From Exuberant Youth to Sustainable Maturity - DTI Home

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