The world is changing. Last week, the U.K. voted to exit the European Union. Now U.K. game developers, investors and others weigh in on what such a 'Brexit' means for the game industry at large.
Last week the United Kingdom held a public referendum to determine whether it should exit (or “Brexit”) the European Union. More than 30 million people voted, and the majority of them said “Leave.”
This has the potential to significantly affect our global game industry. The UK has been a part of the EU for over 40 years, and the specter of its looming departure has kicked off a series of significant poltical, cultural and economic shake-ups around the world -- starting with a steep drop in the value of the British pound.
What this means for game developers, both within the U.K. and without, won’t become fully clear for some time. The UK is still sorting out exactly how and when it will extricate itself from the EU, and that will in turn affect the way people work, travel, earn and spend money in Europe.
For developers in the UK, a Brexit seems likely to cut off access to EU grant programs like Creative Europe, which has helped fund UK studios like The Chinese Room, Italic Pig and Revolution Software. It may also complicate things for UK devs employed by studios in EU member countries, and vice versa.
To get a better understanding of the situation from multiple perspectives, Gamasutra reached out to folks from across the game industry last week to get their thoughts on what this means for game developers around the world.
Some of them shared (via Twitter) brief opinions on topics like access to the European labor market, free movement throughout Europe, and what the shifting exchange rate of British pounds to U.S. dollars means for their bottom lines.
"There is no doubt in my mind this is a sad day for the UK country, economy and cultural landscape. In a connected 24/7 world powered by borderless technology, it feels like we just moved back in time 40 years."
Others shared longer and more nuanced thoughts with Gamasutra, and so we’ve taken the liberty of excerpting their comments below in an effort to shed light on what the UK’s decision means for the game industry at large.
“What this means for the game industry depends on who you are. If you’re a developer with primarily US$ denominated contracts the devaluation of the £ is good news. A $1M contract you signed last week just got, in theory, approximately 8% more £ in your bank account. However your Dollar and Euro-based costs went up relative to the Pound.
For the next 2 years it’s unlikely any other business fundamentals will change while the politicians work out the divorce settlement. After that the situation is more hazy - primarily, what does this mean for freedom of movement of labour and employment for developers? Today you can hire from 20+ countries without paperwork or limitation and that is likely to change for the worse.
Anyone running studios in the US will know how hard it is to get visas for non-US citizens, and I hope we don’t move in that direction. One of the great things about a UK-based studio is the diversity of talent employed from all across the continent. In my experience, that makes for better teams and better teams simply make better games.
The investment landscape may also be more complicated. There are certain investors who get funding from European funds that require, or limit them, to investing in EU-based companies. Once the UK is out, that might impact access to certain, but not all, sources of equity investment. However, I think this is more than offset by new sources of capital, particularly from China.
The recently-introduced creative industries tax credits are excellent benefits for UK studios, but their design was somewhat hampered by over-arching EU restrictions on state aid for specific sectors. Post-exit, it is possible that the UK government can be more entrepreneurial in the way they treat one of the best growth stories for the UK economy, namely games.
Being realistic, I don’t expect this to be top of the agenda for the new UK government regime but we can continue to influence policy strongly here.
It definitely would have been better for the UK to remain in the EU, in my opinion. Our cultural diversity is immeasurably improved by our connections to Europe and the incredible talent that can work here in the UK to help UK studios continue to be world-class.
The next 2 years will re-write substantial amounts of trade and employment legislation for the UK and it’s unclear, 8 hours in, exactly what this looks like. But there is no doubt in my mind this is a sad day for the UK country, economy and cultural landscape. In a connected 24/7 world powered by borderless technology, it feels like we just moved back in time 40 years.”
- Phil Harrison, London-based investor and entrepreneur in games and technology. Formerly a corporate vice president at Microsoft, a president of worldwide studios at Sony and (ages ago) a British game designer and producer.
“I'm sad and disappointed at the decision, given all the positive cross-European work that I have seen in the games industry. But once the currency and stock markets have settled down, I believe VR and games development in general will be affected less than many other industries. I am feeling less pessimistic now that the dust is starting to settle.
I believe the UK must and will retain access to the single market, which means we can continue to sell our games across Europe. We may see less investment in the UK from Europe, but hopefully some of that will be made up by getting closer to the US and China.
