The UK video-game industry has a long established tradition, having demonstrated diversity, creativity and in many cases largely successful titles. There are numerous way to measure the success or failure within an industry: financial performance, profitability and productivity are among them. What about survivability? In this post we attempt an initial evaluation of the UK’s video-games industry survivability and the corresponding determining factors.
One of the first things that someone could notice by examining the industry’s geographic distribution is that companies are uniformly distributed within the country, and that geographic clusters seem to emerge. The largest cluster within the UK is by far the one located in the metropolitan area of greater London. Approximately 50% of the UK-based companies of the video-game industry currently reside there. This is not unexpected because London has a huge tradition in creative industries. Such tradition is very important for video game industry as has already been demonstrated by Yuko Aoyama and Hiro Izusho who establish the relationship between technological, cultural and social foundations and video-game creativity.
Moreover, the geographic clusters can be evaluated according to the life expectancy of their member companies, and using the age as a proxy of the companies’ survivability. London, cluster is not only the biggest in size but also one of the oldest clusters within the UK, implying increased survivability and positive network externalities.
Other already established clusters include, the metropolitan areas of Birmingham, Manchester and Yorkshire. Emerging clusters also include Scotland (Glasgow, Edinburgh), Tyne and Wear and Southwest England, with younger bu successful companies.
Moreover, in addition to geographic factors that seem to affect survivability of the industry, the type of the company seems to have a significant effect. On average, in the UK, video game companies exit the industry before completing their 6th year while the average age of the active companies is 9 years. However the interesting thing is that Developers seem to be resilient compared to publishers, being expected to survive for 9.75 years, compared to polishers (9.15). It seems that developers face less competition and they can evolve to serve particular market niches, compared to publishers who are expected to compete in larger market segments. However, developers face greater risks early on, exiting the industry before completing the 6th year, while publishers are slightly more durable and expected to complete the 7th year before exiting the industry.