A Dundee bedroom, as the legend goes, was where the creation story began for a company which would go on to produce some of the most popular video games of all time. Since the rise of Scottish-born games like Lemmings and Grand Theft Auto, developers in Scotland have continued to carve out a prolific track record in delivering hugely popular titles to the world. Holding its own against games-making hubs like Canada and France, however, has become increasingly tough in recent years as the UK government continues to deny the sector the financial incentives and tax breaks that have proved so successful overseas.
Last year a Scottish Affairs Committee report urged the government to consider the “compelling case” for stronger support for the sector.
It also highlighted a plethora of challenges facing games firms in Scotland – not least the ability to create enough jobs to keep the rich pool of extremely talented graduates north of Hadrian’s Wall.
Despite citing experts who hailed this a golden age for developers, little movement has happened since the Scottish Affairs Committee report was published. Save for the rise of improved R&D tax credits, the prospect of tax breaks and incentives specifically for games firms remains off the agenda.
While the Department of Culture, Media and Sport told BQ it was not able to comment on the prospect of such incentives as they are a “Treasury”, the Treasury told us that there are no plans for even a review of the decision this year.
Meanwhile during a parliamentary session last summer, Culture minister Ed Vaizey skirted the topic when pressed to explain the government’s stance on the issue, pointing to R&D tax credits and the enterprise investment scheme as positive incentives for games firms.
In the meantime, one major Scottish player in the sector has been shot down – with loss of 25 jobs at Dundee’s Cohort Studios – while the spectre of 2010’s major corporate casualty, Realtime Worlds, still looms large in the wake of the resultant 150 job losses.
With no national government discussion or decision making on the issue expected anytime soon, it appears it is up to Scotland’s games firms and universities to ensure potential does not fizzle out in the uncertain times that lie ahead.
Fortunately, regardless of the state of limbo the industry finds itself in, there are reasons to be cheerful and signs that Scotland has what it takes to continue to show the world how to make games which blow their rivals out of the water. As the global market for video games continues on track to soar from US$52.5bn in 2009 to US$86.8bn in 2014, Scotland remains home to around 45 video games development-related firms – 10% of the entire UK sector.
Annually, Scottish games companies are estimated to invest £27.5m in salaries and overheads, contribute £25.1m in direct and indirect tax revenues to HM Treasury, and make a direct and indirect contribution of £61m to the UK’s GDP.
“Scotland’s a great place to be at the moment. There’s a really vibrant games scene and it’s quite easy to get face to face with the people that matter.”
That is the view of Gregor Hofer, founder of Speech Graphic. The Edinburgh-based university spin-out enables video games makers to sync their characters lips to their speech.
Hofer’s firm was awarded a £68,000 development grant in the February this year from the Scottish Government through its SMART: Scotland scheme. No wonder the game-changing company is a big fan of Scotland, cynics may say, but Hofer is not alone in his optimism for the future of an embattled sector.
Larger, more established firms also agree that Scotland is a prime location from which to grow a video games empire. Mobile and social media games giant Outplay Entertainment last year created 150 jobs at its new base in Dundee. The density of video games talent was what brought the company to Dundee, it said, before adding its voice to calls for UK tax breaks.
"When you look at the locations that have gone down that path, there seems to be a vibrant industry around them," the firm said as it announced its Scottish move.
The recent decision of national development agency Creative Scotland – which invests in new games by Scottish developers – to join trade association TIGA could also help improve the support network for games developers in Scotland.
According to Dr Richard Wilson, CEO of TIGA, Scotland’s already world-renowned prowess in games development could be taken to a whole new level with a little help from the government.
He also believes the sector could significantly lessen the nation’s reliance on financial and public sector employment.
“The lack of a tax break has certainly hindered the Scottish games industry,” he said, “with tax breaks we would get more investment into the Scottish industry, and especially more inward investment.”
Naturally, since he represents a hotbed of gaming talent, Jim McGovern, Labour MP for Dundee West, agrees. “The dramatic increase in games developers in the US and Canada can be traced to these incentives,” he told BQ.
“I sincerely hope we do not see job losses. However, this is a competitive industry and even under good circumstances jobs can be lost very quickly if a particular title goes bad. What the industry faces at the moment is a distorted international market where some participants are willing to offer support and incentives, and the question companies face is whether to locate their operations in places like the US, Canada, Ireland or the UK – all with excellent universities and a pool of talent that can be drawn on immediately – but with some offering generous government-backed incentives.”
But McGovern believes, despite the fact that George Osborne has clearly made up his mind on the issue in the immediate term, there may be some hope for the future.
“I am more confident in the middle or long term. Either this government or a future administration is likely to come to the conclusion that a comprehensive strategy for economic growth will be needed. This will include a new package of schemes to incentivise and support businesses and industries. Support for the computer games will hopefully fall into this strategy.”
With the global games industry now growing so fast it has far eclipsed even the movie industry, business leaders in the sector have no time to cling to the slim chance of a government u-turn or wait for changes in the longer term.
Much of the onus, in terms of keeping momentum in the sector going, is on Scotland’s universities, which are among the very few institutions in the country to offer degree courses in games development.
For Paul Durrant, director of business development at Abertay University, the career prospects for its gaming graduates remain largely positive – especially given the rise of mobile games and apps and the fact that bedroom developers can now produce and sell their own games without a publisher.
“We are fortunate to have some pretty good collaborations with the games development industry and major companies get involved on our course advisory boards,” he said.
“We take the issues that are key to them on board when we design a course but you can’t change everything overnight. We make sure our students are current and we build real world project work into the courses. Students work on projects for the platforms of the moment,” he added.
As the first university in the world to introduce a masters course related to games technology in 1997, the international draw of the institution is certainly strong.
However, perhaps positively for the future of the Scotland’s games industry, around 60% of the students on games-based courses are actually Scottish.
At the University of the West of Scotland, in Paisley, that figure is closer to 75% according to Professor Thomas Connolly from the faculty’s computing department.
He said: “The computer games technology degree has Skillset accreditation and the majority of the graduates from this programme gain employment in the games industry, which also provides information on the games industry.
“Skillset's course accreditation scheme, devised in consultation with industry and education providers, recognises courses within the UK that provide exceptional standards of education.”
As well as the ongoing popularity of Scotland’s games-based university places, hugely successful and awareness-raising events such as the games industry festival Dare ProtoPlay held in Dundee, show the huge appetite among talented Scottish youngsters to get involved in the sector.
It now remains to be seen whether their future careers in the industry will be played out at home or abroad and in spite or because of the government’s decision making process.