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Britainâ€™s got talent...

Forget Lara Croft, George Osborne is the new video game hero | Page 5

The future of gaming is quite literally in your hands | Page 8

But more needs to be done to attract and keep them from working abroad | Page 11

November 2012 | business-reporter.co.uk

INTERACTIVE ENTERTAINMENT

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TAX CREDITS MOBILE BOOM REAL-LIFE GAMING TECHNO-REVOLUTION

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Business Reporter · November 2012

an independent report from lyonsdown, distributed with the guardian

Interactive entertainment

Find us online: business-reporter.co.uk

Publisher Bradley Scheffer info@lyonsdown.co.uk

Project Managers Josh Lesnick josh@lyonsdown.co.uk

Editor Ellen Bennet editor@lyonsdown.co.uk

For more information on any of our supplements please contact us:

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Telephone 020 8349 4363 Email info@lyonsdown.co.uk

Production Assistant Fleur Hollett production@lyonsdown.co.uk

Best of the blogs

In brief Who? Satori What? Mark DeLoura, author of the Satori blog, specializes in videogame technology, online games and infrastructure and writes the Game Programming Gems series of technical books. His rich experience in technology leadership positions, such as Sony, Nintendo and Google, provides a more practical approach to his blogging. “I’ve always been passionate about the idea of using games to teach, and for self-expression. As game developers we’ve fine-tuned our abilities to keep the player entertained, to teach simple concepts which build to more complex concepts over the course of a game, and to reward the player periodically to keep them engaged and motivated.” Who? Game Tycoon What? David Edery, the author of the Game Tycoon blog, says, “This blog is focused on making the world a happier place.” Featuring business-side analysis of the interactive entertainment market, Game Tycoon particularly focuses on insights from the game development world. “As several news outlets have discovered, we have amicably settled our lawsuit with 6waves.

We are very happy with the outcome and glad to be finished with this matter.“ Who? Interactive Entertainment What? This blog from Don Daglow, a pioneering video game and online game designer, gives us professional insights into interactive entertainment along with upcoming news affecting the industry. This blog, a foreshortened version Don’s 25 years of experiences as a video game developer, is definitely worth a read. “I recently had the chance to visit the Strong National Museum of Play in Rochester, New York, and take a tour of their collections. They have over 30,000 electronic game related items from every generation of PC games and every console ever made. It was the first time since the CES trade show of 1982 that I’d seen an Intellivision, a Vectrex and an Atari 2600 sitting side-by-side... let alone in playable condition with big libraries of games for each machine. (And remember, the Intellivision is clearly superior!).” Who? Finding something is losing something else What? Concerning the gender landscape in the videogames

world, this blog features opinions on the interactive entertainment industry from a female perspective. Karen Brennan, a research assistant at MIT Media Lab, introduces a new voice helping to promote diversity within the interactive entertainment industry. “From my experience, the core skills for a producer vary but generally include: people management, negotiation/ mediation, coaching/mentoring, solid knowledge of game development (including the area which they oversee), contract review, time management/ scheduling, presentation/ public speaking, and mastery of software tools for the creation of spreadsheets/slide decks/ documents and so forth (i.e. MS Office or similar). “ Video: Sustainable Perspectives on Video Games: Andy Robertson at TEDxExeter Andy Robertson nurtures fresh perspectives on videogames criticism. He edits the GeekDad blog for Wired.co.uk and publishes articles on BBC and the Telegraph, his creative way of mixing videogames with songs, plays, comedies and art provides an alternative way to respond to interactive entertainment.

Business Reporter · November 2012

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Interactive entertainment

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What’s inside? Datafile UK video game industry l Growth The video game sector offers opportunities for growth and high value, high technology job creation for the UK. Estimates from PWC suggest that the global market for video games will grow from $52.5 billion in 2009 to $86.8 billion in 2014. TIGA’s ambition is to make the UK the best place in the world to do games business and so enable the UK games industry and the UK economy to secure a growing share of this huge market.

l Exports UK game developers are export focused. 95 per cent of UK game businesses export at least some of their games/services to overseas markets. On average, 45 per cent of a UK games business’s turnover is generated from the export of games.

45%

100

95%

l Staff The UK games industry employs 9,000 highly skilled development staff, 85 per cent of whom are employed outside of London. 80 per cent of the workforce in game studios such as Blitz, Climax, Exient, Jagex, Kuju Entertainment, Rebellion and Ubisoft Reflections are qualified to degree level or above.

Gaming on the move Page 6

export services overseas

2014 $86.8bn

turnover generated by exports

How the chancellor became an unlikely hero Page 5

The war for talent Page 8

2009 $52.5bn

85%

skilled staff employed outside London

80%

staff qualified to degree level or above

Source: TIGA

Virtual games making real money Page 12

BEST APPS FOR GAMERS

FREE

Angry Birds Rovio The classic and still the best-loved, Angry Birds was that rare thing: a genuine game-changer for the interactive entertainment industry.

69p

Infinity Blade Epic Games A popular game for the more serious player, aspiring developers could do far worse than learn from Infinity Blade.

On the record

Digital Storytelling: A creator’s guide to interactive entertainment by Carolyn Handler Miller (14 May 2008) Amazon, £26.99

“

”

“If Pac-Man had affected us as kids, we’d all be running around in dark rooms, munching pills and listening to repetitive electronic music. Marcus Brigstocke

” “ ” “

Reality is broken. Game designers can fix it. Jane McGonigal “The worst thing a kid can say about a game is that it’s too easy. Henry Jenkins

”

Back in the office: reading list

“

I like video games, but they’re really violent. I’d like to play a video game where you help the people who were shot in all the other games. It’d be called ‘Really Busy Hospital.” Demetri Martin

FREE

Fruit Ninja Halfbrick Studios A gaming sensation that consists of nothing more than slicing fruit, this app proves that success can be simple.