I suspect there will be developers affected by deals not happening due to caution, or by the likely (hopefully small) recession. I hope this isn't widespread.
Above all we need to work harder than ever now. We need to keep all the amazing cross-nation work going in our industry. We need to show that we are an outward-looking country who are still keen to work, share, and help others. That's what makes us British!”
- Patrick O’Luanaigh, CEO and founder of U.K. studio nDreams (The Assembly, Gunner)
"I don't think the impact will be as great as many fear, although it depends vastly on each studio's circumstances. People employing staff from Europe could theoretically run into visa problems, which may prove an issue for studios in that situation, but other than that, it shouldn't be a real problem.
Most indie studios have people working from home anyway, and I can't see a problem with me still using a European artist as a contractor. The immediate result is a huge drop in the pound against the dollar, and as most indie studios get paid in dollars, they will actually be *better* off than before.
I'm also not worried about tax breaks, because that was a UK government thing they had to get the EU to allow them to do, so if anything they could be better post-Brexit than before.
I've always sold games to every country on Earth without any problems, so no longer being in the EU should not matter. In fact, AFAIK the only country you ever had to make special builds for in any case would be Germany due to its regulations on WW2 imagery, so no change there.
Studying economics taught me that trade is always good, for both parties, so I can't really even imagine a world where France bans imports of UK-made videogames, or a tariff on them, its just not in anyone's interests to restrict trade with us."
- Cliff Harris, longtime game developer and founder of U.K.-based Positech Games (Democracy 3, Gratuitous Space Battles)
As the debris from the referendum settles down, the most immediate impact seems to be on the currencies. Companies that are based in the UK specifically for its access to the European market might have to reconsider their presence there, and European companies seeing the UK as a EU bridge to the anglosphere might have to reconsider that, too.
In the long terms, so much in dependent on the Article 50 negotations that define the terms for the separation of the UK. How will VAT work? Will freedom of movement be maintained? What limitations will there be on trade? Will there be tariffs or fees? How far back up will the economies bounce? While UKIE already made statements reassuring UK-based studios, I've been hearing rumblings throughout that suggest a lot of studios might not feel as safe running their business from the UK today as they did yesterday.
- Rami Ismail, Vlambeer (Nuclear Throne, Luftrausers) cofounder and world traveller
“I don't have any immediate worries about talent, because we all work remotely. But I have great concerns for the future of the economy generally. I'd rather UK prices didn't go up, and the danger is that our costs will increase on all fronts if and when this precipitates another recession.
Moreover, I think the loss of freedom of movement is simply contrary to growth and progress in all industries. Development isn't an island, and we need cross-pollination from other industries and cultures. Anything that puts barriers in the way of that is a bad idea.”
- Jim Rossignol, longtime writer about games and cofounder of the U.K.-based Big Robot (Sir, You Are Being Hunted, Avseq)
Meanwhile, both TIGA and UKIE (which serve as trade bodies for video game developers in the U.K. and the EU) have made a public show of looking out for game dev interests in a post-Brexit world.
While UKIE refrained from taking a public stance on the vote, it now seeks to reassure British game devs that it will be working hard to ensure the region's game industry is well-represented in the government's efforts to gracefully Brexit.
"Ukie is committed to ensuring the UK is the best place in the world to make and sell games," Ukie chief Dr. Jo Twist stated publicly last week. "Although this decision and the political uncertainty it brings will have an impact on our businesses it is important to remember that we are already a globally successful sector and a leading exporter in the digital economy. Ukie will continue to work hard with colleagues in government and other sectors to ensure we continue to have the best possible business environment for our sector."
TIGA laid out specific priorities to fight for amid the post-Brexit turmoil, suggesting that access to financing and tax breaks, access to talent, and the fate of intellectual property rights are now key issues facing the U.K. game industry.
"The UK video games development sector is an export focused industry that sells content all over the globe," stated TIGA chairman (and Rebellion chief) Jason Kingsley. "We have a highly skilled workforce, a creative and growing studio population and a heritage of thirty years of success. While uncertainty is unwelcome for business, the UK video games industry will remain strong, resilient and competitive."
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