Tiny independent studios are rising from the ashes of big, failed, videogame firms

They're providing a creative and economic boost to towns around the UK, says David Crookes

There is a scene in Up In The Air where George Clooney's Ryan Bingham looks a worker in the eye and tells him he is being made redundant. "Anybody who ever built an empire, or changed the world, sat where you are now," the corporate downsizer says. "And it's because they sat there that they were able to do it."

It is a phrase videogame developer Peter Wallace hopes will come true for him and his team, a bunch of people made redundant in February. They worked for Bizarre Creations, a large gaming company based in Speke on Merseyside, but game publisher Activision, which had owned the firm since 2007, decided to sell up when its latest release, Blur, failed to shift the numbers executives were expecting.

It led to 200 jobs being lost at a eveloper famed for top-selling games such as the blockbuster racer Project Gotham Racing, but rather than join the dole queue, Wallace – a senior manager at Bizarre – encouraged a small number of workers to join him in the setting up of a new developer, Lucid Games. Now he sees the future in a whole different light and is confident his firm will play a pioneering part in the creative sector of the north-west economy which already employs around 17 per cent of the UK's entire gaming and animation workforce.

Lucid's new offices are in the Baltic Triangle, a creative hub in Liverpool city centre, a world away from the huge premises Bizarre once enjoyed. It holds a big advantage, however: Wallace and his team can mix with other creative people and companies (around him are digital, web and mobile phone app developers) which he hopes will breed ideas and collaborations. Wallace believes it is vital for small, independent games companies to work not only with each other but with similar creative outlets. "UK studios need to have a shift in ideology," he affirms. "Collaborations have been difficult in the games industry, which traditionally has had an insular attitude. If the UK is to catch up and get back to the forefront of the industry I believe it is through the UK development studios helping each other out."

And it appears the industry – which contributes £1bn each year to the UK economy – could do with some assistance. It faces the pressure of attractive tax breaks in countries such as Canada or France that has led to investment moving away from the UK, according to industry trade group TIGA. There was optimism that it could be immune to the economic issues faced elsewhere with some pundits assuming people would shun going out and stay indoors to play games. Instead videogaming in the UK is reeling following a raft of big name closures.

"I think it's the right time to hit the reset button and re-evaluate everything we do," says Wallace, 37. "The games industry is still very young and is still going through change."

Britain's viedogame industry is made up of numerous clusters of companies centred on areas as diverse as Dundee, Brighton, Liverpool, Newcastle and Leamington Spa. As Edward Glaeser, author of The Triumph Of The City, points out, the great urban advantage is connection. When companies of one type come together in one place, they learn from each other and become the catalyst for urban reinvention.

What we are seeing in Britain is a stark rise in the number of smaller independent companies being formed, tapping into the new markets that have emerged in recent years from mobile phone apps to digital distribution on the major consoles. Gaming's indie scene is no longer dominated by fledgling coders who value art over commerce. Developers with years of experience in creating big name games have become heavily involved.

Could the industry be better served if all of these developers were based in London, for instance? Not according to Juan Mateos-Garcia, a creative industries research fellow for the independent body Nesta (the National Endowment for Science, Technology and the Arts). "The regional clusters in the UK is a positive thing. The different clusters have their own identities so in Brighton there's an emphasis on social gaming and they work with non-gaming organisations like the BBC and Channel 4. In the north-east, there is a strong emphasis on driving games. So these regional clusters work because they play on particular strengths."

Lucid is not the only company formed from the ashes of Bizarre Creations: Hogrocket, created by three former staff, is also looking to reinvigorate the gaming sector in the region. Its managing director Ben Ward has been closely observing the north-west gaming scene and decided his company is best served by remaining in the region where there is more of an emphasis on smaller developers producing games for the mobile market (the space into which Hogrocket intends to flourish). There is also evidence of openness. "In the north-west we've already seen indie games developers coming together with mailing lists and meet-ups in pubs," Ward says.

The company's intention to work within a creative hub allows it to tap in to the region's artists, musicians, play testers and marketeers, using them as freelancers. It can also better equip itself for a changing gaming landscape that is becoming as much about understanding Twitter, Facebook and forming online friendships as it is about gameplay. "Being small brings lots of creative benefits. It lets the studio be more agile, responding to marketing challenges quicker than we might otherwise would," Ward continues. "This agility is key to the new kind of business model which is emerging in the cutting-edge games industry – it brings so many advantages. We can work on whichever of the newer platforms make the most sense, without having to make huge investment in development kits, technology and staff training."

There is also a healthy dollop of interactivity between the various clusters. Each year, developers travel across the country to meet at conferences such as Develop in Brighton and Liverpool where they hear about fresh markets, new perspectives and different approaches to technology. Smaller teams and individuals are well placed to learn from these and make immediate changes whereas the ingrained working practices of larger companies mean they are often less adaptable.

"Big console titles cost in excess of £20m to make. Get a few flops in a row and you can go out of business in a hurry," says Ian Livingstone, co-founder of Games Workshop, author of the Fighting Fantasy books and the former executive chairman of Eidos, publisher of the Tomb Raider series of videogames. "The benefits of being small is that they can be more flexible. Costs are low, original IP can be created with retained ownership and games can be served as a service on social networks with minimum viable content."

Larger companies are seeing the benefits of smaller teams, too, and are welcoming outside involvement, to tap into skills and talent. The Oliver twins – identical siblings Philip and Andrew – are at the forefront of this. The pair began their careers writing games such as Super Robin Hood and Dizzy for Codemasters in Leamington Spa before deciding to go it alone. Today, the Olivers' Blitz Games Studios is staying faithful to its roots and it is heavily involved in helping indie developers with their own projects, whether it be with distribution, design guidance, PR, funding, networking or resources

"We see the skill, passion, determination and creativity of smaller studios and we want to see them succeed," says CEO Philip Oliver of his Blitz 1Up initiative. "Smaller studios are naturally more agile but many often lack the contacts and the business knowledge that we as a larger, well-established company have on tap. Helping these guys in no way reduces our market or potential sales, if anything it helps us expand our reach and gives rise to new opportunities both for them and ourselves."

According to Mateos-Garcia, this kind of open approach, not only in Britain but among Western developers in general, gives them an upper hand on their Japanese counterparts which are less open to sharing and learning from each other. "What we see in the UK are companies that started very small and have grown rapidly to take advantage of emerging markets. It's difficult to achieve that in such a small timeframe if you isolate yourself."

Next-level recruitment

Videogame creation is multi-disciplined, involving experts in level design, art, audio, animation and interactivity. A small team can struggle to be strong in all aspects which is why they often look for outside help.

For start-up developers Hogrocket, such talent is not necessarily being pooled from within the gaming industry. "The opportunity for us lies with bringing in developers with crossover skills from other industries," says its managing director, Ben Ward. "We need new insights and opinions so we are working with two Bafta-winning animators who have no prior industry experience. Their passion and art skills are transferable, and we love that."

The main advantage, says Ward, is the boost to creativity. "We can choose between different art styles for different games by using a differentset of contractors. We can also get multiple styles of music for our gameby grabbing the best talent remotely from their respective areas of themusic industry."