Video Games and Interactive Media: A Glimpse at New Digital Entertainment by Stephane Natkin (16 Mar 2006) Amazon, £18.99 Speccy Nation: A tribute to the golden age of British gaming by Dan Whitehead (6 Sep 2012) Amazon, £3.99

With thanks to the following organisations:

www.tiga.org

Business Reporter · November 2012

an independent report from lyonsdown, distributed with the guardian

Interactive entertainment

Find us online: business-reporter.co.uk

Tablet talk

Join a revolution in technology with an innovative range of tablets INDUSTRY VIEW

t has been an impressive year for Versus with a staggering growth in tablet sales in a number of major retailers; including PC World and Currys, and with the Versus TouchTab in Carphone Warehouse. Most recently, the Versus TouchPad 7 was used at London Fashion Week by Emilio De La Morena’s VIP guests for updating Facebook, tweeting and blogging during the show. The Versus TouchPad is available in a range of sizes from 7in to 9in and 9.7in. The range includes Android 4.0 Ice Cream Sandwich, a Micro SD card expansion slot for adding memory and transferring files, HDMI out to watch films or play the games on your TV (7in and 9.7in version only), plus a host of other features. Enclosed in a feather-light chassis, the Versus TouchPad can be taken anywhere, and with

prices starting from £89.99 RRP, the range is accessible in a way that many others are not; meaning there is something for everyone is the TouchPad collection. The Versus TouchPad 7 is ideal

for people who are constantly on the go. Compact and lightweight, this 7in tablet is perfect to put in your bag or pocket. With built in wi-fi, just connect to your nearest hotspot and enjoy full web browsing capability. So whether

you need to check your emails, update your status, send a tweet or post a blog, you can do it all on the move. Watch films, your favourite TV shows or sporting events on the Versus TouchPad 9. Thanks to its 9in widescreen display and built-in Flash support, it’s the ideal way to catch up on all your favourites. With a 9.7in HD screen, 1GB memory, 8GB built in storage and wi-fi, the Versus TouchPad 9.7 means business. It is ideal for accessing emails, showcasing portfolios and presentations, downloading files and editing documents on the go, plus there is the option of increased memory of up to 32GB. In 2013, Versus will release a new wave of tablets - with a new spec, a new look and new accessories, the brand is set to take the tablet market by storm. www.versusuk.com

Business Reporter · November 2012

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Interactive entertainment

Gaming’s coming home After buckling under industry demands for a tax break, it seems there’s a there’s a new video game hero in town revenue. But between 2006 and 2012, and continue the campaign, despite it dropped down the tables and is being told it was going to be a waste currently around fifth. The UK lost of time,” says Wilson. “Fortunately Sonic, Super Mario and Lara its place to key competitors such as we managed to change the coalition Croft are all heroes of the video game Canada and the US, which have government’s view and they agreed industry. In March this year, a less generous tax breaks in place for it in March. We’re absolutely delighted likely player joined their ranks: gaming and production companies. – it will make a big difference.” George Osborne. The chancellor Between 2008 and 2011, headcount Other industries may well ask what delighted the industry in his annual in the industry in the UK shrunk by gaming has that they don’t. For Wilson, budget speech by finally caving in to 10 per cent. In the same period, it it centres on contribution to the demands for a tax break to encourage grew 33 per cent in Canada. economy. Gaming is a huge growth the development of the gaming “The underlying motive sector at a time when most Tax breaks industry in the UK. for our campaign is to industries are in decline; will generate Osborne was swayed by strong enable the UK games the consultancy PWC arguments. Traditionally the home industry to compete on a estimates its global worth of gaming development, the UK has level playing field; that’s will reach $80bn (£50bn) of investment slipped down the ranks in recent years. been the key motivating by 2014. In the UK, it’s a from studios The gaming industry employs some and driving factor,” says provider of good jobs, with 9,000 people in the UK and confidently TIGA chief executive Richard 80 per cent of studio employees predicts this tax boon will create 4,700 Wilson. “So we waged a campaign.” educated to degree level or higher. “It direct and indirect jobs and generate And what a campaign it has been. will increase investment considerably, £188m in investment by studios. The industry won over the Labour by several hundred million points, The tax break, which comes into government, and all political parties and it all helps to rebalance the UK force in April, will effectively bring supported it during the 2010 election economy more generally,” says Wilson. gaming back home. The UK has campaign. But in the budget of 2010, The tax relief works in two ways. traditionally been a world-leading the newly installed Chancellor Studios which make a profit can use developer of video games. Until 2006, Osborne decided not to introduce it. the relief to reduce the amount of it ranked third in the world by “We had to redouble our efforts corporation tax they pay to the Treasury. Those which make a loss can use the relief to claim money back The culture test from the Treasury of some of the cost To qualify for the tax break, games must score cultural points. Points can be won by: of developing the game – making a l Representing aspects of British literature and history traditionally high risk investment l Supporting British cultural practitioners (key staff, programmers, artists) that much safer. This is designed to l Innovating be particularly helpful for start-ups. l Using technological service providers based in the UK (eg motion capture) Games will have to pass a cultural l Supporting British jobs test to qualify for the relief (see box) – and many hundreds will do so. By Ellen Bennet

