Clustered we stand, divided we fall

We need an economic recovery that sees job creation and prosperity not just in London but throughout the UK. Encouraging business clusters can contribute to this strategy. This approach can also support the growth of strong, sustainable, independent game developers.

Clusters, a term coined by the competitiveness guru Professor Michael Porter in 1990, are a geographical concentration of firms from the same sector or similar sectors that collaborate and compete with one another. They sometimes have links with universities and other educational establishments.

Examples of clusters include financial institutions in the City of London, film companies in Pinewood, and technology businesses in Cambridge. Clusters are good for businesses and good for the economy because they typically encourage knowledge transfer, promote business efficiencies, enhance skills and encourage inward investment.

Today, the UK’s videogame industry is increasingly made up of clusters of companies centred in areas including Birmingham, Brighton, Cambridge, Dundee, Edinburgh, Glasgow, Guildford, Leamington Spa, Leeds, Liverpool, London, Manchester, Newcastle, Oxford, and Sheffield. Companies in these clusters benefit from having a rich talent pool on their doorstep and the ability to share ideas and learning.

The UK has seen numerous studio start-ups in recent years (accompanied sadly by a relatively high mortality rate). Smaller independent companies are being formed, tapping into the new markets that have emerged 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.

The UK Coalition Government has enthusiastically promoted one particular cluster of creative and technological businesses – London’s Silicon Roundabout.

There are positive results: more start-ups were established in London’s Silicon Roundabout than any other region in the UK. According to UHY Hacker Young, the accountancy firm, 15,720 new businesses were created in London Silicon Roundabout in the year ending March 2013.

Yet more needs to be done to promote clusters of high technology businesses, including games businesses, across the UK. This is vital if we are to spread economic and employment opportunities beyond London.

From the game industry’s perspective, the biggest strategic challenge is to turn more promising start-ups into sustainable, successful and growing businesses. Promoting clusters of game developers is part of the answer to this challenge.

The Government could begin by shining a light on existing clusters of game businesses and high technology companies. The Government does not need to try to create clusters from scratch. This could be an ineffective endeavour.

Instead, national and local governments can build on existing clusters that have spontaneously emerged by supporting local start-ups and by encouraging similar businesses to locate in the same areas. UKTI could highlight the UK’s clusters and so encourage inward investment. This is a policy that reinforces success. 

New game studios can be encouraged to grow in areas where there are existing game clusters through the provision of more business incubators. Business incubators which provide hardware, software and broadband, shared office administration and which waive commercial rates for 24 months could enable more start-up studios to achieve commercial escape velocity and become sustainable, growing businesses.

Clusters can be strengthened further through the supply of social and financial capital. With respect to social capital, mentoring programmes that focus on imparting experience and advice on how developers can successfully self-publish via digital distribution could increase the sustainability of start-ups in clusters. Building connections between developers in clusters and local business angels and venture capitalists can improve access to finance.

Encouraging networking within clusters and between different clusters is also crucial. Trade associations like Tiga help to bring companies together, not least through our local GameDev nights. These events help to share knowledge and ideas amongst developers.

With the industry changing and greater emphasis on smaller teams and direct publishing of games, we need to be more alert than ever to how we run our businesses. Standing alone will only leave companies behind. Collaborating and sharing can help companies advance. Investing in clusters is investing in success.