If you click on a link and make a purchase we may receive a small commission. Read our editorial policy.

Year of solid growth for UK industry sees employment and revenues rise

Update: "Micro studios" on the rise with 65% of UK developers now employing less than 5 people

Update: The British games industry is increasingly composed of “micro studios” employing four or fewer people, a sector that now comprises 65 per cent of the UK's total studio population.

New findings from TIGA show a 5% rise in micro studios since 2014, as more and more developers in the UK concentrate around platforms populated by smaller games - specifically mobile. Only 16% of UK studios now employ 15 or more people, down from 22% in 2014. According to TIGA CEO Richard Wilson, large studios are now “as rare as hen's teeth” in the UK, with only 2% of studios employing 150 people or more.

However, the 7.5% growth in the UK's developer headcount was still fuelled by those medium and large studios. Micro studios may be a higher proportion of the 688 active studios in the UK, but that doesn't necessarily translate to a higher proportion of the total workforce.

Small studios also displayed a great deal of instability. More than 130 studios closed down in the year leading up to March 2016, 69% of which had fewer than 5 staff.

The total number of studios rose by 24 to reach 688.

Original Story: A study from TIGA has indicated that the UK industry is in a period of healthy growth, with employment, revenues and tax contributions up across the board over the last year.

According to the paper, full-time creative staff working in games in the UK now number 11,893, an increase of 7.5% over last year. In addition, 21,744 jobs are indirectly supported by the sector. Combined direct and indirect tax revenues generated by the sector for the Treasury increased from £460 million to £514 million, whilst the contribution to UK GDP was up from £1.1bn to £1.25bn in the year leading up to March 2016.

"The UK video games development sector is strengthening, succeeding and soaring to new heights," said TIGA CEO Dr Richard Wilson. "Employment and investment in the sector surged to record levels in 2016 and the industry's contribution to GDP reached an all-time high of £1.25 billion.

"The industry's growth over the last year has been driven by three factors. Firstly, the games market is buoyant, with new opportunities continuing to arise in mobile, PC gaming, console and VR and AR, which have combined to stimulate investment and job creation.

"Secondly, start-ups have increased in number while existing medium and larger studios have expanded, suggesting that we are getting closer to the efficient industry eco-system that TIGA has long fought for.

"Thirdly, and perhaps most importantly, Games Tax Relief (GTR) is powering growth. TIGA played a critical role in winning GTR, which effectively reduces the cost and risk of games development and is incentivising investment and job creation in the games industry. There is now a clear causal link between the advent of GTR and headcount growth in the UK games development sector.

Over the three years before GTR was announced, the UK's development headcount experienced an average annual growth rate of minus 3.6 per cent. Over the four years after the announcement, the average annual growth rate was plus 7.1 per cent. We should now examine how we can make GTR even more effective so that it will continue to create more jobs, more investment and more video games in the years ahead."

Additional reporting by Matthew Handrahan.