Chris White MP, Co-Chair of the All Party Parliamentary Group for Video Games in the Westminster Parliament, commented on TIGA's proposals:
"I support TIGA's call for the creation of a Games Investment Fund, which has the potential to provide a significant boost to the video games industry. It is particularly important that we support small and medium-sized firms and the Games Investment Fund would improve access to finance, as well as promoting creativity and innovation in the UK.
"The video games sector continues to play an important role in our economy and represents some of the very best of our creative talent. Finding new ways to support games developers, such as through a new Games Investment Fund, is needed to ensure the industry fulfils its potential."
Chris Law MP, Co-Chair of the All Party Parliamentary Group for Video Games in the Westminster Parliament, said:
"Establishing TIGA's proposed Games Investment Fund would boost investment and employment and help to grow the video games industry in the all of the UK's creative hotspots, including the Dundee and wider Scottish games development clusters."
Access to finance is a challenge for many UK games developers
Games developers typically struggle to raise debt finance because they have relatively few assets and little financial track record. Equally, most venture capitalists and business angels will not invest in games because of high risk levels, low knowledge levels about the industry and high, largely fixed costs of due diligence relative to the amount of equity sought. 89 per cent of games company respondents to a recent TIGA survey that tried to raise institutional equity finance failed to do so. Consequently, many small and start-up studios struggle to raise finance and are vulnerable to collapse.
A Solution: A Games Investment Fund
To improve developers' access to finance, the Government should facilitate the development of a Games Investment Fund (GIF). The GIF would disburse 25 convertible loans or matched grants of up to £200,000 per annum (£5 million in total). A commercial mentoring business advisory service, staffed by paid industry veterans, would be mandated for successful companies.
The GIF could be managed by the British Film Institute, the UK Games Talent and Finance Community Interest Company or one of the British Business Bank's finance providers. It could be financed either from the National Lottery or from Grant-in-Aid money from the Government.
The impact of the GIF
The GIF would have a positive impact on the UK's games industry and wider economy. Over the five years from 2017 to 2021, the GIF would:
- increase headcount by nearly 600 staff;
- create over 1,000 indirect jobs in the supply chain around games development;
- encourage games companies to invest an additional £81million in development expenditure;
- contribute an additional £74 million in tax revenues over 5 years;
- help 125 studios (18 per cent of total);
- increase Gross Domestic Product (GDP) by an additional £178 million.
Support for the GIF
TIGA found strong support for the GIF in a survey of games developers in 2016:
- 73 per cent believed the GIF would allow them to create original games IP that will otherwise be difficult or impossible to develop.
- 46 per cent said the GIF would allow them to retain more ownership in new games IP.
- 40 per cent believed that the GIF would enable them to negotiate stronger distribution or publishing deals.
- 40 per cent thought that the GIF would make their companies more attractive to new investors.
- 58 per cent were positive about the GIF's ability to increase their company's long-term self-sufficiency
- 56 per cent felt it would enable them to grow their headcount.
- 90 per cent of micro-small companies, at whom the GIF is targeted, believed the GIF would have a positive impact. No studios thought it would have a negative impact.
Dr Richard Wilson, TIGA CEO, said:
"Access to finance is the most persistent challenge for many UK games studios. TIGA's plan for a Games Investment Fund would enable developers to access finance more easily, promote the creation of new IP and build up the UK video games industry. The matched funding criteria would multiply investment and employment in the industry. The GIF would also promote investment in capital, skills and innovation, all factors which contribute to productivity growth.
"A similar scheme in Finland operated by the agency Tekes has provided financial support to over one fifth of the entire Finnish games industry's studio population. The scheme has also more than paid for itself: for every euro invested in the games industry by Tekes, a return ranging from nine to 26 euros has been generated."
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TIGA is the network for games developers and digital publishers and the trade association representing the video games industry. Our core purpose is to strengthen the games development and digital publishing sector. We achieve this by campaigning for the industry in the corridors of power, championing the industry in the media and helping our members commercially.
TIGA is intent on building an enduring organisation which continually improves; a business that will make a significant impact on the games industry and so benefit our membership and the wider economy. Since 2010, TIGA has won 24 business awards, an achievement which reflects TIGA's drive for improvement and to meet best practice.
For more information visit: http://www.tiga.org
Get in touch:
Tel: 0845 468 2330
For further information, you can also contact:
Dr Richard Wilson, TIGA CEO at: firstname.lastname@example.org