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UK games industry survives Brexit threat - but for how long?

Weekly Roundup: Investment in the country continues at a rapid pace, but concerns over creative talent is rising

The British Prime Minister Theresa May struck fear into the hearts of many a business this week by telling the world that Britain would be leaving the EU single market.

That includes businesses within the UK games industry, with over 80% of them telling trade body UKIE in April that they wanted to remain in the European Union.

Yet if the decision to leave the EU is having a detrimental impact upon the games market in Britain, it's not evident in the news that we're reporting.

Shortly after the vote, the Turkish mobile developer behind Six! - Gram Games - opened a new UK studio. CCP moved most of its management team to London and set-up a small development unit. Endemol also launched its own games team, which is once again based in London. Meanwhile, Team17 secured £16.5m in investment and last week announced its plans to expand internationally.

And this week, Angry Birds developer Rovio opened its own London studio, while Ubisoft has acquired Activision's FreeStyleGames unit and rebranded it Ubisoft Leamington.

It's not all been positive news. Sony closed its Guerrilla Cambridge studio for reasons not entirely clear - the developer's games may not have been big sellers, but they were critically well received. That closure was a huge pity, not least because of its great heritage and the brilliant games that the company built (MediEvil, Rigs, Killzone Mercenaries), but also because of the hard work the staff had put in in supporting young talent from the local universities. It was a real loss to the whole industry.

Yet it feels like Guerrilla Cambridge is the exception that proves the rule. Because by all other measures, the UK games business seems to have just shrugged off the threat posed by Brexit. Even GAME this week benefitted, with the performance of its Spanish stores helping the firm's bottom line - partially because it performed well, and also because the weak pound (as a result of the Brexit vote) boosted that good performance further.

Of course, the weaker pound means higher prices will start to appear - App Store prices are set to rise by almost 25%. Although in today's competitive UK games market, consumers may not notice it across all categories. In fact, the price of the Nintendo Switch in the UK is actually lower than most other countries.

However, the UK games business must be careful not to get caught in the excitement. Video games is a predominantly digital business today, and so the issues around free trade - although still relevant - are not quite as severe as they will be in other industries (like cars, for instance).

"It is good news for the UK that Ubisoft is still eager to invest in the country's games industry. However, with computer science only recently being added to the school curriculum, there is a genuine worry about the next generation of talent."

And as a major export business for the UK, the weak pound certainly benefits video games companies who sell goods abroad.

Yet take a closer look at those big wins for the UK industry. Gram Games and CCP hail from countries that aren't part of the EU anyway, and so it's a world they're used to living in. Rovio had an office in the UK anyway, albeit a consumer products department, and it's only looking to hire 8 people onto the London team.

Meanwhile, the FreeStyleGames acquisition by Ubisoft is a mixed blessing. It's certainly good news for the staff there, but it means Activision no-longer has a UK presence in terms of development at all. Also, one of the reasons Ubisoft will have wanted the company is due to the biggest threat that Brexit poses: access to talent.

Ubisoft has been eager to expand its Reflections studio for some time, but trying to attract talent to Newcastle has not been easy - despite the outfit's strong pedigree. Brexit will have made attracting talent event harder from within the EU. In picking up FreeStyleGames, Ubisoft has a sort-of satellite studio that would help broaden the capabilities of Reflections.

It is good news for the UK that Ubisoft is still eager to invest in the country's games industry. However, with computer science only recently being added to the school curriculum, there is a genuine worry about the next generation of talent. Many UK studios are filled with EU nationals - some are proud to say upwards of 25% of its staff come from the continent. Although Theresa May has made noises that she is eager to guarantee the rights of EU nationals in the UK, she still hasn't done it yet.

Then what about attracting EU talent? Even if the Government makes it easy for skilled games developers to move to the UK, will they want to? And what about project-based work? How will work permits work? Or transfer of benefits? Insurance?

As Ubisoft has shown in acquiring FreeStyleGames, top talent is a premium in the UK games industry today, and the threat of Brexit makes it more so.

UKIE highlighted this worry in its latest article this week. It's launching a consultation on the subject, too. I urge UK businesses to fill it in.

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Christopher Dring avatar
Christopher Dring: Chris is a 17-year media veteran specialising in the business of video games. And, erm, Doctor Who
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