Video games industry in the UK: industry profile

The video games industry is a significant success story within the UK’s creative economy. Its developers have played a part in the creation of some of the world’s most iconic games, including Tomb Raider and Grand Theft Auto. Around 20% of games sold in the UK are developed domestically, well above the European average of 8%, and the country is one of the world’s largest exporters of video games.

Figures from UKIE show the sector contributes around £6 billion in Gross Value Added (GVA) each year, with TIGA estimating the figure could be as high as £12 billion. It supports more than 73,000 jobs across the country, including 26,000 people employed directly in the sector, with around 55% of studio roles based outside London and the South East. It also brings wider economic benefits, contributing to technological innovation and spillovers in other areas such as autonomous vehicles and virtual reality surgical training tools.

The sector has faced a turbulent few years however. During COVID-19, gaming surged in popularity and attracted substantial investment globally. As consumer activity returned to pre-pandemic levels, it became apparent the industry had overexpanded. This has led to project cancellations, job losses, studio closures and restructurings across the UK. Brexit has also affected the sector, making it more difficult for UK firms to attract European talent following the end of free movement.

According to UKIE, consumers spent £7.6bn on video games in 2024, down slightly from £7.82bn in 2023. Hardware sales fell by 5.1% overall, whilst software sales grew 0.58%, driven by an 8.1% increase in mobile game spending year-on-year.

Despite recent challenges, the sector’s long-term outlook remains strong. The UK market has doubled in size since 2013 and continued growth is forecast over the next five years, according to IBISWorld. The Government’s Creative Industries Sector Plan, published in June 2025, recognises the high growth potential of the sector.

Whilst rapid technological change and emerging platforms present new opportunities for innovation and growth, the industry continues to face challenges, particularly in areas such as finance, talent and regulation. These are explored in more detail below.

Some of the ways the UK market is segmented include:

The UK games industry includes companies spanning development, publishing, technology and specialist support services. Game developers represent the largest segment, operating either as publisher-owned studios or independent ('indie') studios. The UK’s indie sector is particularly recognised for its creativity and innovation. Providing support are specialist service providers with expertise in areas such as quality assurance, localisation, art, sound design, animation and other production services.

Publishers play a crucial role in financing, marketing and distributing games worldwide. Whilst major publishers such as Electronic Arts, Nintendo, Sony and Microsoft own development studios, smaller publishers may outsource development. Platform and technology companies also supply the hardware and digital infrastructure that underpin the industry, including Sony (PlayStation), Microsoft (Xbox), Nintendo, Apple and Google. Whilst the UK market includes multinational publishers and platform holders, it remains heavily weighted towards small and medium-sized enterprises (SMEs).

According to TIGA, the UK had 2,148 games development companies in May 2024, including 1,697 development studios, 60 publisher studios, 109 publishers and 278 service providers. Companies within the sector are most likely to be in the early start-up stages, according to data from Price Bailey.

Whilst London and the South East are major hubs, there are strong regional clusters of firms established across the Midlands, North West, North East, Scotland, and Wales. UKIE’s Games Map provides a detailed visualisation of the geographical distribution of the UK games industry.

UK industry revenues are typically divided into software and hardware. The software segment was valued at £5.1 billion in 2024 according to UKIE, dominated by digital console sales and mobile gaming. Hardware was worth £2.1 billion, encompassing consoles and accessories, PC components and VR headsets. As console generations are refreshed intermittently, sales tend to spike during major hardware launches and taper in intervening years. The long awaited Nintendo Switch 2 is expected to boost revenue in 2025.

Games culture is often recognised as a supporting segment, valued at £385 million in 2024. It includes revenues from toys and merchandise, books and magazines, soundtracks, film and TV tie-ins, streaming, live events, and gaming venues. In particular, Esports grew by 44% year-on-year, driven by more prominent UK-based events.

Video games are further categorised by genre. According to a S&P survey, the most popular genres played in the UK in 2024 included puzzle games, sports games, and first-person shooters.

The gaming audience in the UK is highly diverse, spanning a wide range of demographic groups that influence market trends. Research from Deloitte shows that gaming is no longer dominated by young men, with women and over-35s now making up a substantial share of players. Ofcom also reports that 90% of children aged 3–15 play games across different devices.

