House of Commons - Video games industry in Scotland

Video games industry in Scotland - Scottish Affairs Committee Contents

4 Other challenges facing the industry

Skills shortage

69. An innovative and talented workforce has traditionally been one of the key selling points of the UK video games industry. However, recent surveys have identified a lack of adequately skilled employees as a priority issue.[98]

70. NESTA told us that "the UK video games industry has long complained about the low quality of specialist video games courses at universities. Indeed, only 18 per cent of those who graduated from these courses in 2007 managed to gain a job in the sector."[99] Mr Livingstone, Life President of EIDOS, concurred: "so many courses in the UK are, frankly, not fit for purpose. They are generalist subjects—media studies, effectively, masquerading as computer games studies."[100]

71. Mr Rawlinson, told us:

[...] what we need to do is to get young people into programming and the fundamentals of computer science and other STEM subjects [...] and that will then flow through into the university agenda and on into the work force. That doesn't necessarily need more money; it needs more focus. We also need our industry to be talked up rather than down.[101]

Dr Wilson concurred:

[...] we need to increase the supply of good quality computer science and mathematics graduates [...] we would like to see measures taken by the Government to make sure that computer science graduates and mathematics graduates pay lower tuition fees than those on other courses.[102]

Mr Livingstone believed that:

[...] the UK average is that 6% of universities engage with local industry [...] we would ask any Government to ensure that there is more incentive for universities to engage with local industry. Abertay is a shining example of best practice, and that should be replicated throughout the country.[103]

Chris Chapman, the Director of Black Company studios, based in Edinburgh, argued that:

[...] the tightening belts of the publishers and financiers of the industry don't allow developers the leeway they need to recruit and train new talent, and that hurts the industry both now and in the long term.[104]

He recommended "making it easier and cheaper to hire talented but inexperienced staff" and "subsidies for education and training."[105]

72. In the course of our inquiry we visited the University of Abertay, which is seen as a beacon of how successfully to equip graduates for work in the industry.[106] Our visit confirmed the outstanding work which is being done, and we were particularly impressed to see the work place simulation being undertaken. The innovative practices in place at the University of Abertay, such as workplace simulation, the level support given to graduates starting their own business and the level of cooperation with local industry should be replicated across the UK. We recommend that the Government set out in its response to this Report how it will develop ways of encouraging the adoption of these practices nationwide.

73. The shortage of graduates adequately qualified to sustain the video games industry in the UK is matter of real concern, as is the unsuitability of many self-proclaimed video games courses. There needs to be more focus on the hard skills needed for the industry, such as mathematics and computer science. Other important factors necessary to ensure graduates are both trained for industry and able to find a job, are the levels of engagement between higher education institutions and industry, and the incentives for industry to take on talented graduates as trainees. The Department for Business, Innovation and Skills should be able to demonstrate that it is aware of these problems and has proposals to address them effectively. We recommend that the Government's strategy for addressing such issues is set out in its response to this Report.

THE £5 MILLION ABERTAY PROTOTYPE SCHEME

On 14 July 2010, Ed Vaizey announced that a multi-million pound investment project was to be launched at Abertay University. Mr Vaizey said:

The first phase of the £5 million project is a £2 million fund to invest in new computer games prototypes, creating new businesses and giving fledgling companies the chance to attract further investment by developing their intellectual property (IP).

Grants of up to £25,000 will be available to support the development of fully-working prototypes. Commercialisation and project management support will also be provided from Abertay's business and computer games experts, giving each successful applicant the best chance of establishing or developing a thriving business. Talented students and graduates will also gain important work experience opportunities on project teams, further developing the successful Abertay model of small teams working in the same studio environment as computer games companies.

The project aims to create 30 new companies, provide important support to another 80 existing smaller businesses, and create up to 400 new jobs.[107]

Financial support for the project came from the UK Government (£2.5 million), the European Regional Development Fund (£1 million) and the University of Abertay Dundee (£1.5 million).

74. The £5 million prototype scheme, to be run by Abertay University, is an excellent example of support targeted towards a priority issue for the video games industry. We expect the Government to monitor the progress of the scheme, and if it is successful, to explain how it intends to ensure that it can be replicated nationwide.

LIVINGSTONE/HOPE REVIEW OF SKILLS

75. On 14 July 2010, the Government has announced an independent review of education and training in the UK games and visual effects sectors, to be led by Ian Livingstone, co-founder of Games Workshop and Life President of Eidos, and Alex Hope, co-founder of Double Negative, and carried out by NESTA and Skillset. The review is expected to conclude at the end of January 2011.[108] Mr Livingstone said the review would be:

[...] an opportunity to transform the UK into the world hotbed of games production talent [...] we will be working hard to deliver a blueprint for change in the UK's educational system, so that our companies can access the kind of talent they need to stay on top, creatively and commercially.[109]

76. Ensuring schools and universities provide the right education and training is beneficial to graduates, businesses and the wider economy. We support the Government's decision to commission an independent review of education and training in the UK video games sector. We expect the response to this Report to set out a timetable for the Government's analysis of the review and for developing its action plan for working with the Scottish Government on the recommendations.

