Video game companies 'optimistic' over prospects

Dozens of video game companies expect their workforce to grow over the next six months.

More than half say they are optimistic about their short-term future despite the number of firms operating in the UK gaming sector falling by nine per cent between 2008 and 2010.

And two-thirds of the 104 companies surveyed have given consumers cause for celebration, saying they did not foresee an increase in the retail price of games this year.

The findings are the result of the Business Opinion Survey published by gaming trade association TIGA.

Most of the companies interviewed were smaller, independent companies. The survery found that 59 per cent expected their company to grow over the next six months with six per cent believing there will be a decline.

It also found that 54 per cent were more optimistic about their firm's prospects when compared to a year ago with just 15 per cent feeling pessimistic.

Only a small percentage – 14 per cent – said it was more difficult to borrow money from the bank compared to six months ago but 53 per cent expect their costs to rise (four per cent expected them to fall).

Yet only 13 per cent of companies felt price rises were on the cards, with 71 per cent believing there will be no imminent changes.

Over the past year, the gaming landscape in the UK has changed with many high profile company closures resulting in mass job losses.

In September 2010, Realtime Worlds in Dundee – a company founded by the creator of Grand Theft Auto and Lemmings – closed with a loss of 200 jobs.

The Code Monkeys closed its Yorkshire operation in February after 23 years and Bizarre Creations, which produced the blockbuster game Project Gotham Racing, was shut down by US owners Activision.

But this has led to a growth in independent games producers with some workers who were made redundant going on to form their own companies such as Hogrocket and Lucid Games which rose from the ashes of Bizarre Creations in the North West.

Ben Ward, managing director of Hogrocket, said smaller companies were well placed to succeed in today's gaming market.

“Being agile gives us many advantages, both creatively and economically, and those advantages are especially important during this time of transition in the industry,” he says. “Smaller developers can turn on a dime and respond to changes in the marketplace much faster than larger ones.

“I think the games industry is experiencing its own 'invasion of the Internet', just like the music industry did a few years back. Luckily for us we've been able to learn from their experiences, and a lot of gamers developers are starting to swim with the tide rather than struggle against it.”

Dr. Richard Wilson, TIGA CEO, said: “With the right support from the Government, the UK games industry has the potential to create more highly skilled jobs in the future. Estimates from [accountants] PWC suggest that the global market for video games will grow from $52.5 billion in 2009 to $86.8 billion in 2014.”

Analysts believe the UK economy to be stagnant despite growth of 0.5 per cent in the first quarter of 2011.

The Office of National Statistics said much of the increase was an “arithmetic” effect which signalled that the economy had recovered from the extremely cold weather last December. In the final quarter of 2010, the economy had dropped by 0.5 per cent.