£188m

Booming industry As interactive entertainment has boomed, so too has online gambling, with poker becoming a popular option. The total number of online gambling websites is thought to have declined since 2009, thanks to the adverse economic conditions, with fewer than 2,400 sites active in 2011, according to online gambling monitor H2 Gambling Capital. But revenues have risen nonetheless. Online casino and bingo sites saw global revenues of $2.67billion (£1.6bn) in 2011 – a rise of 28.4 per cent over 2009. Online casinos contributed $6.24m (£3.9m), up 13.3 per cent. Poker saw a rise of 7.1 per cent to $5.6m (£3.1m), H2 reported, with a relaxation of rules in the French and Italian markets contributing to the rise. The sector’s biggest business generator at $12.6 billion (£7.9bn) was without doubt sports betting, up 10.8 per cent including the World Cup Football booster. A recent report by consultant PWC predicted that online gaming would continue to surge, and regulation and legislation would adapt to meet the new demand. It said: “Online gaming is happening across the world, whether regional, national and state regulators and lawmakers like it or not. “The fog of uncertainty that surrounds the size, scope and often the legal basis of online gaming makes it hard to assess its current and future impacts, or to plan strategies around it.”

Business Reporter · November 2012

an independent report from lyonsdown, distributed with the guardian

Interactive entertainment

Find us online: business-reporter.co.uk

What happens in the next level? The technological developments driving the slew of latest trends means gamers can now play any game, anytime and anywhere And in an industry once dominated by the high street, which saw retailers acting as gatekeepers for the market, Getting into gaming? What a key innovation is the development used to be a source of stigma is now of the app store and other web outlets. a booming industry – and this is being The transactions for the purchase driven by a slew of different of gaming apps used to be routed technological developments. through mobile operators, but now The development of games for stores such as those run by Facebook tablets, smartphones and social and Sony mean the process takes just networks has seen traditional non- a few clicks. This not only reduces gamer demographics, such as older the barriers to consumers – female consumers, seize on the new encouraging them to buy more apps format. And other innovations such – but also opens the floodgates for as the development of smart TV see games creators, who simply have to these being brought together for a submit a game to a store and more interactive experience. potentially pay a fee. Because the market is New ways to pay free of any big constraints, It may be obvious, but the there is the chance er plagiarism can slip continuing innovations v o e r a There on the internet are making through the cracks – but gaming more accessible, with around a quarter n pps o games ane store more linked up, and more of a million games apps the iPho attractive for consumers. on the iPhone store By Bonnie Gardiner

0 250,00

alone, this drawback is outweighed by the opportunities for gamers and innovators. There has been, as Nick Gibson of Games Investor Consulting puts it, a “tidal wave” of investment into these small games. “A lot of them won’t be particularly good, but there are a few very good games which you can find using things like ratings systems, reviews and word of mouth,” he says. Another driving force behind this industry is the development of payment systems such as micro transactions, which exist within games. This means players can enter free games such as Facebook’s Farmville and those looking for a more enhanced experience can pay small amounts for extras, adding to the game’s revenues.

Online gaming As well as providing new means of payment and customer access, online activity is providing new gaming platforms – which includes social networks, but others too. Social networks have

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this year, and there are problems around the service – though in theory, the quality of the experience in cloud gaming depends on a player’s server. Gibson predicts a good area for investments over the next five years and beyond, but not in the short term. New accessories for game use Technology has also made gaming more available – and interconnected – through the use of smartphones, touchscreens and voice-activated technology, such as Apple’s Siri. One big example of this is smart TV – where a television set is connected online, allowing it to access the games available in places such as app stores. It doesn’t come without its problems, it proves unwieldy to play a game using a remote control, but there are dedicated console controls available, or players can link the monitor to a tablet or smart phone’s controls. But because of the practical flaws and the specialist range of technology involved, the market for firms and investors is difficult to scale. The next generation of consoles As Gibson of Games Investor notes, burgeoning markets for games on had a robust performance in the Facebook, smartphones and tablets gaming sector – Facebook gaming have “sucked the PR oxygen out of has exploded over the past three the room” and are stealing much of years, and though this has slowed the market’s thunder when it comes over the financial year 2010/2011, to excitement around gaming. it remains the most populous platform But developments for the more for gamers on the planet. traditional games platforms are still Social-network gaming has failed a force to contend with, with consoles to draw in the traditional, console- making up the largest constituent hungry “hardcore” gamers – younger part of the games industry in terms male players are conspicuous by their of revenue at around 50 per cent. absence, despite a handful of The overall console market has companies attempting to target them been in decline since 2008 – much – but Facebook, which has of this can be put down to the managed to hit an older, female collapse of the Wii market, with demographic, claims it still other devices such as Xbox racks up 25m unique and PS3 showing modest, Facebook claims players per month. but steady, growth. But the opportunities A real driver for the gaming sector will be a for bu si ne s s e s a nd unique players highly anticipated, if investors still look strong: per month developers must pay a fee and unconfirmed, batch of new host their creations exclusively consoles expected to arrive within on Facebook, but from then are free the next 24 months or so. Nintendo to make money, and investors have has already announced a new Wii the chance to get a share of this. console which will hit UK shores Online play is also making waves before Christmas. And the industry with cloud gaming, which allows is abuzz over rumours of a new Xbox people to play any form or quality of console – which some predict will existing game through a console or land by the end of 2013 – and similar PC, using different payment systems. mutterings are circling about a new There are some signs this is a Playstation. market set for big things – just this The implications for consumers summer Sony had the confidence to – apart from heightened and buy cloud gaming host, Gaikai, for potentially more joined-up gameplay an impressive $380m (£239m). – are unknown, but there are rich But there are issues – another big pickings for both businesses and provider, OnLive, went bust earlier investors, if only in certain areas.