BRAIN DRAIN

77. TIGA's State of the UK Video Game Development Sector report, published in 2010, notes that "over the last year, 23% of developers said that some of their staff had left them to go and work for developers overseas."[110] NESTA's 2009 report It's Time to Play noted that:

[...] the brain drain is a relatively recent trend [...] it is clear from our results that government support is now enabling studios in Canada to attract some of the UK's most talented and experienced developers, who they target with generous relocation packages. One in three respondents to this survey claim that this brain drain will, over time, have a detrimental impact on the quality of UK video games development.[111]

78. The skills shortage in the UK industry is compounded by a brain drain to countries offering more generous incentives to the video games industry. If the UK is to retain its position as a global player in the industry, efforts must be made to halt this brain drain. We recommend that the Government, in its response to this Report, outline how it will work with universities and the industry to ensure talented graduates remain in the UK.

Access to Finance

79. Access to finance is cited as a priority issue for many industries, and the creative industries are no exception. As Mr Rawlinson told us in evidence:

Any creative industry is a high-risk, high-reward industry, and the video games industry probably stands at the very top of that list of high risk and high reward [...] for normal high street banks looking at that business, it is incredibly difficult for them to assess the risk and understand the proposition.[112]

Ian Livingstone expanded on the point, stating that:

[...] not just banks [but] private equity, VCs [venture capitalists] and angels [private investors] still have trouble understanding our industry, and quite right too, because it's not just one format and one way of consuming content [...] with diverse content device skills and budgets from a few hundred pounds to £30 million, it is very difficult for anyone, even in our own industry, to understand the economics, let alone outside funders.[113]

80. Mr Daniel Livingstone, School of Computing, University of the West of Scotland, stated that "the production for the games industry is such that a company may operate for many months before receiving any income, and income may be irregular. This can be problematic for opening business accounts."[114]

81. The video games companies face significant challenges in accessing finance. More needs to be done to increase the understanding of the financial cycle for video games companies amongst banks and private equity funders. The Government has an important role to play in providing support to businesses in attracting finance. We invite the Government to outline in its response to our Report how this business support is being tailored to video games companies.

Marketing and representing Scotland

82. In evidence, Ian Livingstone told us:

[...] there is a golden age of opportunity now for games. Traditionally they have been high-cost packaged goods that go at retail, and consequently, they have not been able to reach global markets. But today, with the online world of network gaming, social games, casual games and games that are played on iPhone, small teams of people can get global audiences.[115]

83. Both the video games representatives we met during our visit to Dundee and written submissions highlighted several measures needed to ensure the industry in Scotland can benefit from this golden age of opportunity. Most notably amongst the issues raised were marketing Scotland, adequate guidance for small companies and representation.

84. Dr Richard Wilson, TIGA, concurred: "one thing that we could do throughout the UK [...] is be much more aggressive in marketing Scotland and the UK in general as a place to do business."[116] He went on to say that "trade associations have a role [...] and Scottish Enterprise, UK Trade and Investment, the Scottish Government and the Westminster Government have a role."[117] Mr Rawlinson noted that "Having a Government, an education system and a trade and investment department that really trumpet our industry as open for business and open for capability will give us the opportunity to lay our wares out and show what we are capable of."[118] The Minister assured us that he was:

[...] very interested in ensuring that we have a successful video games industry [...] I certainly think we need to learn perhaps from the aggression of some of our competitor countries in terms of their active wooing of different companies. I think we need to be bolder in terms of going after organisations and actively encouraging them to come here.[119]

85. Scotland is open for business, and it is vital that this message is publicised. We see the need for a more targeted marketing strategy to attract investment to Scotland, and recommend that the Government work with the Scottish Executive and trade associations to formulate and implement such a strategy relating to the video games industry in particular. We invite it to set out in its response to this Report how it intends to do this.

86. Scottish Enterprise told us that "the companies that have developed their own content and got to market have largely done so as a result of personal networks [...] access to mentors, either formally or informally, appears to be invaluable for companies,"[120] and this is something we heard about first-hand in Dundee. Notwithstanding these personal networks, we heard that small companies "need help and guidance [...] because they are creatives and they often do not have the help in business that they need. They need to partner with business people, they need access to finance, and they need guidance."[121]

87. This is a "golden age of opportunity" for the video games industry, with small businesses able to access global audiences. It is imperative that guidance and support is available for these companies. We recommend that the Minister for Culture, Communication and Creative Industries holds regular meetings with companies from the video games industry to develop and provide this support. We recommend that the Government, in its response to this Report, set out its strategy for engagement with the video games industry and its underlying criteria to enable the video games industry to secure Government support.

88. Although there are personal networks within in the video games industry, more formal representation at regional level could provide stronger support for companies. We see an argument for a trade body representing companies in Scotland, with the UK Government, trade associations and games companies all involved in its creation. We invite the Government to set out its action plan for such a body in its response to our Report.

98 For example see: TIGA, State of the UK Video Games Development Sector, 2010 Back

99 NESTA, The Innovation Game, Adjusting the R&D Tax Credit: boosting innovation in the UK video games industry, October 2010 Back

100 Q 2 Back

101 Q 21 Back

102 Q 6 Back

103 Q 38 Back

104 Ev w 12 Back

105 Ev w 12 Back

106 DCMS and BIS, Digital Britain Final Report, Cm 7650, June 2009 Back

107 "Games industry jobs boost from £5m Abertay prototyping project", University of Abertay, 14 July 2010, www.abertay.ac.uk Back

108 Ev 45. The review is due to be published on 1 February 2011. See www.nesta.org.uk/ Back

109 www.develop-online.net/features/1003/A-call-to-action Back