BFI Screen Business

BFI Screen Business

Key findings

• In 2016, the UK Games Industry directly employed 20,430 FTEs and contributed £1.52bn in GVA to UK economy

• Including indirect and spillover economic impacts, this rises to 47,620 FTEs and £2.87bn in GVA

• At least £1.75bn of overseas investment into UK games companies in 2015-2017

• £1.25bn spent on game development in the UK in 2016

• £389.9 (31 per cent) of UK expenditure supported by VGTR, 68 per cent of which is additional

• VGTR supported 9,240 UK industry jobs, including 4,320 FTEs directly in game development

• VGTR contributed £294.1m in GVA, rising to £525.0m with indirect and spillover impacts

• Every £1 invested into the games industry via VGTR generated an additional £4.00 in GVA for the UK economy

Overview

Published in October 2018, ‘Screen Business: How tax incentives help power economic growth across the UK’, produced by Olsberg SPI and Nordicity and commissioned by the British Film Institute, investigates the contribution to the economy of the UK screen sector tax reliefs, including the VGTR. It also includes an analysis of the total economic impact of the UK games industry, including detailed assessments of the development, publishing, retail, esports and merchandising subsectors.

At the time of publication, 'Screen Business' represents the most comprehensive and up-to-date economic analysis of the UK games industry. Due to the amount of time required for various tax data and other essential components to become publicly available, the report is based on 2016 data, which was the most recent complete annual dataset at the time. The reports methodology underwent review from several Governemnt departments, including HM Treasury and DCMS, and contained a foreword from Phillip Hammond, Chancellor of the Exchequer.

Methodology

The report's methodology is complex and outlined in detail within the report. In summary, the games industry analysis is based on data derived from the UK Games Map, filtered for only those companies active in 2016. Other key elements of the data inlude Ukie's 2016 UK Consumer Market Valuation and GfK UK Chart-Track sales data for 2016.

Each economic measure within the report is broken down into the following standard sub-measures:

• Direct Impact – The economic impact directly attributable to production, distribution, and consumption undertaken within the sectors covered. In the instance of the games industry, this refers to the economic impacts of the core games development, publishing and retail businesses.

• Indirect Impact – That which comes from further economic activity that happens because of the direct impacts. In the games industry, this would include any business that supports the the core industry, which includes anything from PR agencies, to middleware providers, to hardware suppliers, to trade associations.

• Induced Impact – These are the effects resulting from the re-expenditures of households, or employee wages etc. The effects of the wages of the employees in the groups above being spent in the general wider economy.

• Spillover Impact – Parts of wider industries that occur because of the economic activity in the primary industry. In this report, his refers to the merchandising and esports sectors.

Whole UK Games Industry Findings

The data shows that in 2016, the UK games industry directly employed 20,430 people and contributed £1.52bn in GVA to the UK economy. With indirect economic and spillover impacts included, these numbers rise to show the industry supporting 47,620 jobs and contributing a total of £2.87bn in GVA.

The report shows that with £1.25bn spent on game development in the UK, employment in the sector is at record levels, with 16,140 FTEs directly employed in development and publishing roles, contributing over £1.35bn in GVA. The strength of UK games companies was also demonstrated in the significant inward investment to the industry, with at least £1.75bn of overseas investment throughout 2015-2017.

The ‘Screen Business’ report also shows for the first time the economic contribution of the fast-growing UK esports industry for the first time, showing that in 2016, UK esports provided job roles for 470 FTEs across a sector already generating £18.4m in GVA. The economic contribution of the digital retail sector was also shown for the first time, with 660 FTE positions contributing £49.1m in GVA.

Employment

Employment in the UK Games Industry (FTEs)
Subsector	Direct	Indirect	Induced	Total
Development	13,840	7,250	4,980	26,070
Publishing	2,300	6,350	3,790	12,440
Digital Retail	310	190	160	660
Physical Retail	3,980	2,120	1,110	7,210
Merchandising	770	-	-	770
Esports	280	190	-	470
Total	21,480	16,100	10,040	47,620

GVA Contribution

GVA Contribution of the UK Games Industry (£m)
Subsector	Direct	Indirect	Induced	Total
Development	826.0	369.5	245.1	1,440.6
Publishing	526.6	339.2	186.4	1,052.2
Digital Retail	37.1	9.8	7.6	49.1
Physical Retail	132.0	92.6	54.7	279.3
Merchandising	34.4	-	-	34.4
Esports	16.1	2.3	-	18.4
Total	1,566.8	813.4	493.8	2,874.0

VGTR Findings

Now supporting £389.9m of UK development spend (or 31 per cent of the total amount spent on development), the Video Games Tax Relief (VGTR) continues to prove itself to be an important economic driver of innovation and cultural creativity. With £45m paid out in relief in 2016, VGTR-supported games provided 9,240 jobs across the industry, including 4,320 FTEs in game development (or 31 per cent of the UK development workforce).

The success of VGTR games directly contributed £294.1m in GVA to the UK economy, rising to £525m including indirect and spillover impacts. The report also shows that without VGTR support, 68 per cent of VGTR-supported games would not have been made in the UK. With £156.0m generated in tax revenue from VGTR-supported games, this means that every £1 invested into the games industry via VGTR generated an additional £4.00 in GVA for the UK economy. Of all the screen sector tax reliefs, VGTR delivered the highest rate of labour productivity in 2016 at £83,800 (compared to the UK average of £62,100).

Employment

Employment supported by the VGTR in the UK Games Industry (FTEs)
Subsector	Direct	Indirect	Induced	Total
Development	4,320	2,260	1,150	8,130
Publishing	120	340	210	370
Digital Retail	20	10	10	40
Physical Retail	180	100	50	330
Merchandising	40	-	-	40
Esports	20	10	-	30
Total	4,700	2,270	1,820	9,240

GVA Contribution

GVA contribution supported by the VGTR of the UK Games Industry (£m)
Subsector	Direct	Indirect	Induced	Total
Development	257.7	115.3	76.5	449.5
Publishing	28.4	18.3	10.1	56.8
Digital Retail	1.8	0.6	0.4	2.8
Physical Retail	6.1	4.3	2.5	13.0
Merchandising	1.9	-	-	1.9
Esports	0.9	0.1	-	1.0
Total	296.8	141.6	89.5	525.0