The Video Games Industry in Scotland

Written evidence from Skillset (VID 08)

Introduction

1. This is Skillset’s response to the Scottish Affairs Committee’s Inquiry into the Video Games Industry in Scotland. Skillset is the sector skills council for the Creative Media and Fashion & Textiles industries – an independent, employer-led, UK–wide organisation that aims to make sure that the UK creative media and fashion and textiles industries have the right people, with the right skills, in the right place, at the right time in order to remain competitive.

2. This response is not confidential and we are happy for the Committee to share this with other interested parties as well as include it in the published report.

Skillset’s interest in this inquiry and Executive Summary

3. Skillset is the Sector Skills Council (SSC) for the Creative Media and Fashion & Textiles industries, comprising advertising1, TV, radio, interactive content design, animation, content for computer games, facilities, photo imaging, publishing and fashion & textiles2. Skillset is responsible for the production of Strategic Skills Assessments (SSA) for each of the UK’s four constituent nations, and in January 2010 it produced a Strategic Skills Assessment for Scotland (http://www.skillset.org/research/index/#ssa ) which reviewed current and future needs and contributed to the UK Commission of Employment and Skills National Skills Audit for 2010. As these are going to be annual documents, the next SSA is expected in early 2011.

4. Skillset’s carries out systematic and vigorous research into the industry and this feeds into the SSA. Unless otherwise stated, research quoted in this response is from Skillset sources and appears in the SSA for Scotland.

5. As mentioned before, Skillset is looking after the skills needs of the Computer Games (Content) industry. These occupations will include Games Designers, Artists, Programmers, Project Managers and Producers.

6. Creative Media is a popular choice of study amongst young people; despite this potential over-supply of new entrants to the industry, some skills shortages remain within the sector. In particular 45% of employers in Computer Games (Content) industry have had difficulty obtaining the skills they need - the majority of which are reported to be industry specific.

7. The evidence presented in the Skillset Strategic Skills Assessment for Scotland points to Computer Games (Content) industry as arguably a key asset in the Scottish Creative Media portfolio. In particular investment in well developed educational infrastructure, particularly at the University of Abertay and University of West Scotland where the Skillset accredited degree programmes produce graduates which are considered by employers to be ‘industry ready’, demonstrates the importance o f industry- facing HE provision . This environment clearly provides the ground for the kind of successful games cluster that has emerged around Dundee and Tayside in recent years.

8. Feedback from industry identified two inter-related challenges for Scottish Computer Games (Content) developers: achieving critical mass; and attracting talent.

9. It is important to state that Skillset cannot have a position on the Tax Relief discussions. However, our research has pointed out that favorable tax breaks alone are not enough to allow expansion. The talent and the right skills also need to be available. We hope that any proposed alternative financial incentives for the industry will also be examined from the perspective of producing the right talent to ensure any resurgent industry has the flexibility to expand.

Skillset’s response to Committee’s questions

10. Out of the five questions asked within this inquiry, the following two are the ones that Skillset can contribute:

The contribution made by the Scottish video games industry to both the Scottish and UK economy

11. The Games industry in Scotland may not be big in size (Skillset research estimates that under 500 people are working in Computer Games (Content) industry in Scotland, representing around 7% of the UK total for this sector), but it has an impressive output. Scotland has carved a significant niche in this market with a number of high-end studios producing games for worldwide distribution.

12. However, the global nature of the games market means the industry faces strong competition for the traditional leading nations of USA, Japan and now Canada. At the UK level a lack of global scale publishers, limited access to finance and skill shortages have been identified as key barriers to sectoral growth3.

13. Feedback from industry identified two inter-related challenges for Scottish Computer Games (Content) developers: achieving critical mass; and attracting talent. In terms of achieving critical mass, it was felt important that the games cluster continue to grow and develop.

14. Similarly, the attraction and retention of senior talent was given as a constant challenge. In this sense the attractiveness of Scotland as a place to live and work was seen as crucial.

15. In order to overcome skills challenges, Scottish Computer Games (Content) developers recruit globally with some employers having over 25% of their staff originate from outside the European Economic Area (EEA). The feedback from industry noted a number of challenges in doing this. These were:

• Location – with it being challenging to attract the best talent to Scotland.

• Scarcity – competition for talent is global. Scottish companies are competing with other international games developers to attract the best.

• Specificity – at the senior level, it was said to be important that prospective employees had a proven track record in Computer Games development.

16. Skillset’s remit is primarily concerned with the development of talent for the Creative media industries, and within the scope of this inquiry , the Computer Games (Content) and Interactiv e Media sectors in particular.

17. The evidence presented in the Skillset Strategic Skills Assessment for Scotland points to Computer Games (Content) industry as arguably a key asset in the Scottish Creative Media portfolio. Apart from some world renowned companies which compete globally and have a proven track record in producing quality outputs, there is also a supportive environment where the Scottish Government and the national economic development agencies recognize the potential of the industry4; and there is also investment in well developed educational infrastructure, particularly at the University of Abertay and University of West Scotland, where the Skillset accredited degree programmes produce graduates which are considered by employers to be ‘industry ready’.

18. It is indicative and a testament to the potential for the industry in Scotland that out of t he nine UK Skillset accredited games courses (judged by industry criteria) no less than four are based in Scotland - three at Abertay, and one at U niversity of W est S cotland (UWS) . The connection of industry facing HE provision clearly provides the ground for the kind of successful games cluster that has emerged around Dundee and Tayside in recent years.

19. The following link is for a case study that shows the journey of a graduate from the Abertay course and how his skills are now benefiting the Scottish Computer Games (Content) industry:

http://courses.skillset.org/case_studies/183_andrew_heywoods_games_career_after_graduating_from_university_of_abertay_du n dee

20. Recently Culture Minister Ed Vaizey announced ( indicating how the UK Government sees skills as being vitally important for the Games industry ) an Independent Review of G ames and Visual Effects (VFX) skills, chaired by Ian Livingstone, and managed by NESTA in partnership with Skillset.

21. Scotland was represented at the ina ugural meeting for this Review by Paul Durrant of Abertay University . Also invited was Derek Robertson of Learning and Teaching Scotland. All Scottish accredited courses will be feeding into the R eview.

22. Skillset will ensure that the R eview covers best practice from these universities, and is also made aware of the increasingly problematic f inancial and organisational stru ctures under which such courses operate.

The recent announcement by the Chancellor of the Exchequer to abolish tax relief for this sector, and to examine alternative financial incentives for the industry.

23. It is important to state that Skillset cannot have a position on the Tax Relief discussions . Our role is to recommend and attempt to influence within the sphere of education and training , and not on these issues .

24. However, our research has pointed out that favorable tax breaks alone are not enough to allow expansion. The talent and the right skills also need to be available in order to succeed from potential growth to actual industry development.

25. W e hope that any proposed alternative financial incentives for the industry will also be examined from the perspective of producing the right talent to ensure any resurgent industry has the flexibility to expand.

10 September 2010