Overseas ownership surpasses 50% in UK game development

The British Film Institute (BFI) recently conducted a comprehensive study to assess the impacts of overseas mergers and acquisitions on the UK video games industry. The findings reveal a transformative effect on the sector, contributing significantly to the UK economy by supporting a considerable 76,000 jobs and rendering local companies more appealing to international entities.

As of April 2023, the repercussions of these mergers and acquisitions are evident in the employment landscape, with a noteworthy shift. Currently, 51.9% of video game development staff in the UK are employed by companies owned by overseas entities, surpassing those working for local firms.

The study focuses on the period spanning 1993 to 2022, which witnessed 118 transactions involving overseas buyers acquiring UK-based video game developers. The United States emerged as a dominant player in these transactions, representing 49%, followed by China at 15%, and Swedish companies at 10%.

An intriguing trend observed during the years 2018 to 2021 highlighted an acceleration in both the frequency and value of these deals, constituting 39% of all transactions. Notably, the pandemic years, 2020 and 2021, stood out, recording published values of $2 billion and $2.7 billion, respectively.

Several prominent UK companies, including Codemasters, Sumo Group, and Playdemi, were part of acquisitions exceeding $1 million during this transformative period.

The overseas purchasers identified in the study were primarily concentrated in the games sector, with 56% categorized as publishers. The BFI report underscores that these mergers and acquisitions often aimed to bring intellectual properties (IPs) and development capabilities in-house. However, it also raises a cautionary note, pointing out potential risks such as reduced innovation and collaboration opportunities for UK firms, despite the apparent upsides. 

The video game industry is a dynamic and thriving sector that has evolved significantly over the years. A recent report revealed that the industry is expected to surpass $300 billion in annual revenue by 2030, with an estimated worldwide audience of 3.8 billion active players.