25 million

Business Reporter · November 2012

Interactive entertainment

Business Reporter · November 2012

an independent report from lyonsdown, distributed with the guardian

Interactive entertainment

Find us online: business-reporter.co.uk

Don’t The power is worry, in our hands be appy Tap into all your experience when you’re creating an app. It’s not just the idea that counts – it’s how you deliver it that really matters

Developers and mobile phone firms are working ferociously to keep apace with consumers’ appetite for handheld gaming

INDUSTRY VIEW

ake time to develop a feature-rich, user-friendly app that your customers will love - or don’t bother. So says Cameron Dick, founder Creator of Apps, based in the Wilmslow, Cheshire. With thousands of apps already available, don’t be panicked into launching your app too soon –quality, not quantity, is what’s needed. Only well-built apps will stand the test of time. Content, graphics, speed – users need all three if they’re to use an app with any frequency. It pays to get it right first time. “There’s never a shortage of ideas for great apps,” Dick says. “The problem always lies in execution. Better to keep it simple and add functionality over a reasonable period of time than to launch a poorlyperforming app – users have high expectations and will almost certainly be unforgiving.” Approach your app with a long-term view. User needs and technology will certainly change but it’s best to assume your audience is fickle, according to Dick. “Boredom and ambivalence are, undoubtedly, the biggest hurdles to overcome,” he says. Every week, hundreds of new apps are developed. It’s human nature to be curious about something new, so if you want to maintain the initial success of your app you have to work hard to keep your users’ attention, he adds. “That means fixing usability issues as a priority, and a continuous cycle of innovation. On the plus side, if you establish a reputation for quality, it should be possible to build buzz and intrigue about what you’re going to do next.” www.creatorofapps.co.uk

By Bonnie Gardiner Would it bother you to know that your employees have a game in their back pocket? How about the game sitting on their desk – or for that matter, the game sitting on yours? The boom of mobile gaming means that games and gaming technologies are no longer being left at home on the family PC or living room console. Now they are following us around wherever we go, doubling up as smartphones, tablets and laptops. Around $8bn (£5bn) is spent annually on games for mobile platforms, and that figure rising. People are experiencing and consuming gaming in different ways, meaning alterations or extensions of old games, and the development of new gaming techniques to meet consumer demand. Impact of new developments Many see the expanding mobile gaming platform as having a negative effect on traditional gaming devices such as PCs and consoles. However, as long as games are accessible from various platforms, the impact of hand-held devices is not so black and white. Take online gaming for example, where you download a game such as Farmville on Facebook. Traditionally these games were played on PCs, but with a few alterations you can now access these games on your smartphone or tablet. The platform is different, but this doesn’t change the fact that the game is web-based, enhancing the popularity of that game rather than diminishing it.

Types of games The smaller-screen experience of mobile gaming has led to more ‘bite-sized’ gaming, different than your PC or console gaming experience, which is a fixed location and usually engages users for hours at a time. As a result, a different model is necessary, as the games are typically smaller, shorter and simpler in mechanics. The hand-held capability of mobiles also creates new methods for interface, such as movement sensors, where the device can act as a steering wheel, for example, in a driving game that plays and renders on the PC. Clever PC-to-mobile links are being developed, with games such as the Warcraft Mobile Armory, extended from World of Warcraft on PC for players on the go. While you cannot directly play the game, you can connect to the game, make transactions, check statistics and look at gild challengers. “That’s the holy grail,” says Matt Ployhar, president of the Gaming Alliance. “You want to create this app or game and stay connected to the experience wherever you go.” Consumer habits Consumer habits are changing and growing, and the gaming industry has had to evolve in order to meet demands. Now that there is a propensity for bitesized gaming, more people of greater diversity are relying on mobile devices for entertainment. Whether it’s killing time sitting at a bus stop, or playing simultaneously while watching television, there is a huge trend towards easy ‘pick up and play’ games such as Angry Birds,

Business Reporter · November 2012

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which have rocketed gaming to the top as an entertainment sector. “People that were gaming in the ‘80s and ‘90s are growing into adults now – and they haven’t given up gaming,” says Rob Bartholomew, brand director of Creative Assembly. “Before they may have moved away from gaming because it took up too much time, now they have mobile phones where they can continue gaming on the bus on the way to work or on their lunch break.” In short, games have become a more culturally acceptable means of enjoyment and both mobile and gaming businesses are set to benefit from this new reliance. Key challenges These benefits cannot be enjoyed without a challenge, however, as suppliers and developers are having to continually update and adapt in order to keep users engaged. “The biggest concern right now for gaming executives is a battle for mind share,” says Ployhar. “If we can’t keep the gamers’ attention they’ll go somewhere else. If there’s no mind share, there’s no dollar share.” Creating games, and then trying to extend those games onto mobile devices, means looking at the situation holistically, with developers doing whatever it takes to maintain this attention. “They’ll put it on the web, they’ll tap into social media, and they’ll create free-to-play web-based games. You’ve got Apple’s approach with iCloud, Microsoft and Windows 8 – they’re creating continuity between your PC and mobile device.” Digestible games Like the World of Warcraft example, developers are taking the principles of PC gaming and distilling

them into a form of game-play that your average mobile user will find easier to digest, without dumbing it down or losing those key elements. “It’s more about repackaging it for that unique opportunity of the mobile space. There are no requirements to sit there and hammer away at the same level or challenge for more than a few minutes at a time,” says Bartholomew. In an effort to expand on this tactic, Creative Assembly have recently set up a mobile team to focus on transferring long-term overarching PC gameplay into the hand-held space, making more strategic and cerebral gaming appropriate for the smartphone consumer. Touch screen controls Developing games t hat f it t he various configurations of hardware – iPhone, Android, Microsoft Phone – has proven challenging for the industry, in particular the introduction of touch screen in a world of moveable handheld consoles. All the benefits of touch controls means a psychological jump for game designers who may have spent decades creating products for keyboard and mouse or Xbox or PlayStation joy-pad, and now must think about how to equally interact with games via a mere touch-screen. Attempts to superimpose joystick movement to screens was seen by users as an uncomfortable and unnatural way to play a game, so developers are having to come up with new and innovative ways to use simple touch techniques in an intuitive and engaging way.

