UK game industry shrank by almost half in 2012, claims govt report

The UK game industry shrank by nearly half in 2012 compared to 2011, according to figures released by the department for Culture, Media and Sport.

The economic contribution in 2012 (or gross value added) was £540 million.

During 2011 however, the industry was valued at £946 million. This means there has been drop of £446 million.

It should be noted however that the sector has still grown since 2010, when the industry contributed £443 million to the economy, and more than the two years prior.

The report suggested part of the drop could be down to re-stocking or de-stocking as the value of purchases by the industry was lower in 2011 than in 2010 or 2012.

It also noted that “data at this level of detail are volatile and dependent on survey data and should be treated with caution”.

Despite the large drop in contribution to the economy, the number of jobs in the UK game industry is said to have risen from 13,000 in 2011 to 15,000 in 2012, a rise of 18.8 per cent.

These numbers differ however from a previous Creative Skillset report, which suggested the industry only employed 5,000, and also to industry trade body Tiga’s own research, which suggested nearly 9,220 people worked in the sector as of the end of 2012.

Companies that generated a turnover below £79,000 were not recognised in the figures as they did not need to register for VAT.

Game industry trade organisation UKIE has warned that many UK games companies are not being counted as part of official industrial and economic figures, and has called on the sector to work together to fix this and increase representation.

It recommended developers check their SIC code to ensure it relates to the game industry. It suggests using the SIC codes 58.21 for publishers and 62.01/1 for developers.

“These figures are obviously disappointing on the face of it,” said UKIE CEO Jo Twist.

“A reduction from £946 million to £540 million in one year is not good. This is partially due to the cyclical nature of our industry, as 2012 saw both the start of a build-up to the new generation of consoles and a broader shift towards new, smaller companies. Both these trends would see a focus on investment rather than output. However, as the Department for Culture, Media and Sport (DCMS) note in their estimates, the £540 million GVA figure is not as robust as it could be and ‘should be treated with caution’.

“We think a lot of games companies are not being counted as part of our industry, and we are already working with the Office for National Statistics (ONS) to see if this can be improved. This is hugely important in showing government the importance and potential of our industry, and we will be calling on games companies to help with this work in the coming months.”