14 January 2014 - London, United Kingdom – Ukie CEO Jo Twist says that many UK games companies aren’t being counted as part of official industrial and economic figures and that the industry needs to work together to fix this.
The new estimation of the UK industry’s value suggests that the sector contributed £540 million to the UK’s economy in 2012.
The last official estimation was in 2011 and put the games industry’s worth at £946 million. However, in 2010 it was measured at £443 million, meaning the industry has grown over the last two years.
More positively, employment was found to have increased by 2,000 between 2011 and 2012, from 13,000 to 15,000.
The economic contribution (Gross Value Added) figure measures the output of companies in the industry; this is different from the calculation of consumer spend which also occurs annually.
Ukie CEO Dr Jo Twist said: “These figures are obviously disappointing on the face of it. A reduction from £946 million to £540 million in one year is not good. This is partially due to the cyclical nature of our industry, as 2012 saw both the start of a build-up to the new generation of consoles and a broader shift towards new, smaller companies. Both these trends would see a focus on investment rather than output. However, as the Department for Culture, Media and Sport (DCMS) note in their estimates, the £540 million GVA figure is not as robust as it could be and ‘should be treated with caution.’”
“We think a lot of games companies are not being counted as part of our industry, and we are already working with the Office for National Statistics (ONS) to see if this can be improved. This is hugely important in showing government the importance and potential of our industry, and we will be calling on games companies to help with this work in the coming months.”
The official figures are calculated by using what are called Standard Industrial Classification (SIC) codes, which every company that is VAT or PAYE registered is given by HMRC to show which sector they are in. There are two SIC codes which are used to represent the games industry – one for publishers and one for developers – and an initial investigation suggests that many games companies are not in either of these codes. The ONS have agreed to work with Ukie to find ways to improve this.
Ukie is also calling on companies to check what their SIC code is: their accounts team or accountant should be able to find this out, or companies can contact Companies House. If a company’s code is not one of the two codes for the games industry – 58.21 for publishers or 62.01/1 for developers – that means that they have not been counted as part of the industry in today’s figures. Ukie is urging games businesses who are not in the right SIC category to contact HMRC or Companies House to request their SIC code be changed.
It should also be noted that companies with a turnover below £79,000 do not show up in these figures, as they do not have to register for VAT. This means that the strong growth of start-ups in the last few years may not be fully accounted for.
Dr Twist added, “If we can get this right and make sure official statistics reflect the true size of the games industry, it will make our voice that much louder in getting the changes we need to make the UK the best place in the world to make and sell games, and to be considered in the same light as other creative sectors like film and TV as an economic and creative powerhouse.”
“Most important amongst the changes we need is of course the introduction, after delays in Europe, of the games production tax credits. Although there is some explanation for these poor figures today, they are still further evidence that the tax credits are needed to create a competitive level playing field for the UK and an incentive for more studios to make culturally British or European games.”
This year’s statistics were created using a new ‘creative intensities’ methodology that had been proposed by Nesta in their report ‘A Dynamic Mapping of the Creative Industries’. This report highlighted the importance of creative workers in all parts of the economy, and particularly in programming, development and other digital roles. Game development demonstrates clearly that software developers and other digital workers can be creative, and should be counted towards the impact and strength of the creative industries.
Ukie worked closely with Nesta to ensure that this argument was heard and that IT-based occupations were kept in these DCMS figures. As a result, games continue to be counted as part of the creative industries, as they should be.
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The Association for United Kingdom Interactive Entertainment or Ukie (pronounced YOU-KEY) is a trade body that aims to support, grow and promote the whole of the UK’s games and interactive entertainment industry. Founded in 2010 (although formerly known as ELSPA), Ukie’s membership includes all the major UK and global games publishers and the best of UK development talent - from promising start-ups to some of the biggest, most successful studios operating in the UK today.
We also have distributors, academic institutions, new publishers, and media outlets that are integral to the lifeblood of the industry as part of the family.
Ukie works with government to champion a range of issues including age ratings, education and skills, access to finance and protecting intellectual property rights. It also works with the media to ensure true and accurate representation of the sector by raising awareness of the industry’s positive economic contribution and the societal benefits of gaming to policy makers, regulators and consumers.
One of Ukie’s key roles is to support its members by providing them with key market information, promoting careers and offering the business support services, training and best-practice knowledge to enable them to operate most effectively.
We also offer a comprehensive events programme to give the games industry access to key information, leading industry figures and give everyone the chance to network. You can see our events programme here http://ukie.org.uk/events
In addition, Ukie compiles weekly, monthly and annual retail charts and sales reports for the UK market.