The UK video games industry will remain one of the leading lights in games development and publishing, according to a game industry group.
By Darren Waters
BBC News Online staff
Mike Rawlinson, deputy director general of European Leisure Software Producers' Association (Elspa) told BBC News Online that the creativity of UK developers and producers would always "shine through".
E3 provides a platform to show off your wares to the world
He was speaking at the recent E3 trade show in Los Angeles following a difficult year for the UK industry which has seen a number of developers, such as Rage, shut down and a number of firms consolidate by merging.
"I think from a publishing perspective we have very few truly UK owned publishing companies.
"But those left, Eidos, SCI, Empire Interact, they seem to be coming through.
"They are holding their own. UK publishing is in a good state of business."
The video games industry is one of the fastest=growing businesses in the UK, with the export value of UK developed games for 2003 likely to exceed £200m ($357m).
But firms such as Eidos, publishers of Championship Manager, Hitman and Lara Croft games, remain vulnerable.
LEADING UK DEVELOPERS AND PUBLISHERS
Last week the firm's share price collapsed following the news that its latest title, Hitman: Contracts, had not shipped as many copies as the company had planned.
The drop in share price sparked rumours it was about to be bought out, which were denied by the company.
Before the share problems, Jonathan Kemp, Eidos' European managing director, told BBC News Online that the company had emerged stronger after "two or three difficult years".
He said: "We needed to refocus the firm and turn it around. The last year has been about pointing in the right direction and we have achieved that."
Eidos employs 650 people worldwide and has five development studios, two of which are in the UK, making it one of the most important video game firms with headquarters in the country.
Mr Kemp insisted it was still possible for British companies to compete in an international market.
"We are operating on a global stage but we are based in the UK. We are proving we are a big global player. We may not be as big as EA or Activision, but we have a stable business, which is growing."
Looking ahead, it seems the UK industry should expect more consolidation to come.
Mr Kemp said: "I think the consolidation will be two-fold: consolidation of developers and consolidation of intellectual properties.
Lara Croft: Made in Britain
"Small publishers will not be able to compete ultimately with the big players."
Many in the industry believe that the global games industry will eventually mirror the film industry, with a handful of giant publishers supplied by a limited number of developers who use smaller companies for specialist work.
Mr Rawlinson said: "In terms of development there is going to be a transition, but UK developers will find their strength.
"It will be like Hollywood where companies will come to the UK for certain core skills.
"UK development will end up providing those core skills such as games engines, or artificial intelligence, as well as creativity."
He said the UK government was working to support the industry, but stopping short of subsidising it.
At E3 the Department of Trade and Industry worked with a number of firms to set up the UK State of Play stand.
Mr Rawlinson said: "There have been a number of movements through research and development tax credits recently that will support UK firms.
"It is trying to support the industry as best it can - through export and import missions, scoping new markets.
"At the end of the day, commercial companies have got to survive on their own terms."
He said that the State of Play stand at E3 gave a focus to UK creativity.
"As an independent, you may be able to work on the world's leading franchises but to come to E3 and stand out is very difficult."