, which seem likely to make a comeback in many places, but non-tariff barriers in terms of diverse regulations and standards that will make it harder for companies to operate across national borders. The vast majority of games are multinational efforts; assets, code, and technology are created in different parts of the world and brought together to create the final product. Sometimes this is because of outsourcing, other times it's because of staff who work remotely, and very often it's simply because a certain piece of technology is licensed from a company overseas.

If countries become more hostile to free trade, all of that will become more complex and expensive. And that's even before we start to think about what happens to game hardware, from consoles that source components from across Asia before assembly in China or Japan, to PC and smart device parts that flow out of China, Korea, Taiwan and, increasingly, from developing nations in South-East Asia. If tariff barriers are raised, all of those things will get a lot more expensive, limiting the industry's consumer base at the most damaging time possible.

"In opposing those changes, creative businesses will find allies across a wide range of industries and sectors"

Such trade barriers - be they tariff barriers or non-tarriff barriers - would disproportionately impact developing countries. Free trade and globalisation have had negative externalities, unquestionably, but by and large they have contributed to an extraordinary period of prosperity around the world, with enormous populations of people being lifted out of poverty in recent decades and many developing countries showing clear signs of a large emerging middle class. Those are the markets game companies desperately want to target in the coming decade or so. In order for the industry to continue to grow and prosper, the emerging middle class in countries like India, Brazil and Indonesia needs to cultivated as a new wave of game consumers, just as many markets in Central and Eastern Europe were a decade ago.

The current political attacks on the existing order of world trade threaten to cut those economies off from the system that has allowed them to grow and develop so quickly, potentially hurling them into deep recession before they have an opportunity to cement stable, sustainable long-term economic prosperity. That's an awful prospect on many levels, of course (it goes without saying that many of the things under discussion threaten human misery and catastrophe that far outweighs the impact on the games business), but one consequence will likely be a hard stop to the games industry's capacity to grow in the coming years.

It's not just developing economies whose consumers are at risk from a rise of protectionism and anti-trade sentiments, however. If we learned anything from the 2008 crash and the recession that followed, it should be that the global economy largely runs not on cash, but on confidence. The entire edifice is built on a set of rules and standards that are designed to give investors confidence; the structure changes over time, of course, but only slowly, because stability is required to allow people to invest and to build businesses with confidence that the rug won't be tugged out from underneath them tomorrow. From the rhetoric of Donald Trump to the hardline Brexit approach of the UK, let alone the extremist ideas of politicians like Marine le Pen and Geert Wilders, the current political movement deeply threatens that confidence. Only too recently we've seen what happens to ordinary consumers' job security and incomes when confidence disappears from the global economy; a repeat performance now seems almost inevitable.

Of course, the games industry isn't in a position to do anything about these political changes - not alone, at least. The same calculations, however, apply to a wide variety of industries, and they're all having the same conversations. Creative industries are at the forefront for the simple reason that they will be the first to suffer should the business environment upon which they rely turn negative, but in opposing those changes, creative businesses will find allies across a wide range of industries and sectors.

Any business leader that wants to throw their weight behind opposing these changes on moral or ethical grounds is more than welcome to, of course - that's a laudable stance - but regardless of personal ideology, the whole industry should be making its voice heard. The livelihoods of everyone working in this industry may depend on the willingness of the industry as a whole to identify these commercial threats and respond to them clearly and powerfully.

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Rob Fahey avatar

Rob Fahey

Contributing Editor

Rob Fahey is a former editor of GamesIndustry.biz who spent several years living in Japan and probably still has a mint condition Dreamcast Samba de Amigo set.

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