There were more dramatic shifts in the UK games development industry in 2013, as mapped out in our Making Games in the UK 2014 report published recently by TIGA.
No change is more emblematic than the unprecedented proliferation of micro studios (with under five permanent staff), a trend that is both welcome and potentially hazardous to the industry. This month I’ll explore the implications of the UK industry becoming smaller, faster and leaner.
The number of games development studios in the UK has rocketed in the last few years, more than doubling from 278 in 2010 to 620 in 2013. During the same period, the total headcount for UK games development has only increased ten per cent (from 9,010 to 9,896). So the average number of creative staff (i.e. excluding publishing, admin and other non-development roles) employed at each UK studio has halved in just three or so years from 32 to 16 per company.
The folding and downsizing of so many larger UK studios has contributed significantly to this structural change, but of much greater importance has been the massive proliferation of new studios. Five years ago, many would have grown into more substantial outfits but these days the vast majority of these tiny studios stay tiny. The number of micro studios has nearly trebled between 2010 and 2013 from 126 to 368. Now representing nearly 60 per cent of all UK studios, this is a truly seismic structural shift.
The key catalyst has unsurprisingly been the adoption of mobile gaming, which has become the platform of choice for the largest group of UK studios. 49 per cent of UK studios were primarily focused on mobile games development in 2013 (up from 39 per cent in 2012). Mobile is now comfortably the most popular platform category for UK studios.
Over 120 new and existing studios moved their primary focus to mobile in 2013 alone, meaning that there was a brand new UK entrant into the mobile games market every three days or so last year. With mobile continuing to dominate among start-ups, this trend looks set to continue.
SMALL STUDIO, BIG RISKS
Do I need to say why this is happening? The comparative ease of mobile games development and self-publishing, coupled with the allure of self-sufficiency and creative autonomy is inspiring many, assisted by the impressive financial performance of top games and high valuation exits of leading companies.
After such a long history of developing blockbuster hits for others, UK development is now making an effort to go it alone, a genuinely admirable ambition that will help it make its mark in this the fastest growing corner of the global games market. It will also help pave the way for greater investor interest much as it has done in countries like Finland. That’s the theory, but what’s the reality?
Unfortunately, a significant proportion of the UK’s mobile games studios are undercapitalised and inadequately staffed, suitable only for short-term self-sufficiency. The overwhelming majority require third-party funding, cobbling modest amounts of equity funding from friends and family and supplementing it with grants and work-for-hire.
Many have parachuted from large work-for-hire studios to focus on original IP only to find themselves reverting to work-for-hire to remain in business. This is particularly true of micro studios whose staff are usually paid either nothing or below average salaries. Many, and possibly most, of these smaller studios live on the edge, a sacrifice many will be happy to endure in the short-term but few can afford in the longer-term.
The result is that the UK’s start-up boom over the last year was accompanied by the highest rate of company failures we have ever recorded. The age of the micro studio may be empowering and is already producing some highly successful new studios.
However, the high level of churn it is also causing is very destabilising for the UK industry as a growing proportion of UK developers exist on subsistence wages employed at companies with precarious financial positions and seemingly limited prospects.
The barriers to entry into mobile remain low but the barriers to commercial success are already high and still climbing. To avoid joining the recent masses of failed studios, developers need to understand that a strong creative idea isn’t enough. Understanding who their game is for, how they can be reached and what motivates them to pay could make all the difference to the success or failure of a new generation of plucky British studios.