Clickety-click

Stay one step ahead in today’s competitive video game and console market INDUSTRY VIEW

Interactive entertainment

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mid the recession and looming threat of the digital and free-to-play industries, it’s been a difficult time for traditional video games distributors. Yet Click Entertainment has bucked the trend and gone from strength to strength. The firm began trading in 2009 and against

the odds quickly made a name for itself as one of the top UK distributors in the video games and console market. Over the past three years it has enhanced its position as a force in the video games industry. So what is the key to success in this

Business opportunities T here is a huge business opportunity that comes with the introduction of mobile, with teams and companies growing immensely, with more facilities at their disposal. “Creative Assembly has grown from a studio of 20-30 people to almost 250 people – for a UK developer that’s a significant number of staff,” says Bartholomew. “Rather than replacing any of our traditional skillsets, mobile teams are another string to our bow.” Though complex programmes take large teams to develop, the evolution of mobile gaming has seen easier access to technology produce new skills, and faster distribution. “Anyone can pretty much create small digestible games with very low outlay and self-taught programming in their own bedrooms,” says Bartholomew. “We’re seeing a fantastic resurgence of great students and indie gamers coming through and applying for jobs at big studios.” The advantage of mobile gaming to engage users whenever, wherever is taking the world by storm, without the expected distraction from day-to-day responsibilities. The gaming device in your employee’s desk doubles up as a productivity booster, with access to important emails, calls and documents. From young children seeking a new form of entertainment, to the elderly learning the new technology –access to games on hand-held devices cater to people of all demographics, and should the industry ignore it, according to Ployhar – “ they do so at their own peril.”

ever-changing sector? According to Click’s head of business development, Jake Wright, it is vital to always remain diligent and adapt to each customer’s needs. “Click Entertainment has always maintained high levels of personal service, even during periods of rapid growth,” he says. “Where some companies can lose focus, we put in extra measures to ensure our service levels continue to meet the exceptional standard we have

become known for.” Click has achieved success across the globe. In a short time, the company has built up and maintained strong relationships with existing customers and suppliers, while still keeping business development and new opportunities in focus. A keen interest is maintained in the market to ensure prices remain competitive and high-demand products are always available, giving Click Entertainment an edge over the competition. www.click-entertainment.com

Business Reporter · November 2012

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Interactive entertainment

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The end of offshoring? A new programming language created by a UK firm is promising to reverse the flow of IT projects from India back to Britain INDUSTRY VIEW

rom records to communications, IT has made companies work more efficiently, in every aspect. In particular, when investing in bespoke software, bosses can achieve the most appropriate IT system to meet the demands of their business. But that needs skilled programmers – who are not cheap or easy to find. That has forced many to look offshore to outsource the work. The argument supporting offshoring is simple: rather than costly work in the UK, find the same expertise abroad at a fraction of the price.

But there are drawbacks. Culture and language barriers muddy communication between a client and provider. Also, the lack of regulation and standard testing leads to frustration, lots of overhead costs and hassle to the client. But there may be an alternative. A London-based company claims its invention can change the equations. Geeks Ltd has created a programming language it says is six times faster than traditional models, meaning software can be built cheaper here in the UK, making offshore frustration a thing of the past. Building applications using traditional tools is slow and error-prone. It takes months to complete a project. However the language invented by Geeks – called M# – automates over 90 per cent of the work, enabling the project to be completed at a fraction of the cost. Also, it’s low risk to

adopt as it generates standard Microsoft.NET code. Having found this claim to be too bold by some, we decided to put it to the test. We gave a Geeks developer the task of creating a customerrelationship management system, covering the process of advertising and editorial work for newspaper supplements. It took him just over an hour to build a solution that worked. He said it would take another few hours to polish and perfect it, with a total cost of £750. We sent the same task to another four companies and their responses varied from three to five weeks, with costs of up to £20,000. With such a huge reduction in time and costs of software development, is Geeks going to change the flow of IT projects back to our shores with its M# technology? www.geeks.ltd.uk

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Interactive entertainment

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Britain’s got talent – but how can we hold on to it? By Dave Baxter As you read this, a British gaming genius is working on big things – a major title such as the latest Grand Theft Auto, or one of many smaller innovations springing up across the industry. He is happy, well-paid and making groundbreaking steps for his company. But wherever he is, it’s not in Britain. This is the crisis the industry faces: while the UK has a good record of innovation – it is currently fifth on the Global Innovation Index – we consistently lose talent to firms abroad and fail to compete in this rapidly growing sector. But there are moves to address this: a tax break for the industry is expected to be detailed next year which could prove to be a game-changer. But there are a number of steps your firm can take now to attract and retain talent. Disappearing workforce The current loss to overseas competitors is significant: the industry has lost around 10 per cent of its work force since 2008. And 41 per cent of the jobs lost by the UK games development sector between 2009 and 2011 relocated overseas, with the majority of these going to Canada and the USA, according to research for industry body TIGA. This has seen the treasury get £100m less in direct and indirect tax revenues, and seen the sector’s contribution to UK GDP fall by almost a quarter of a billion since 2008. And according to responses to TIGA’s research, the majority of those being

The UK’s best and brightest are being lured abroad by better pay and more opportunities in the industry

lured abroad consisted of senior staff. Rick Gibson, of Games Investor Consulting, says: “When you lose your lead artist or your head of production, it’s very hard to replace them, particularly if you have a project ongoing – often gaming companies have to promote internally.”

