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Business | 25 February 2025

UK gaming set for 'Spielberg moment' 

Our Special Report by Coutts Interactive Entertainment Lead Paul Franks charts how, from indie developers to AI, Britain’s gaming sector could be preparing for a creative renaissance.

  • 1. The state of play

    For the last 12-18 months interactive entertainment (IE) and particularly its core engine – the gaming industry – has experienced a recalibration. The lockdowns that accompanied the global covid pandemic created a boom in the demand and use of games, as well as the broader gamut of digital entertainment – pushing the annual value of the sector well above $200 billion in 2024 and suggesting a global revenue of $257 billion by 2028 (sources: Bain Gaming Report 2024. IDC; Euromonitor; PwC; Video Game Insights; TD Cowen; Bain analysis).

    However, as with so many markets, a rush to capitalise on growth has meant adjustments as demand is met and the social conditions conducive to gaming retreat with the pandemic’s restrictions.

    This retraction has seen cuts to budgets, the cancellation of games already in production and redundancies throughout the sector. This is by no means an existential crisis. The long-term outlook for the sector remains extremely compelling, as expected of an innovative market that combines technology, creativity and marketing across most media platforms and which is already demonstrating the potential for new business dimensions within digital ecologies.

    However, such potent markets are also extremely competitive. The recent adjustments have seen M&A activity as smaller studios are sold to larger publishers. In line with this is caution over ‘box office risk’; essentially, as with cinema, you can hype a film as much as you like but it’s no guarantee you’ll see enough tickets.

    This also represents a perception of risk for publishers if they are pushing an unknown entity to consumers whose domestic budgets are tight and for whose attention the competition is fierce. Ultimately, this has put a premium on recognised titles and popular pre-existing game brands. As one client recently told us, consumers feel like there is too much choice, though not necessarily enough differentiation –  

    “There are tens of thousands of new games released each year, it’s getting harder to discover new games. Players are sticking to the familiar box office games. A huge portion of global games income is generated from under 100 games!”

    Nick Button Brown on the state of the industry, the potential of new creativity; his investment into groundbreaking interactive education company Brainspark Games – and how gaming teaches critical thinking.

    Video player requires JavaScript enabled. You can watch this video here: https://vimeo.com/1012337201

    “I feel the corner is turning. I feel there are some wonderful opportunities, I feel investments are picking up.”

    – Nick Button Brown

  • 2. The Spielberg moment

    An entrenchment of recognised titles can mean an opportunity. The redundancies made by established publishers and studios has meant we are now seeing a lot of new incorporations, around 500 per quarter across the UK, as those laid off start new companies. The entry to access can be low and there is a well-developed consumer market for new games. In this space, the combination of experience and knowledge within the agility of smaller challenger start-ups can flourish.

    The nuance here will be in developing new games that people want to play, not providing a repeat within the parameters of big brands. Speaking to our clients, it’s clear some have already seen the trajectory this new challenge can offer if smaller houses commit to creativity –

    “Test, test, test – ensuring player engagement is key for new game development. If it’s not performing, don’t be afraid to kill it and pivot.”  

     

    Creativity not churn

    Perhaps more presciently though, is the fact that the creative industries have been here before.

    “The Film industry went through a similar reset in in the 60’s, the Spielbergs and Lucas’s came out from that era, so not all is lost.”

    This analogy is spot on. The uniformity of Hollywood in the 1960s saw studios double down on the same types of films. The creative stasis led to clear windows for differentiation, illuminated by the new departures of Stephen Spielberg and George Lucas. These films, like great games, brought new ingredients to winning formulas – new stars, great scripts, unprecedented action, special effects and all played to a killer soundtrack.

    Given the enormous success of franchises such as Star Wars and Indiana Jones it’s hard to perceive them as initial risky ventures. Of course, they were, but given the market circumstances, and the returns that followed, the old adage applies: sometimes the biggest risk is not taking a risk.

    However, IE today is very different to cinema 50 years ago – especially in how it can adjust to minimise risk. Today, independent creators, often supported by venture capital, are able to connect directly with their audience, gauging demand and integrating products and sale-points on their platforms. This allows them to build revenue quickly and retain funds inhouse. Such monetisation of specialisation has also helped capture new demographics that were not previously targeted by big game houses. Mobile gaming is the best example of this phenomenon.

    Robin Milton, Founder of Fairer Games, describes her experience as a small producer, highlighting the sector’s potential, the democratisation of creative development, and the need for further developer diversity. 

    Video player requires JavaScript enabled. You can watch this video here: https://vimeo.com/1012336992

    “Gaming is a special sector to me because it incorporates arts, science, technology, vast history, animation and writing.”

    “Each year there’s more cutting-edge software becoming available for free – you’re seeing a rise in creativity and a greater diversity of the people who are making the games.” 

    – Robin Milton

    How Coutts could support your interactive entertainment business

  • 3. Nurturing the green shoots

    As seen in so many sector market cycles, the stories announcing studios reducing staff are accompanied by optimism among SMEs. We see new growth set to be well supported by focused funding as investors look to take advantage of ground floor partnering with founders and developers who have a proven track record. Likewise, the exciting potential of AI could prove a genuine x-factor for growth – a fillip that can not only be transformative for the games themselves, but their platforms, distribution and marketing potential.   

    Supporting this ecology, and those looking to grow within it, has never been more important. It’s therefore crucial that banks are knowledgeable and interested partners providing the financial solutions needed to capitalise on a potential gaming upcycle. Coutts and the NatWest Group are part of this. Having been in the interactive entertainment industry for eight years, we’ve been able to partner with a series of extremely successful founders, developers and publishers, helping them realise business journeys yielding hundreds of millions.

