January 23, 2017

TIGA, the network for games developers and digital publishers, and the trade association representing the video games industry, has proposed the introduction of a Games Investment Fund to enhance studios’ access to finance, promote the development of original IP and to encourage studio growth. TIGA’s proposal for a Games Investment Fund would involve grants or loans being made available to games businesses on a pound for pound, matched funding basis, up to a maximum of £200,000.

Chris White MP, Co-Chair of the All Party Parliamentary Group for Video Games in the Westminster Parliament, commented on TIGA’s proposals: “I support TIGA’s call for the creation of a Games Investment Fund, which has the potential to provide a significant boost to the video games industry. It is particularly important that we support small and medium-sized firms and the Games Investment Fund would improve access to finance, as well as promoting creativity and innovation in the UK”.

Access to finance is a challenge for many UK games developers because they have relatively few assets and little financial track record. Equally, TIGA says, most venture capitalists and business angels will not invest in games because of high risk levels, low knowledge levels about the industry and high, largely fixed costs of due diligence relative to the amount of equity sought. A recent TIGA survey showed that 89% of games company respondents who had tried to raise institutional equity finance had failed to do so. Consequently, TIGA says, many small and start-up studios struggle to raise finance and are vulnerable to collapse.

To improve developers’ access to finance, TIGA is calling on the Government to facilitate the development of a Games Investment Fund (GIF). The GIF would disburse 25 convertible loans or matched grants of up to £200,000 per annum (£5 million in total). A commercial mentoring business advisory service, staffed by paid industry veterans, would be mandated for successful companies.

TIGA suggests that the GIF could be managed by the British Film Institute, the UK Games Talent and Finance Community Interest Company or one of the British Business Bank’s finance providers. It could be financed either from the National Lottery or from Grant-in-Aid money from the Government.

The GIF would have a positive impact on the UK’s games industry and wider economy, TIGA argues. Over the five years from 2017 to 2021, the GIF would:

• increase headcount by nearly 600 staff;
• create over 1,000 indirect jobs in the supply chain around games development;
• encourage games companies to invest an additional £81 million in development expenditure;
• contribute an additional £74 million in tax revenues over 5 years;
• help 125 studios (18% of total); and
• increase Gross Domestic Product (GDP) by an additional £178 million.

TIGA says there is strong support for the GIF amongst games developers. For further information, click here