This morning it was announced that the UK have voted to leave the European Union, by a tiny margin. 48% of the UK population voted to remain a part of the EU versus 52% to leave. There is a fair number of game development studios that reside in the UK. Obviously the real impact of this huge decision is yet to be seen but UK game industry representatives have released their first statements and I then go into a few areas where this could affect the average gamer and indie game developer.
First off, Dr Richard Wilson, the CEO of TIGA, which is the network for video games developers and digital publishers and the trade association representing the video games industry, had a statement ready this morning,
“The UK video games industry is a high technology sector that provides high skilled employment for over 30,000 people, including approximately 11,000 development staff and which contributes £1.1 billion to UK GDP. It is also export oriented, with at least 95 per cent of studios exporting. Following the referendum in favour of ‘Brexit’, it will be more vital than ever to strengthen (and avoid harming) those sectors where the UK has a comparative competitive advantage: for example, aerospace, defence, high-value manufacturing and engineering, high technology industries, higher education, low carbon technology and the creative industries, including the video games sector.
There are a handful of serious points of interest covering the UKs EU exit, regarding the gaming industry and UK gamers.
Intellectual Property could be an important area for concern. With the UK being woven into the EU Trade Mark regime. This could make it much more difficult for game developers to maintain their IP across the globe. Having a solo UK trade mark could be less well recognised in other countries, compared to the EU trade mark. Normally things are getting serious when trade mark law is being called upon and you want to have as strong a claim as possible to defend your IP.
Anyone in the UK with EU trade marks (which cost a lot to acquire) would probably have to consider reapplying for their UK only trade mark.
Access to Game Developers and talent. The UK and any EU country will rely heavily on the free employee movement, that is available when part of the larger EU body. As borders close and foreign skill sets become less accessible due to new immigration rules put in place by the UK the UK may find a skill shortage.
Video Games Tax Relief and R&D Tax Relief. Over the past decade there have been times when the UK was considered a game development tax haven. The UK tax incentives could draw development studios to set up in the UK or give new studios the chance they need to make that first blockbuster indie hit. Recently major Studios discovered that Canada was one of the best places to set up and run a Game dev studio. Now that the UK have more control again over game industry tax incentives, it could be one of the few silver linings for the UK game development scene. That said, with tighter migration policy it might not be enough to pull new foreign studios into the country. See the Access to Game Developers and Talent point above.
UK Investors and Funding. With the UK pound plummeting overnight to the lowest it has been since 1985 (this is likely to drop further), UK investors will likely be sceptical about putting their money in to new ventures. With another UK recession possibly around the corner, Game Development investment is likely to be squeezed.
However, perhaps strong external countries might look at this devaluing in the UK currency as an opportunity. Where hiring UK talent becomes cheaper. But then that sounds more like UK talent would leave the UK to work in places where their income might be higher. Hopefully for the UK it actually means investors from overseas think that the UK becomes a better investment region as the pound devalues.
Gamer Tech prices. The UK is an island and does very little PC hardware manufacturing, as far as we have heard. Lets take an example of something UK gamers must all be thinking. If the new GTX 1080 (or any imported graphics card/hardware item) cost £620-£660 yesterday, and the UK pound has devalued overnight by 10%, does that mean that once UK shops can adjust their prices, the UK gamers would be paying £682-£726 for the same graphics card? Obviously that change could flow across the whole hardware purchasing industry.
Indie Developers. I have just spoken to a Danish national indie developer, Alexander Birke, who lives and develops his upcoming game here in the UK. Him and the UK company he set up has directly enjoyed the gaming grants provided by EU funding. I asked him for his early thoughts on today's situation.
Alex "I'm from Denmark and have lived in the UK and worked in the games industry over here for close to 3 years. Waking up today to learn that the UK will be leaving was not pleasant. Depending on when the exit is officially started I might have to leave the UK since you have to have lived here for 5 years before you can get permanent residency.
In the short term it is also going to have an effect on my ability to get my games funded. I started my own company last year and got a publisher for my first game which has allowed me to not just work on it myself but also hire people as well. Getting funding for the next game is likely going to be harder because a lot of the government initiatives that have been put up to promote the UK games industry are affected by EU law or are run by EU grants. I actually moved to the UK because I got head hunted for a job over here and it is very common for game studios to look for talent overseas especially from Europe because the legal process is so easy. That's likely going to be harder for game companies to do after the exit. I think the UK is likely to lose a lot of talent in the games industry as a result.
If I can stay I'm not sure I want to live in a country where I'm not feeling welcome at the moment. It all depends on how the exit is going to proceed and right now no one knows how that is going to go down."
Thanks for your thoughts Alex and good luck. Please check out Alex's upcoming PC game, Laser Disco Defenders, that for the moment at least, is being developed in the UK. It will also be available on the PS Vita.
This is quite a shake up and a considerable time of uncertainty for the UK. Time will tell what this will mean to the UK game industry and the country as a whole. This is a passionate area of discussion so please be very mindful of your comments below, so as not to offend others, there is always someone who feels strongly the other way.