From blockbuster franchises to innovative indie titles, it has long been a cornerstone of the country’s creative economy. But despite this strength, there are growing concerns that the UK may struggle to retain both talent and intellectual property without more competitive government support.

Rising global competition for talent and IP

Governments around the world are actively targeting the video games sector as a high-growth, high-value industry. Countries such as France, Australia and Ireland are strengthening their tax incentives and funding frameworks to attract studios and investment.

Mandy Girder, Partner, warns:

Without decisive action from the Government, the UK risks losing both talent and intellectual property to other countries. France, Australia and Ireland are offering increasingly generous and accessible incentive regimes designed to attract investment.

This trend reflects a broader shift: video games are no longer just entertainment products – they are valuable intellectual property assets with long-term revenue potential. Jurisdictions that successfully attract development activity often retain the associated IP, along with the economic benefits it generates.

Policy ambition versus practical barriers

The UK’s Video Games Expenditure Credit and broader creative industry incentives have played an important role in supporting growth, and while competitive on headline rates, they are often viewed as more complex and, in some cases, less flexible or accessible than incentive regimes in countries such as Ireland and Australia.

Complexity and administrative burden can significantly influence where companies choose to locate projects – particularly when alternative regimes offer similar or better financial benefits with fewer barriers.

Changes to eligibility criteria are having an impact. Companies must now ensure that at least 10% of development costs are incurred in the UK, rather than across the wider European Economic Area.

Whilst intended to encourage use of UK based talent – this has been restrictive on the number of successful claims for projects already underway and structured around European teams, which has led to a decline in the availability of these tax credits.

For internationally structured development teams, this shift can disrupt existing operating models and reduce access to reliefs, potentially making other jurisdictions more attractive.

The scale-up funding gap

Access to finance remains another critical challenge. While early-stage funding is relatively accessible, mid-sized studios often face barriers when seeking the scale-up capital needed to expand internationally and retain valuable intellectual property. This funding gap risks limiting the UK’s ability to fully capitalise on its creative strengths.

This “missing middle” in funding is a familiar issue across the UK’s innovation economy. Without sufficient scale-up capital, companies may be forced to seek investment overseas – often accompanied by relocation of IP ownership and decision-making.

A positive step but is it enough?

UK Government’s Creative Industries Sector Plan, actioned this week, is a positive step forward, with £28.5 million in funding now available and open for applicants to support the next generation of video game development. The UK has long been recognised as a creative powerhouse, home to world-class studios and exceptional talent behind globally successful titles such as Grand Theft Auto and Tomb Raider.

However, the question remains whether this level of support is sufficient to address the structural funding challenges facing the sector. A more comprehensive approach combining competitive tax relief, grants and alternative financing options will be essential to unlock sustained growth.

Why this matters for businesses

For businesses operating in or adjacent to the video games sector, these developments have tangible implications:

Location decisions: Companies may increasingly evaluate international options based on ease of access to incentives and funding.

Investment strategy: Investors may follow more favourable regimes, influencing where capital flows.

Talent retention: Skilled developers may migrate to markets offering stronger project pipelines and financial backing.

IP ownership: The long-term economic value of UK-developed games could shift overseas if development relocates.

More broadly, the issue reflects a competitive global landscape in which policy design can directly shape industry outcomes.

The path forward

The UK retains significant advantages: a deep talent pool, established studios and a strong global reputation. But maintaining leadership will require coordinated action between industry and government.

Mandy concludes:

Now is the time for industry and Government to work together to simplify incentives, unlock scale-up funding, and ensure the UK remains a destination of choice for global games investment. The London Games Festival turns the spotlight to the UK’s role as a leading force in the global video games market – and on the steps the Government needs to take to secure its future competitiveness.

What you should consider / do next

Review your eligibility for existing tax reliefs: Ensure your business structure and cost allocation align with current UK requirements.

Assess international options: For global businesses, compare incentive regimes across jurisdictions when planning new projects.

Plan for funding early: If scaling, explore a mix of financing routes—including private investment, grants and alternative funding models.

Monitor policy developments: Further changes to UK creative sector support are likely—staying informed will help you act quickly.

Engage with advisers: Navigating tax reliefs and funding frameworks can be complex; specialist advice can unlock value and reduce risk.

Would you like to know more?

If you have any questions, please get it touch with your usual Blick Rothenberg contact or Mandy using the form below.