Games businesses face rising cost pressures as economy flat lines

However, many businesses in the sector face rising cost pressures but are not able to pass on the costs in price rises. Access to bank finance does not appear to have improved dramatically for most businesses. The survey takes place against a backdrop of an economy in which growth has broadly flat lined over the last six months (the economy contracted by 0.5 per cent in the last quarter of 2010 before growing by 0.5 per cent in the first quarter of 2011).

Some of the key findings were:

    <*>59 per cent of respondents expect to grow their organisation’s workforce over the next six months, 35 per cent do not anticipate either growing or shrinking their workforce, while 6 per cent expect their workforce will decline. Headcount in the UK video development industry has fallen by 9 per cent since 2008. <*>54 per cent of survey participants said that they were more optimistic about their business’s prospects in comparison to six months ago. 15 per cent were less optimistic, and almost a third felt the same as six months ago. <*>53 per cent of respondents expect their company’s costs to rise over the next six months, while only 4 per cent expect them to fall. <*>71 per cent in our survey do not expect to change the prices that they charge to their customers over the next six months. 13 per cent expected to increase prices and 14 per cent expected their prices would fall. <*>Over two fifths of respondents said that there was no difference in their business’s ability to borrow from the bank when compared to six months ago, but 14 per cent said that it was now more difficult.
 

Dr. Richard Wilson, TIGA CEO, stated:

“Despite the UK’s disappointing economic growth performance over the last six months, TIGA’s latest Business Opinion Survey shows that there are tentative signs of optimism in the UK games industry. A majority of survey participants expect to increase employment in their businesses over the next six months. With the right support from the Government, the UK games industry has the potential to create more highly skilled jobs in the future. Estimates from PWC suggest that the global market for video games will grow from $52.5 billion in 2009 to $86.8 billion in 2014. <1>

“At present, our key competitors including Canada, France and the USA benefit from tax breaks for games production at a national or state level. The UK does not. This leaves us at a disadvantage when competing for inward investment. The UK games industry is much more likely to seize a larger share of the market for video games if we can compete on a level playing field. The Government should support the industries of the future such as games development.

“Our industry is export oriented, R&D intensive, provides high skilled employment and is low carbon in output. The introduction of Games Tax Relief would power our sector forward, creating many more high quality jobs in the process.” 

Jason Kingsley, TIGA Chairman and CEO and Creative Director of Rebellion, added:

“The latest TIGA Business Opinion Survey shows that the video games industry has the potential to create more highly skilled jobs. To exploit this potential, the UK should not only introduce Games Tax Relief, but should also continue to reform the small firms R&D tax credit. TIGA research shows that expanding the scope of the R&D tax credit to enable businesses to claim for the costs of IP protection, design and premises costs will encourage games businesses to invest in more R&D and expand their workforce.”

Ends

Notes to Editors:

1)     Over 5 years, TIGA research shows that Games Tax Relief would create or safeguard 9,519 direct and indirect jobs (including 3,366 jobs in the games industry),£431 million investment in development expenditure and£394 million in tax receipts to HM Treasury. It would cost just£194 million in tax relief to HM Treasury.

About TIGA:

TIGA is the trade association representing the UK’s games industry. The majority of our members are either independent games developers or in-house publisher owned developers. We also have games publishers, outsourcing companies, technology businesses and universities amongst our membership. TIGA was awarded‘Trade Association of the Year’ and the‘Member Recruitment Award’ at the Trade Association Forum Best Practice Awards 2010. TIGA has also been named as a finalist in the 2010 Chartered Management Institute (CMI) National Management and Leadership Awards in the category of‘The Outstanding Organisation of the Year Award (SME)’. TIGA is an Investors in People organisation.

TIGA's vision is to make the UK the best place in the world to do games business.  We focus on three sets of activities: political representation, generating media coverage and developing services that enhance the competitiveness of our members.  This means that TIGA members are effectively represented in the corridors of power, their voice is heard in the media and they receive benefits that make a material difference to their businesses, including a reduction in costs and improved commercial opportunities.

For further information, please contact Dr Richard Wilson, TIGA CEO on 07875939643: or email richard.wilson@tiga.org ; or contact David Hodges on 02070911653

 


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