Number of UK gaming start-ups jumps by 22%, boosted by mass layoffs

The number of new gaming companies incorporated in the UK jumped by nearly a quarter (22%) last year, as mass layoffs in gaming and the wider tech industry prompted many to set up their own business, according to analysis by leading audit, tax and consulting firm RSM UK.

The data shows 2,450 gaming companies, including computer game publishers and entertainment software developers, were incorporated in the UK last year, up from 2,008 the year before.

Many UK regions saw an increase on the previous year, with London gaming incorporations rising by almost a third (30%) on the previous year’s figure to 1,374. Regions that saw a decline include the South East, North West, and Scotland.

Richard Heap, partner at RSM UK, said: ‘It’s encouraging to see further growth in the gaming industry despite widespread challenges, suggesting there’s reason to be optimistic.

‘But there’s no denying that layoffs in the sector were rife throughout last year, and 2024 got off to an equally difficult start. Redundancies continue, as companies grapple with a dearth of investment appetite, soaring costs, and consumer demand reverting to normal levels following an explosion of interest during lockdown.

‘While layoffs are often seen as damaging to the gaming industry, they can fuel growth, as these individuals may have taken the leap of starting their own company. With more staff reductions made at the beginning of this year, UK gaming incorporations could be set for another uptick.’

‘The hype around artificial intelligence is particularly prevalent in the gaming industry. The process behind bringing a video game to life is often long, labour intensive, and expensive.

‘AI can speed up this process, making it an extremely powerful tool, but it also requires people with the right skills to use the technology effectively. The government has an important role to play in supporting industry growth, by creating a level playing field for businesses of all sizes.

‘This involves ensuring that funding, resources, and world-class talent is accessible for early-stage entrepreneurs. UK chancellor Jeremy Hunt’s announcement of additional funding for the tech sector in his latest Spring Budget, including a £7.4m AI upskilling fund for SMEs, is a welcome step in the right direction but there’s more work to be done.’