It would be easy to believe that the outlook for the games sector is all doom and gloom based on recent headlines about record numbers of layoffs in the sector, with estimates that up to 6,400 people have lost their jobs globally in 2023 after some of the biggest names in the industry, Microsoft, Epic, Sega, Unity, and Roblox, were forced to reduce staff numbers.

This is undoubtedly exacerbated in the UK by factors such as lack of funding for the sector, high-interest rates, inflation, slowed growth, rising production costs, and increased global competition.

One of the key external factors is that the world has changed drastically since the pandemic when the games industry expanded dramatically whilst lockdown measures were in place. There was a period of exponential growth and now the industry is sobering up and having to make corrections based on the fact money is tighter. Reducing personnel is one consequence of these changing circumstances but despite this, it is important to note there has been overall growth within the sector.

It is estimated that the UK games industry grew by 11.4% between December 2021 and April 2023 with the total UK workforce (including freelancers) reaching 25,026 and 44,162 jobs indirectly supported by the sector. Whilst these figures may have declined slightly in recent months, it's important to reiterate that we are growing as a sector and the outlook remains positive.

I expect that we will see a reduction in the number of game job vacancies in November and December because those who have lost their jobs are a windfall for companies that are hiring right now and many of the current vacancies will disappear quickly.

And, despite current economic conditions, the gaming sector is primed for growth, with The Data City estimating that UK gaming sector employment could rise to 60,000 by 2025 and it could be worth approximately £29.5bn by 2027.

Furthermore, a report by TIGA, one of the trade associations for the games industry, has highlighted the extent to which the sector contributes to the UK’s Levelling Up Agenda with almost 80% of those working in the UK games industry employed outside of London. With huge potential for the industry, it is pertinent that more is done to support the sector, which The UK Government has identified as part of its ambitious plans to grow the economy and boost the creative industries by £50bn.

Although venture capital funding was reportedly at a record high in 2022, the amount of venture capital funding for the games sector is not increasing as fast as other emerging economy sectors and many companies struggle to access funding, especially at the start-up stages.

As Portfolio Manager for the recently launched Content Fund, part of the UK Games Fund, we have seen unprecedented demand for funding. Since opening in mid-September, the £5m fund, which offers £50,000-£150,000 commercial games-for-entertainment content grants, has received over 120 applications, which shows the need for funding support for businesses at all stages of development.

Funding challenges were highlighted in the recent UKIE Games Industry Manifesto, which calls for the government to renew the UK Games Fund and increase it to £30m over three years, ensuring broader support for projects to nurture industry growth.

We are also seeing a lack of senior talent in the sector, which is exacerbated by people being laid off several times. This leads to a perception that the industry is too risky and talented people are seeking stability elsewhere. We have a leaky bucket situation where we are losing senior talent faster than we can train junior talent to replace them.

We need to make the industry more stable by tackling the ‘acute skills challenge’ at both ends of the spectrum, retaining experienced people and offering support to employ and train junior staff. The industry is crying out for opportunities like the Kick Start Scheme, which ran from 2020-2022. It covered the cost of employment for six months, greatly reducing the risk of taking on young, new staff. Rivet Games was fortunate to benefit from the programme and we appointed four people, which we couldn’t have done otherwise.

It's vital that we see more schemes like this for the games industry to help seal the leaky bucket, which will create benefits for other industries through the development of valuable, transferable skills honed within the games industry.

With Scottish Games Week kicking off, including a symposium to explore the education pipeline in Scotland, and discussions around many of the issues discussed above, I look forward to seeing how lessons from the Scottish games sector could be adopted more widely across the UK and further afield.

Get in touch

If you'd like to get in touch to discuss this further, please don't hesitate to get in touch with a member of the Johnston Carmichael Technology & Life Sciences team.

Colin Macdonald is the portfolio manager for the Content Fund, director of Games Jobs Live, commercial director at Rivet Games, managing director at Indie Champions, an advisor at Speech Graphics, and a member of Johnston Carmichael’s Tech Advisory Board.