    Neil Bellamy, National Sector Head for Tech Media & Telecom, NatWest Group on the importance of finance understanding IE

    Video player requires JavaScript enabled. You can watch this video here: https://vimeo.com/1012338397

    “It’s critical to have financial partners and banks that do understand the creative sector and gaming in particular.”

    – Neil Bellamy

    In 2025 Coutts continues to grow with clients in this space, providing the finance to nurture grassroots through intellectual property lending, lending to enable video games tax relief and asset finance. Beyond this though, we strongly believe in building the ecology – connecting people and bringing new funders into the sector. Advocacy and education is also key, especially at a moment of potential pivot such as this. Discoverability of the sector for investors is still a key challenge, as is telling the multiple success stories that IE continues to deliver.

    Neil Bellamy, whose team at NatWest Group work closely to support IE entrepreneurs is already seeing advocacy and involved financing coming to fruition across the sector:

    “We are seeing a very strong bounce back post Hollywood strikes across the creative industries as a whole,” says Neil. “The gaming sector is looking for a big 2025 with major global releases due such as the next GTA instalment from British developers, Rockstar North.”

    “In addition to this, the creative industries were named as a key growth sector in the UK governments industrial strategy – so we are getting behind that effort and are forecasting a significant contribution of the sector to the national GDP. Last year we were able to support Liverpool based Ripstone’s growth plans with an IP loan worth £600,000 and at the start of 2025 we hosted a scale up session for gaming companies at our conference centre. As well as this, we are working closely with Creative UK to help firms to scale through free accelerators, addressing funding gaps and training.”

    The trade body for the UK games and interactive entertainment industry, UKIE, are also promoting their ‘Supercharged’ campaign to get more from the government and keep the UK growing on the IE map. If Parliament are able to provide the IE sector with the same tax credits that benefit the British film industry, then gaming can become a major growth catalyst in the government’s broader growth strategy for the UK.

    Security may be required. Product fees may apply. All credit is subject to approval and affordability checks.

    Sam Collin, CCO, UKIE on the UK’s ‘powerhouse’ position within global gaming 

    Video player requires JavaScript enabled. You can watch this video here: https://vimeo.com/1012336615

    “There’s an enormous ecosystem, and in the UK we have a particular specialisation – 70% of the UK population play games.”

    – Sam Collins

    Intelligent finance as part of the conversation

    As financial partners and advocates of the sector we’re embedded in the industry as an active partner. This is to ensure we have the intelligence to share and utilise with our clients.

    Paul Franks, IE Lead Coutts, on the importance of London Games Festival, the breadth of activity in the sector, and how finance is supporting developers.

    Video player requires JavaScript enabled. You can watch this video here: https://vimeo.com/1012337584

    “The leaders in the sector are coming together and sharing thoughts and opinions on what’s coming in the future but also the earlier indie studios are releasing games, talking about new content.”

    “Being present in this sector for the eight years – we’ve managed to create new clients and a lot of people who sponsor what we’re doing from a movement perspective.”

    – Paul Franks 

    Michael French, Head of Games & Director of London Games Festival on the talent showcased in the UK capital – 

    Video player requires JavaScript enabled. You can watch this video here: https://vimeo.com/1012339062

     “The games industry is really exciting right now because of how it’s opening up to all kinds of new audiences and new types of talent,”

    – Michael French

  • 4. The AI’s have it

    “AI will impact games, but hopefully making games even better for less. There may be a tsunami of AI created games on the horizon, but these will look similar and consumers will vote with their feet. It’s the developers using all tools available to produce games like never before – humans will still need to innovate and drive this.” – Coutts IE client

    In 2025, the potential for AI is still more keenly felt than its application, though the transition is underway. In 18 months’ time we may see people making games through AI the same way they draft documents today. Competing AIs are already establishing market share ahead of a broader utilisation that will see their products adapting to demand. The exciting question here is whether larger, well-capitalised, organisations with legacy processes are best placed to take advantage of AI, or whether more nimble producers will be able to build better games through it?

    Arguably, the answers will nuance several bigger questions – who can construct a better AI-enabled game production line? Who can white label a gaming AI? How will policy support responsible AI? How will best practice be established within the industry? What will consumers expect from AI?

    What is likely is the further democratisation of the IE space as AI continues to lower barriers to entry and enables faster and more specified products. This in turn should support gaming collaborations in other sectors such as education. AI is set to revolutionise our lives and, given the ‘sandbox’ nature of gaming and the meta parallels accessed via IE, it’s clear AI’s application within this space can provide seminal learnings in others.

  • 5. Conclusion – an ecology poised for abundance

    As with ecologies, markets provide opportunities through change. We expect the adjustments made by large gaming publishers to open new potential avenues for emerging creative projects, promoting the possibility of a ‘Spielberg moment’ that captures consumers’ imaginations. The IE market is complex and diverse, positively reacting to the right creativity for sweeping wins, while also evolving new routes to revenue. This is a fecund land where gaming will work in enhanced collaboration
    with –

    • AI
    • Virtual Reality
    • Web3
    • Online payments
    • Entertainment markets through interaction
    • TV services and streaming
    • Film collaborations
    • Medicine
    • Retail
    • Education

    With the right support from businesses, government and crucially, finance, the gaming industry will continue to flourish in the UK.

    sir-ian-livingstone

    “It’s going to continue to eat the world” – Gaming Business legend Sir Ian Livingstone on the power of interactive entertainment

    Banking & finance for interactive entertainment

    Untitled design - 1

    Paul Franks is Coutts Interactive Entertainment Lead, Commercial Banking

    Telephone: +44 7919 058596

    Email: paul.franks@coutts.com

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