here – but the barriers are too high for us to compete. “The tax break should give us more bidding power against other developers.” But he argues there are other ways that firms can boost their capital and spending power for poaching talent – by finding alternative forms of funding to banks. Lack of education These include crowd-funding, where This issue is compounded by a gap in projects can be posted online and people education. Research by charity Nesta interested can pitch in money. But asked people in the games and visual Braben argues other sources – such as said they had learned effects industries what had helped their skills in higher approaching investors such as business them find a job – 37 per cent were selfangel groups – would give firms more education taught, 32 per cent said hands-on financial firepower for getting in talent. technolog y skills, and only 29 per cent said they had learned their skills in Shout about the sector higher education. Games firms also need to work on attracting people Nesta argues that all levels of with the right skills to the industry by pushing education are not pushing subjects gaming as an exciting sector. such as computer science, leaving As Nesta’s report outlines, there is a lack of a skills deficit which only worsens people taking on scientific and mathematic courses the effects of the brain drain. in schools, colleges and universities. So gaming firms need to consider There are also not enough young people how to attract – and retain – talent. being steered towards the industry – a survey of One thing UK gaming firms lack is 2,000 people aged between 16 and 24 by the the ability to pay better money to Association for UK Interactive Entertainment compete with other countries currently found 57 per cent had considered careers in film, outbidding them. TV or games, but one in five found it hard to get This industry is being undercut by careers advice on this. competitors in countries including While Nesta proposes schemes such as national Canada, France, Singapore video games development competitions for schools and the USA because and better careers advice resources, companies they all enjoy tax relief, could get ahead by headhunting at universities, according to TIGA – developing links with colleges, or working more with studios in Canada closely with recruitment agencies. receiving backing equivalent to 23 per Gaming companies in the UK could be working cent of turnover. on the next Halo or Angry Birds – but they need David Braben, CEO and founder to address the outflow of top talent. British of gaming company Frontier developers will continue to work on the best the Developments, says: “Countries industry has to offer – but it is up to UK companies are headhunting games developers to make sure this stays at home.

29%

Entertainment at your fingertips Ensuring products can be delivered to consumers quickly is key in boosting profits for the retail sector INDUSTRY VIEW

pay, the largest processor of mobile top-up in the UK, has introduced point of sale activation cards for gaming credits for Xbox, Sony and Nintendo subscriptions through their payment terminals. Intended for

self purchase these products can be used as a gift and are available in retail outlets across the UK, perfect with Christmas around the corner. “Consumers are demanding more convenient ways of purchasing gaming credits. We are able to offer a simpler solution allowing them to shop using cash whilst also providing them with more choice” says Hetal Patel, Head of Retail Marketing Services at epay. Retailers benefit from a wider product offering at no upfront cost – they only pay for the cards that are activated at the till. Cards come

fully merchandised into display units and provide a great way to earn more revenue. epay partners with the UK’s biggest multiple retailers, including Sainsbury’s, Tesco, ASDA, WHSmith, Carphone Warehouse, BP, DSG and the Post Office, providing them access to world leading brands, such as iTunes, Microsoft, Sony, Apple, Vodafone, Adobe and Xbox. epay’s payment technology has been instrumental in turning boxed products into a simple digital PIN that delivers the product online, this not only

reduces cost but also offers a better consumer experience. Senior Vendor Manager at epay, Joni Shakles, says: “It’s an exciting and fast-evolving marketplace that has changed almost beyond recognition in a few short years.” To order a gaming unit for your store, or to find out more, contact epay. 0844 800 0233 www.epay worldwide.co.uk

Business Reporter · November 2012

an independent report from lyonsdown, distributed with the guardian

Interactive entertainment

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Game-changers for the real world With better technology and research, the effectiveness of games is no longer restricted to the living room By Dave Baxter Today, a pilot flew an aeroplane, as trained by a simulation created by video-game technology. The military is training its troops in life or death situations by setting up wartime parameters in an artificial setting. Meanwhile, doctors are using remote surgery techniques with consoles and controls to perform life-saving surgery with excellent precision on patients on the other side of the world. Video-game technology has come a long way since games such as Pong, Tetris and PacMan. Games with an educational edge, such as SimCity, which simulate the running of a town, and Civilisation, where users learn about historical figures and civilisations have been around for many years.

Real world application of games Organisations are partnering with consultancies to create innovative games that develop efficiency and skill, socially responsible behavior, help plan for emergencies, or market a stance or brand in an engaging way. The examples above fall under the category of serious gaming, which is an advanced type of gaming that employs the same techniques and technology as regular gaming, but with a primary purpose other than entertainment, such as military or emergency services training. Games for change, which are often tied in with educational gaming, are games with a social conscience that might reach out to an environmental cause or marginalised community in order to better circumstances, create

awareness and encourage healthy behavioural patterns. The Schneider Medical Center in Israel worked with Intel Technology and gaming organisation Compedia to create Classmate PC, which provides an engaging virtual world for children with diabetes to encourage healthy behaviour, such as eating well and testing blood sugar regularly.

“We plunged into this domain because diabetes is an IT-managed condition,” explains David Gordon, director of strategic planning at Intel. “It’s about measuring and computing, applying what your computations are in the form of food and medication intake. This technology goes beyond teaching content, it’s about behavioural change.”

Business Reporter · November 2012

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Opportunities for businesses C omp a n ie s a r e u si ng gamification to accomplish their business goals. Whether it’s for brand awareness or internal training, the interactive learning and marketing of gaming can achieve profitability through better productivity and customer engagement.

