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The state of play

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Ian Livingstone

Chairman of Sumo-Digital

Ian Livingstone is Eidos Life President, Games Workshop co-founder and currently leading an Independent Skills Review for the Video Games and Visual Effects sector.

Bigger than DVDs, bigger than cinema box office, bigger than music and bigger than books – now what entertainment industry could that possibly be? The answer is video games.
In the UK video games are played in two out of three households, four out of ten gamers are female and one gamer in four is over 50. There are some big numbers in games and they are getting bigger. Ten million unit sales of a console game is now possible, ten million subscribers to an MMO is possible, the installed base of hand-held games devices (excluding mobile phones) is above 100 million, games are being played on social networks by hundreds of millions of players, games are selling by the million on Apple’s iPhone and there are an estimated 50,000 games portals offering free-to-play web games to tens of millions of players around the globe. Today, revenues from games software exceed £30 billion a year and are estimated to rise to £50 billion by 2015.
brain training image by flickr member Ant & Carrie’s photos
So what’s the big deal about games? Well, games are the product of an exciting marriage between art and technology. Games are interactive entertainment – a compelling non-linear experience that allows players to control the action themselves rather than watching somebody else having all the fun. Games are rather good at generating emotions such achievement, frustration, greed, happiness, etc. Games have grown up and everybody is playing; male and female, young and old. Games are as important socially, culturally and economically as music and film. They are certainly the preferred entertainment choice of today’s youth. Moving out of the bedroom, people are enjoying playing games together in the living room, online and on a multitude of portable devices. Games are now part of mainstream culture, a new art form that helps define human beings.

Universal Gaming

While the industry is relatively new, playing games is not. When we come into this world we learn about it through play. As we get older we still enjoy play, even as adults, but are often afraid to admit it because of negative connotations. Video games were wrongly portrayed as evil. A foolish notion exists that all video games contain violent content and that only children play them. Contrary to this perception, less than 3 per cent of titles released have an 18 rating, accounting for 5 per cent by value. A typical console player is a person in their mid to late twenties. Therefore it can be no surprise that some older gamers want mature content. Not all books are for children, not all films are for children and, guess what – not all games are for children. However, most games sold are appropriate for everybody to play. Puzzle, sports and social games are the most popular types. Many games are an invisible learning tool; puzzles and problems to solve, choice and consequence, intuitive learning, trial and error, micro-management, simulation, communication, social skills, character development, narrative structure and even manual dexterity.
Learning and Teaching Scotland (LTS), the main organisation for the development of the curriculum and for exploring the use of ICT (Information and communication technologies) in education, carried out an analysis of the effect of Nintendo’s DS game Dr. Kawashima’s Brain Training on pupils’ maths ability. It found a daily dose of the game improved pupils’ attainment in maths and their concentration and behaviour levels. Such evidence suggests games that involve any kind of puzzle-solving help to build synapses in the brain rather than destroy them.
When Sir Clive Sinclair put affordable computers into the hands of a creative nation in the 1980s, it came as no surprise that best-selling franchises such as Lara Croft: Tomb Raider and Grand Theft Auto were created in the UK. Video games are very much part of the creative industries, built on the knowledge economy and creating valuable intellectual property vital to the economic future of the UK as traditional manufacturing declines and financial services go through turmoil. Even without production tax breaks or a supportive press, video games today generate £2 billion in sales in the UK and contribute £1 billion to UK GDP, with a positive export balance in excess of £100 million a year. To put the economic value of games into context, the launch of Grand Theft Auto 4 in 2008 saw six million units sold in the first week, generating £250 million of revenue worldwide. This brilliant game was developed in Scotland and is a great British success story yet the headlines were often negative because of its controversial content. The UK video games industry deservedly needs support rather than criticism.

Skills review

In a hugely competitive global industry, all is not well in the UK, despite the flying start. The UK has dropped from third to fifth in the world league of content development. While the industry worldwide has grown by 20 per cent in the past two years, the UK has declined by 15 per cent. There is a skills shortage in the industry, which suffers from a lack of computer scientists, mathematicians, artists and animators. Most universities offering games courses fail to produce graduates with the skills industry needs, instead focusing on the philosophy of games rather than the hard skills needed to make them. In the summer, Ed Vaizey asked myself and Alex Hope from Double Negative to lead an Independent Skills Review for the Video Games and Visual Effects sector. This review, currently being carried out by NESTA and Skillset, has a simple but ambitious goal: to transform the UK into the best source of talent in the world for the video games and visual effects industries. Our industries have long complained about difficulties in finding university graduates with the right skills. We can no longer afford to neglect this. In the video games context, if the UK is to remain at the top of the global development league, we need to ensure that our education system produces the kind of talent that the industry needs. This can help our studios to grow and produce the best content for global markets. These studios will also attract independent finance or investment from global publishers who are continually looking to set up camp in the most competitive territories. Last but not least, it will put an end to a situation where young people invest their time and money on university courses that fail to provide them with the hard skills they need in the video games industry.
To achieve our aims, we are examining the whole ‘talent pipeline’ including school, universities, Further Education and vocational training. We will be looking at University curricula and teaching methods. We are also examining the potential application of video games technologies in the classroom as a way of getting more young people engaged with STEM subjects such as maths and physics. We have already talked to dozens of educators and industry professionals, and unearthed many nuggets of best practice both in the UK and overseas that need to be encouraged and more widely adopted. We look forward to presenting all our findings in the New Year.
Lara Croft and the Guardian of Light

Innovative business models

The video games industry thrives on innovation. Technology drives innovation in the making and playing of games. The internet is at the centre of its future growth, and high speed broadband is a necessity for its success in delivery and consumption of content. For the UK to remain at the forefront of the global games industry, it is vital that inventors and investors come to understand and trust each other. Nobody can claim it is easy to understand games production and the complexities and opportunities of the industry. Today there are a multitude of game-enabled devices and platforms, online and offline, with games being delivered as a service as well as a product, and new technologies and myriad business models; product sale, subscription, free-to-play with item sales, advertising supported, pay to play and freemium. Add to this cyclicality, seasonality, escalating costs, global competition, problems of lack of scale and there are plenty of reasons for investments to go wrong in a hurry. Despite the huge growth of the market and incredible revenue generation by many titles, the industry is littered with failure and closures. That is all the more reason for creative leaders to understand business people and for business people to understand the creative leaders.
The video games industry is a major global business. It is constantly changing. High-speed broadband is driving new ways of delivering and playing games as new platforms emerge. There has never been such a great opportunity as now for content owners to reach global audiences via the internet. The UK happens to be very good at creating games and developing original, world-beating intellectual property. There are many examples of successful UK studios like Rockstar North, Lionhead, Rocksteady, Blitz, Codemasters, Media Molecule and many others together with online-only companies like Jagex and Mind Candy that are attracting millions of players from around the world. The UK video games industry must be supported. One thing is certain: the global market is getting bigger and the financial rewards of success can be mind-boggling. Modern Warfare 2 was released on 10 November 2009 and sold 4.7 million units in one day in North America and the UK alone, generating £200 million of sales. Innovation and investment are at the heart of the industry, driving it forward at pace. Who would have thought even five years ago that a console called Wii Fit offering interactive exercise would top the games charts, or that millions of wannabe rock stars would be playing Guitar Hero in their living rooms or 65 million people a month would be managing virtual farms playing Farmville on Facebook? Games are fun. There is nothing to fear. They make money for the UK too. Everybody is playing games. You are never too young to start and never too old to stop.

Further information

Follow Ian Livingstone on twitter @ian_livingstone
Ed Vaizey supports London Games Festival

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