Hammond urged to boost video games sector up a level
A darling of the creative industries, the gaming sector, is calling on the chancellor to use his Budget on Monday to create an investment fund to help small studios access finance.
The fund -- the ‘VGIF,’ would also help with promoting the development of original IP and would encourage studios to grow, sector body TIGA says in its appeal to Philip Hammond.
The thinking is that the Video Games Investment Fund would make grants or loans of between £75,000 and £500,000 available to games businesses on a ‘matched funding’ basis.
Under £100k the funds would be delivered as grants, suggests TIGA, while above £100k, so-called ‘soft’ loans would be matched pound for pound to ensure firms can find new investment from other sources.
Should the chancellor take up the proposal, it would represent a double-win for the gaming sector, as it previously convinced Mr Hammond's predecessor, George Osborne, to introduce Video Games Tax Relief.
Introduced in 2014, the tax relief encourages the production of ‘culturally British’ video games, and is on offer to those developers who use UK-based production teams.
As well as safeguarding and protecting more than 4,500 jobs merely by being introduced, the relief has been calculated to have boosted UK games development spend to £1.25bn (in 2016), of which £389.9m was thanks to the relief.
Little wonder, then, that TIGA is hungry for more. "The matched funding criteria [of VGIF] would attract new investment from new investors into games and drive employment", says TIGA's Dr Richard Wilson.
"The VGIF would also enhance productivity growth in the sector by catalysing investment in capital, skills and innovation."
In their appeal to the chancellor, TIGA pointed out that games developers typically struggle to raise debt finance because they have relatively few assets and little financial track record.
But 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", the body says.
Tom Watson MP is already a convert. "[This] proposal for a games investment fund is something Labour is seriously considering as a way to boost innovation, investment and jobs in the sector," he said. "We need to make sure we sustain success in one of our most important creative industries."
26th October 2018