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4 Detailed UK sub-sector review 32 Competitiveness analysis of the UK games software sector Main report
The core focus of our analysis was on issues facing development and publishing. However, in order to understand the issues facing these sectors we also examined a number of other players in the value chain (see below). Exhibit 40: The games industry value chain Licence holder Platform owner / console manufacturer Middleware & services company Developer Financial institutions Recruitment Training education Lawyers Technology suppliers Other services Agent Source: Spectrum analysis Publisher This section thus examines the key characteristics and the main challenges faced by players in the UK games industry: • Development • Publishing • Middleware and tools • Outsourcing and services companies • Format holders / console manufacturers • Distributors • Retailers 4.1 Development Peripherals manufacturers Distributor Key: The UK development sector was effectively born out of the Sinclair Spectrum phenomenon of the 1980s. This low-cost programmable computer quickly gathered a large following of programming enthusiasts - a hobbyist bedroom development culture was created that encouraged the development of new programming skills, combining technical savvy with creative ideas. A B C D Retailer Consumer Core value chain - Not interviewed Core value chain - Interviewed Core value chain - Focus of study Peripheral to value chain - Interviewed DETAILED UK SUB-SECTOR REVIEW 4.1.1 Sector structure and employment The UK development sector employs over 6,000 people 33 , more than twice as many as any other European country and is now the largest, and arguably the most successful, European development community. Exhibit 41: Number of people employed in computer games development in European territories (2000) 500 Benelux 33 Source: Screen Digest - Interactive leisure software, market assessment and forecasts to 2005 34 Source: Spectrum analysis based on Screen digest data 35 Source: Spectrum analysis based on Screen digest data 2,620 France 580 Germany Source: Screen Digest – Interactive leisure software, market assessment and forecasts to 2005 The development sector comprises over 270 studios, is divided between the independent studios and those owned and operated by the publishers. There is also a natural division between the smaller developers and those with substantial scale. The majority of the development community is employed in small to medium sized independent studios with an average of 22 employees 34 . These studios often only have the resources to work on one project at a time and may supplement revenues with conversion work (re-writing a game originally released on one platform for another, e.g. from Playstation 2 to PC). There are, however, approximately eleven large, more experienced independent developers that employ over 100 people 35 . This greater scale enables them to run a number of development projects simultaneously, increasing the likelihood that they will obtain royalties from at least one of the projects and mitigate the risks of a project being cancelled. They also benefit from economies of scale from sharing development tools, technologies, and organisational systems and processes. These developers have established reputations and have typically produced successful titles with a volume of sales sufficient to support future development investment and enabling them to obtain better terms on successive deals. This success has enabled some of these larger developers to gain access to external sources of finance to fund growth plans (e.g. Argonaut and Warthog). Competitiveness analysis of the UK games software sector Main report 33 200 Italy 900 Scandinavia 300 Spain 6,000 UK
Page 1 and 2: From exuberant youth to sustainable
Page 3 and 4: Contents 1 Introduction 4 1.1 Purpo
Page 5 and 6: Preface This report presents the fi
Page 7 and 8: 1.1 Purpose and scope of the study
Page 9 and 10: • Broker/analyst reports - These
Page 11 and 12: This chapter provides an introducti
Page 13 and 14: Exhibit 5: UK and other leisure sof
Page 15 and 16: 2.3.3 Progress to mass-market for g
Page 17 and 18: We project the value of the mobile
Page 19 and 20: 3.1 Outputs This chapter summarises
Page 21 and 22: The key priority for the UK industr
Page 23 and 24: Thus, of the 20,000 people employed
Page 25 and 26: A key threat is new development tal
Page 27 and 28: Poor press and perception of games
Page 29 and 30: "When you look at the level of comp
Page 31 and 32: • "I want to encourage the course
Page 33: The UK is at a turning point in its
Page 37 and 38: Few independent development studios
Page 39 and 40: Like the development sector, the UK
Page 41 and 42: 4.2.3 Publishing sector challenges
Page 43 and 44: Finding an effective cost model - n
Page 45 and 46: The distribution sector employed ov
Page 47 and 48: Insufficient competition The retail
Page 49 and 50: 5.1 Conclusions The UK games indust
Page 51 and 52: Exhibit 56: Action prioritisation s
Page 53 and 54: Action 8: Directory of private sect
Page 55 and 56: Action 15: Establish DTI backed UK
Page 57 and 58: Action 21: Define career paths for
Page 59: From exuberant youth to sustainable

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