Spotlight on the UK gaming industry
Navigating the challenges and opportunities
The UK video games market continues to show both growth and resilience, with industry revenues now exceeding £8.8bn.
However, growth has slowed, as evidenced in our latest gaming incorporations data, so the government’s January announcement of a £60m package of support for the creative industries has been warmly welcomed.
This initiative aims to “turbocharge” growth for hundreds of creative businesses and projects, and includes a record £5.5m investment for the UK Games Fund, designed to support early-stage game development and digital interactive businesses in the UK.
It’s still too early to gauge what the impact of this will be on the UK gaming industry, but we expect a positive effect in the years ahead as newly incorporated businesses begin to grow.
While economic uncertainty persists, our expectations are that Q3 and Q4 will benefit from tailwinds increasing overall certainty for business owners and investors, and we expect market traction to continue to gradually improve over the remainder of the year and into 2026. Looking ahead to 2026, businesses that stay the course are likely to benefit from a more stable and opportunity-rich market.
Optimism has levelled up
In line with the rest of our media respondents, optimism has improved. Out of the sample of 100 gaming businesses, 46% feel very optimistic over the next 12 months, with this dropping slightly to 34% when looking longer term. The number of people feeling very optimistic has more than doubled when compared to 2024.
How optimistic/pessimistic do you feel now about the future of your business?
Unlocked: improved government support
Our survey found that 90% of gaming businesses now feel the UK government supports the media and creative industries, a stark increase from just 32% in last year’s findings.
Positive messaging from the government, including the £5.5m investment in the UK Games Fund, has played a role in this shift. As the new Video Games Expenditure Credit (VGEC) and revised Research & Development (R&D) schemes become embedded, we expect continued stability in the incentives regime to help maintain levels of positivity in the industry.
To what extent do you agree or disagree with the following statement 'The UK government supports the industries (ie tax regime, regulatory burden, ease of funding etc?)
Game on: funding challenges have eased
Funding is essential to help gaming businesses scale effectively, so it was encouraging to see that 66% of respondents have found it easy to access funds in the UK, with only 1% not being able to secure any funding (compared to 14% in 2024).
We also found that only 1% of respondents were not planning a funding round in the future, with the majority (34%) planning one in 1–2 years, and a similar figure planning an exit (37%).
Of enquiries from investors came from the UK
International expansion takes the top spot for spending any funding secured in terms of next 12 months
Interestingly, 100% of respondents had also received approaches or enquiries to acquire or invest in the business. Private Equity, which can include Venture Capital, topped the list accounting for 43% of approaches.
At the same time, there’s a clear shift toward reducing debt. Around 64% of businesses said they now carry less debt than they did six months ago, a noticeable jump from 41% in 2024.
Boost from the R&D scheme as challenges ease
One of the standout areas in last year’s survey was the number of R&D claims being challenged by HMRC. Encouragingly, this is one of the areas that has experienced the most drastic change, with approval of claims without challenge taking the top spot at 44%, compared to last year where it was the lowest response at only 5%.
Thinking about your R&D claim(s) in the last 12 months, which of the following, if any applies?
HMRC’s effort to work through the considerable backlog of enquiries and also improve behaviours in the R&D regime would appear to be bearing fruit. Additional compliance and disclosure requirements might be creating extra work for claimants, but this in turn is reducing the risk of investigations and providing less space for less scrupulous advisors to encourage companies into making aggressive claims. Ultimately, this should help provide certainty around the incentive regime for businesses being properly advised and making valid claims.
59% have submitted a creative sector relief claim in the last 12 months
The UK is also home to other attractive innovation reliefs that can be hugely beneficial to businesses. In particular, for games developers, the Video Games Expenditure Credit (VGEC) provides a hugely valuable incentive to studios developing new games and is available to anyone developing qualifying games in the UK.
With leading trade bodies calling for an increase in the VGEC tax credit it is positive to see the June 2025 spending review commit to ensuring the UK creative industries remain world-leading.
Workforce: the biggest challenge for the UK gaming industry to overcome?
82% reported challenges when it came to recruitment over the last 12 months. At the same time, every company we surveyed has made redundancies. On average, 14% of staff were let go, an improvement on the 22% reported in 2024. However, despite the lower average, redundancies were more widespread this year. In 2024, 4% of businesses made no staff cuts at all—this year, every respondent reported making at least some.
How challenging, if at all, has it been for you to recruit new staff for your business over the last 12 months?
Are you planning to hire new staff over the next 12 months?
Richard Heap
Head of Interactive Entertainment
It’s encouraging to see that 45% of respondents feel very optimistic over the next 12 months, with a whopping 90% of businesses feeling supported by creative tax reliefs and other government support, and 60% saying access to funding is easier.
Thankfully the industry is well past the 2024 layoff peak. Studios and publishers are now leaner with more agile business models, increasing the use of AI both within their organisations and in game design and play. Coupled with access to funding and support, and consumer spend expected to remain resilient, we expect the industry to finish 2025 in a better place, and go into 2026 with renewed positivity.
