NESTA's response to the Budget announcement of tax relief for the UK videogames industry

24/03/2010

In response to the Budget announcement of tax relief for the UK videogames industry, Jonathan Kestenbaum, Chief Executive of NESTA says: 'Tax relief offers the UK videogames industry a much needed shot in the arm. It will help restore the sector to its world-class position but only if it goes hand in hand with encouraging the development of intellectual property and finding new forms of finance'.   

NESTA research has shown that:

- The gaming industry had £2bn in global turnover in 2008.

- The UK has in recent years fallen in global development rankings (from 3^rd in 2008 to 5^th now).

-  In a recent NESTA survey of 30 leading studios, publishers and external investors, NESTA found that: 

• 64% of studios cite a 'brain drain' of experienced developers to those countries where subsidies are available, as an urgent challenge

• More than half of respondents claim that a tax credit would help the sector grow, and level the international playing field.

• More than three quarter of studios would consider growing their UK resources if a tax credit was implemented

• 64% of studios report that it would increase their ability to produce original intellectual property, and in half of the cases, keep ownership over it.

• All respondents reported that a tax credit would encourage them to experiment with innovative distribution models in new markets.

• Half of external financiers claim that a tax credit would make the UK games sector a more attractive investment proposition.

- UK video games developers are facing strong competition from territories such as Canada, France or Singapore and some US states where games development receives generous subsidies.

- NESTA has supported the industry through a series of practical initiatives and research including a practical mentoring pilot which provides training for video games developers to improve their business skills and commercial awareness and a programme which pairs up talented, innovative 'ready for industry' graduates with SME games developers to foster business growth, employment and exposure to new opportunities.

- NESTA has undertaken other research on the sector with a view to informing the formulation of policies to support its activities. Our reports on alternative financing models for the industry (The Money Game), how to build a stronger industry (Level Up) and industry views on the sector (Playing the Game) each build a picture of the current state of the sector and the support it needs to fulfil its economic potential.

Other research shows that:

- Games are estimated to experience the fastest rates of growth of all the creative industries (CAGR of 10.3% between 2008 and 2012) - Price Waterhouse Coopers research

- Britons spent £280 million in casual games in the UK in 2009 (research by Casual Gaming Biz) - this specific market is projected to grow at a CAGR of 17%  between 2008 and 2012 (research by Price Waterhouse Coopers).

Notes to editors

For further information please contact Chani Hirsch on 020 7438 2601.

About NESTA
NESTA is the largest independent endowment in the UK. Its mission is to support innovation to drive economic recovery and solve some of the UK's major social challenges. NESTA is a world leader in its field and is in a unique position to support and promote innovation through a blend of practical programmes, policy and research and investment in early-stage companies.