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Last Updated: Friday, 18 March, 2005, 08:13 GMT
UK games industry 'needs support'
Screenshot of GTA: San Andreas video game
GTA: San Andreas is developed by Edinburgh-based Rockstar games
The video games industry in the UK is looking healthy but could do with more government support, according to a report by analysts Screen Digest.

More software and games are being sold overseas than are imported, a good sign for the economy, said the report.

It shows the interactive entertainment industry is doing financially better than film and television industries.

The rising cost of making games has meant many studios have closed however, sending talent overseas.

The games industry employed 7.5% more people than in 2000, but the number of actual developers fell by 6%.

Most of the gain was made in publishing, distribution, and retail jobs.

Roger Bennett, director general of Elspa (Entertainment and Leisure Software Publishers Association) which commissioned the report, said the financial success was a "marvellous achievement".

More support

But he warned more government help was needed if the industry's future was to stay healthy.

Balance of trade in cultural industries
"Our greatest asset is our creativity and in recent times we have seen this talent being leeched away through lack of funding and more attractive prospects overseas," he said.

As a result, the UK risks losing its position as the source of global blockbuster titles, he added, and as the first European destination for global funding.

The cost of developing titles for the current generation of consoles has already meant some studios have had to shut.

In October, one of the largest and oldest independent games developers in the UK, Argonaut - responsible for the Harry Potter games - went into administration after a severe cash crisis.

Next generation costs

The global games market is worth some $28bn (14.5bn). Gamers spent more than 1.34bn in 2004, with Grand Theft Auto: San Andreas the top biggest seller.

The UK-developed game smashed sales records, selling more than a million copies in its first nine days on release.

"It is now time for government to recognise the valuable contribution we make to the UK economy, comparative to other entertainment sectors," said Mr Bennett.

UK leisure software market worth 1,22m in 2004, a 6% rise from 2003
Console hardware market dropped from 486m in 2003 to 339m in 2004, a 30% fall
320m invested in the UK game development industry in 2004
22,190 people employed in the UK video games industry
Just over 6,000 of these worked for games development companies
Source: Screen Digest, National Statistics
He said that the same level of support and incentives were needed for games too.

Draft government legislation announced last year proposed tax relief to fund 20% of production costs for UK films with budgets of up to 20m.

In Wednesday's budget, Gordon Brown said he would extend this and introduce tax relief to benefit both low- and large-budget UK films.

With the release of next-generation games consoles starting at the end of 2005, this support could be vital.

The consoles will demand much more sophisticated graphics for their games.

The games industry has repeatedly warned that next generation console games would be much more expensive to develop because of the level of skill needed.

At a US games developers' conference last week, some suggested that new start-up studios should make games for mobile phones and handheld consoles, like the Sony PSP and the Nintendo DS, instead.

Electronic Arts said at the conference that it was aiming to makes its mark in that market by releasing mobile versions of its most popular franchises.

The Screen Digest report also highlighted the growing trend of buying games from places other than physical shops, such as online.

"Mobile and online have become significant markets in their own right and we expect all forms of networked games exploitation to account for 20% of the total Western world market by 2008," said Ben Keen, Screen Digest analyst.

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