Interactive entertainment

Brand expansion simulation training is already proving Games are being created hugely effective. and released as marketing “Not only have simulations proven campaigns to engage potential buyers to be better able to pique and retain and increase purchasing decisions by interest than standard learning expanding on the idea of how they techniques, they also provide dynamic engaged with people’s lives. scenarios that allow workers to “Red bull is an example experience on-t he-job Did you know? challenges in realistic of a firm creating games for its brand,” says Tomas Gaming is the biggest contexts,” says Steinberg. Rawling, creative director Tech-savvy companies entertainment sector of Auroch Digital. “They’ve such as Intel already use in the UK created a number of games simulations and games to for the home that are free to train staff in important skills play but take on their trademark and encourage competition. of daredevil exploits, like flying planes Quarterly updates are sent in the and jumping from the edge of space, form of a computer game with quizzes so they’ve got a natural fit into a game.” and puzzles. Meanwhile Nike partnered with Apple to create NikePlus, an app for Making money online smartphones that monitors your A lt hou g h g a m e s a r e running habits. As an online portal, contracted by companies users can track their run and be and often given away for free upfront, awarded for hitting milestones, thus there are many ways to build revenue applying a brand to a person’s lifestyle from them. by setting fitness goals that encourage Simplicity can be a factor – an users to run farther or faster. Apple iPhone user ID allows users to keep payment details on file for instantaneous transactions. The Training and motivation Games can be powerful gaming industry also saw a shift in training tools to help boost operations with the concept of productivity, engage staff or prepare freemium, where free gaming personnel for difficult situations. Scott software is available online, but a Steinberg, CEO of Tech Savvy says premium is charged for advanced

features or functionality. According to Steinberg, virtual entertainment expands the range of revenue models. “Options range from microtransactions (bite-sized, low-cost digital payments) to subscription services, advertising revenues, sponsored content, up-selling premium content on the back-end following initial free giveaways, and more,” he says. “The beauty is that there’s suddenly a multitude of ways to monetise and connect with consumers of all backgrounds, interests and income levels.” Crucial technology advancements Though there has been much innovation surrounding gaming in business, it is not a new concept. The new element will be the continual evolution of gaming technology which is essential to continual success. Acquiring the technology for making games is now far simpler and more affordable, with the potential for medium and smallsized companies to harness gaming. But it won’t stop with business – with gaming officially overtaking film as the biggest entertainment sector in the UK, the industry is set to grow to new heights.

The power of the imagination Mobile gaming will never be the same again, thanks to innovative graphic processors and some of the brightest minds in the business INDUSTRY VIEW

s more and more people use high-performance mobile devices, the need for hot new development talent who can help deliver mobile gaming solutions is increasing, too. If you’re looking at the latest hot tablets or smartphones - whether it’s the advanced sophisticated games or the smooth user interface - you’re most likely experiencing the work of a revolutionary UK company. Imagination Technologies’ PowerVR GPUS (graphics processors) have been developed over nearly 20 years and lead the market for 3D graphics acceleration in mobile gaming. The company has been selected by industry leaders such as

TI, Intel, Sony, MediaTek and Samsung in order to fuel the mobile gaming revolution and deliver console-class graphic performance into the very low power consumption yet high performance engines of mobile devices. “This enables people who thought that they could only develop high performance content for a console or a PC to also do that in tablets and phones,” says Tony King-Smith, vice president of marketing for Imagination Technologies. “It’s a very important

step for developers, as the market this opens up is so much bigger now.” Some the most sophisticated showcase games available on mobile today – like Gravity Rush, , Shadowgun, Infinity Blade II, and Real Racing II - are only possible because of the transformative and innovative effect that PowerVR has on mobile games. “We work with the guys who build the hardware – we help them to put the maximum possible graphics performance into their chips at incredibly low power consumption, so you can have a much richer gaming experience without killing the battery,” says King-Smith. “People that are interested in being at the heart of mobile gaming should get in touch with us.

We’re right at the grassroots of how a game looks, how fast it responds and how advanced the graphics are.” Imagination has developed relationships with more than 35,000 active developer partners, with many relying on the PowerVR Insider SDK and interacting regularly through its forums, and is always on the lookout for new innovative games companies with graphics skills, as well as new recruits. Developers interested in more information can log on to Imagination’s PowerVR ecosystem on our website and download the free SDK featuring tools and tutorials with fully documented examples. And if you’re interested in working for Imagination’s PowerVR team on drivers, tools, demos or support, they’re always looking for the hottest talent at www.imgtec.com/careers . www.imgtec.com

Business Reporter · November 2012

an independent report from lyonsdown, distributed with the guardian

Interactive entertainment

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‘If you’re going to fail, fail fast’ Start-ups need more than a good idea to succeed in a competitive space INDUSTRY VIEW

hile the rest of the UK economy struggles with the continued economic downturn, interactive entertainment is poised at a moment of opportunity. With the global market for interactive gaming set to exceed $86bn within the next two years, according to consultancy PWC, the UK government is boosting the sector with a tax break to increase its competitiveness in the face of growing international competition. Meanwhile, technological developments and changing consumer habits have significantly lowered the barrier to entry for games developers. The proliferation of gaming platforms – for example, through social media sites such as Facebook – has loosened the big studios’ stranglehold on the sector. In theory, these elements combined make the market fertile ground for start-ups. But a successful business in any space requires more than just a good idea. Nader Alaghband, Founder at Apppli, a software development

firm and start up incubator, warns: “There’s a surfeit of ideas relative to the number that will realistically become businesses, and certainly the number that will become successful businesses.” Alaghband speaks from personal experience – several years ago he started an ecommerce business connecting small print providers and graphic art companies to consumers. He readily admits: “We did exactly what businesses shouldn’t do. We built an immense product in a bubble and then took it to market only to realise we didn’t fulfil the key needs people have in that sector.” Like Facebook founder Mark Zuckerberg with his motto “move fast and break things”, Alaghband believes there is no shame in failure. As he points out: “If you’ve done it before, even if you’ve messed up, you’re one step ahead of the person who hasn’t done it.” This experience has moulded Apppli’s approach. The business, which helps start-ups in a number of ways from software design to investment, is predicated on the iterative approach to product development, testing at every step

