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TIGA identifies lack of funding as major UK industry issue

Limited finance access largely blamed for 197 studio closures between 2008 and 2011

A report commissioned by TIGA has identified a lack of access to both public and private finance as a key factor in the UK industry's survival struggle, calling once more for government tax breaks to help stabilise the domestic market.

In a survey conducted for the study, it was found that 216 new studios had opened their doors between 2008 and 2011, but 197 has also been shut down. Since the middle of the last decade, the study found that the UK's share of global investment in the games industry had declined from 10 per cent to just 3.5.

"Despite an almost record number of start-up studios, the industry's potential is being held back by limited access to both private and public finance," said TIGA CEO Richard Wilson.

"UK developers are missing out on investment from global publishers and from global venture capital. This is partly because the UK, unlike many of our key competitors, lacks a tax break for games production, which effectively reduces the cost of games development. Access to debt, bonds and equity finance is difficult because of the high levels of uncertainty about consumer demand and the intangible nature of IP in the games sector. In contrast to the film industry which benefits both from a tax credit and from lottery funding, there is negligible public financial support available for video games development.

"Poor access to finance has contributed to a high incidence of business closures in the games sector. The Coalition Government should consider the introduction of a carefully targeted tax break for games production. This would improve the availability of finance for the sector and enable the sector to compete on a level playing field with our overseas competitors. TIGA will bring forward a revised, well-targeted tax break for games production in time for the March 2012 Budget."

93 Per cent of TIGA members believe that the introduction of tax relief in the UK would increase both private and public investment in the sector. MP Stephen Timms, formerly a secretary to the treasury, agrees.

"This timely report is a further indication that in Government we were right to recognise the growth potential of the video games industry and propose a targeted tax relief to help the sector to grow and create hundreds of highly skilled jobs in the UK," said Timms.

"I urge the Coalition Government to review Games Tax Relief for the forthcoming Budget."

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Dan Pearson avatar

Dan Pearson