Q&A: California dreaming Apppli founder Nader Alaghband believes the UK capital has much to learn from California’s Silicon Valley. What challenges do tech start-ups based in London face? There are a lot of great initiatives out there – from tax incentive schemes like EIS to emerging technology hubs like Silicon Roundabout – but in my view, the relative

absence of venture capital for early stage businesses is the biggest challenge facing UK start-ups. We work closely with seed and angel investors to help our start-ups secure investment but when it comes to Series A and beyond, many of them start looking overseas for funding. Ideally, they should be looking for investment within walking distance of their offices.

Apppli helps companies talk through ideas and add experience of the way. “People come to us and we talk through ideas, looking at them from a number of different perspectives,” he says. “We try to bring to bear our experience in early stage businesses and our expertise in designing products, bringing them to market, raising investment and other competencies that we believe should have an impact on an entrepreneur’s decision making, especially in mobile.” He compares London unfavourably with Silicon Valley, where the sheer number of start-ups, the existence of start-up focused infrastructure and a

What would you bring to London from a trip to Silicon Valley? There’s a culture of being proud of failure in Silicon Valley, meaning that people will run with new ideas – if only for a few weeks or months – without really worrying about the outcomes. People are happy to talk about what they’ve done and what they’ve learned from their experiences. Although shared workspaces like TechHub

highly collaborative culture create an array of opportunities, formal and informal, for entrepreneurs to learn from and share with their peers. In London, such experience is harder to find. Alaghband sums it up thus: “The most important thing is having a great team, the second most important thing is having a great idea, third is having external reference points.” If companies can get these three things right, they will be well placed to seize this moment of opportunity. www.apppli.com

are changing the way entrepreneurs work together, I’d probably bring Silicon Valley’s culture of collaboration and greater willingness to risk failure to London if I could. What should start-ups do to test the market quickly? We encourage people to build proof of concept products and go out and test their proposition in a live environment. For example, we are talking to a start-up that is

developing a marketplace for environmentally friendly small businesses. They are piloting in a small area – they have gone out and got 1,000 retailers and taken a basic product, and found out that this product doesn’t do it for these people. They found that out at the very earliest stage rather than after having invested hundreds of thousands of pounds. If you’re going to fail, fail fast.

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Business Reporter · November 2012

Interactive entertainment

State of the gaming nation Blowout budgets, headline-hitting debuts and retailers reeling– what’s next for gaming? Money moves in huge amounts in the video games industry. Microsoft’s most recent entry in the venerable Halo series, Halo 4, reportedly cost $60m (£38m) to make – including a giant $30m (£18m) marketing budget. The publishers behind the massive Call of Duty and World of Warcraft franchises, Activision-Blizzard, posted a 19 per cent loss in first-quarter revenue for 2012, but still pulled in profits of $384m (£242m). The industry has established a firm foothold as an entertainment juggernaut, but it is still one that undergoes massive shifts in power and profitability from day to day. The internet has intertwined with gaming this generation in a big way. Microsoft’s Xbox 360 and Sony’s Playstation 3 both have a huge focus on internet connectivity. As of June 2011, Microsoft had sold 55m Xbox 360s, with 35m active users of the Xbox Live online service.

Even Nintendo’s family-focused console, the Wii, has online capabilities. Most importantly, they’re all starting to use download services as a source of distribution.

into administration in March. They success: Rovio Entertainment, a were saved week s af ter the Finnish company made up of three announcement, but not before 277 students, was a barely-known stores were closed. All physical developer of mobile games. Angry Birds game retailers are ultimately They released the first entry has been doomed as technolog y in their flagship franchise downloaded Angry Birds in December Age of digital marches into the digital age. 1 billion times 20 09, wh ic h ha s been PC gamers has been using digital In 2009, 20 per cent of all video distribution for quite a while now, but game sales were digital; in 2011, downloaded one billion times. it’s seen huge growth over recent that figure jumped up to 31 per cent. What next? years. Steam, the world’s largest digital distribution service for PC Small and mighty Over the next few years, the industry games by far, reportedly have a 50-70 The shift to digital distribution might will continue moving forwards with per cent share in the $4bn (£2.5bn) be sad for the old guard of gaming a focus on digital distribution. US PC market. retail, but it’s a great opportunity Established publishers like Electronic Others are joining them: Halo 4 cost for smaller firms. Minecraft is Arts and Ubisoft will continue to a reported publisher titan just one such ‘indie’ sensation. dominate, but we are slowly seeing Electronic A r ts Initially developed by one middle-market titles creep back into $60m launched its service for man, Markus “Notch” Persson, the industry thanks to the onlineto make the PC market this year, Minecraft was released by focus of PC gaming and the ease of and already have 11m users. Persson’s tiny company, Mojang, as mobile development. It’s a dynamic market, and while While digital distribution a developmental build of the game risky, a potentially lucrative one for may be convenient (and exclusively for the PC in 2009. cheap) for gamers, it’s Since then, Minecraft has sold 7m the savvy. not great for retailers. copies, turning Mojang from just two GAME, the UK’s friends into a power player in the Ryan McGuire, left, is a freelance biggest retailer for industry, with a net income of over writer, contributing to game journalism video games, went $80m (£50.4m). This is not an isolated websites such as The Gamer’s Challenge