Beyond demographics, player segments are often defined by behaviour. These include casual gamers, hardcore gamers, mobile-first players, esports fans and competitive players, each contributing to different patterns of engagement and demand within the market.

Mobile gaming continues to be a major growth driver in the UK, supported by advances in smartphone processing power and graphics and a growing appetite for casual, on-the-go entertainment, particularly amongst younger audiences. The segment grew 8.1% in 2024 according to UKIE.

Regulatory scrutiny of the mobile ecosystem is increasing under the Digital Markets, Competition and Consumers Act, with Apple and Google now designated by the Competition and Markets Authority (CMA) as holding Strategic Market Status. Forthcoming rules could reshape developer-platform relationships, including proposals to let companies ‘steer’ users outside app stores to make purchases directly. Such changes may reduce fees and create new distribution opportunities, although smaller studios may still benefit from the tools and protections offered by major app stores to reduce overhead and build trust with users.

An emerging trend is cloud gaming. Through services such as Xbox Cloud Gaming and GeForce NOW, players can now access high-quality titles across multiple devices without the need for expensive hardware. High infrastructure and bandwidth costs remain barriers to wider adoption however, whilst inconsistent connectivity can undermine the player experience. The CMA’s 2023 decision to block Microsoft’s $69 billion acquisition of Activision-Blizzard, followed by Microsoft’s transfer of cloud streaming rights to Ubisoft, aimed to promote competition in the cloud gaming market. The move may ultimately broaden distribution opportunities for UK developers and publishers, although securing and managing cloud licensing agreements may prove complex.

Immersive experiences, including augmented reality (AR) and virtual reality (VR) gaming, are another emerging area. According to PwC, VR gaming is estimated to grow 22% annually from 2022 and 2027 in the UK, supported by new releases and an increasing installed base of headsets. However, despite this momentum, global insights from Boston Consulting Group indicate that emerging trends such as cloud-based gaming and immersive experiences are not yet on a trajectory to rival established gaming platforms in the near or even medium term.

Although AI has been central to games development for decades, generative AI has accelerated the pace of innovation in recent years. Asset creation and procedural world-building can now be automated, and gameplay enhanced through adaptive non-player characters. These capabilities enable smaller developers to build complex and dynamic gaming experiences more efficiently and at lower cost, potentially levelling the playing field with larger studios. As noted by Coutts, however, it remains to be seen whether larger, well-funded companies with legacy processes or smaller, more agile studios will harness AI more effectively.

Global surveys, including those from the Game Developers Conference and a16z Games, show AI adoption expanding across studios and roles. Yet concerns are rising over creative quality, copyright, algorithmic bias, regulation and environmental impact. Job security is also a concern within the sector, with generative systems increasingly being used for traditionally creative tasks.

The UK industry faces additional challenges in talent supply. TIGA’s research highlights persistent skills shortages, an issue that may widen as demand grows for workers with AI skills. However, the Government’s Creative Industries Sector Plan signals support for equipping the creative workforce for emerging technologies such as AI, with a Video Games Skills strategy due to launch in 2025.

Despite these challenges, AI presents significant opportunities for the UK games industry. As well as reducing development times and costs, AI-driven analytics can also predict player behaviour, enhance monetisation and improve retention, with applications in AI assisted content moderation promising safer experiences for players online. The industry’s success, however, will depend on responsible AI governance and investment in upskilling.

Players’ ability to actively contribute to games they play is shifting video games from a one-way entertainment experience into a collaborative, user-driven ecosystem. Through games such as Minecraft and Fortnite, along with platforms such as Roblox, players can now design, share, and monetise their own content. This participatory model extends the lifecycle of games, boosts player engagement and generates recurring revenue streams. It also expands brands’ reach beyond traditional marketing channels.

As Deloitte notes, however, UGC presents both opportunities and risks. Whilst fueling innovation, it also has the potential to disrupt premium game models. Moreover, platforms that host UGC must deal with managing, moderating and monetising large amounts of content, as well as the challenges of copyright infringement, harmful content and regulation of online content.

In particular, the UK’s Online Safety Act 2023 places new legal duties on video game services that enable user interaction or content sharing. Companies must now conduct risk assessments, implement proportionate safeguards and prepare for stricter child-protection measures, including robust age-assurance systems coming into force in 2025. These obligations could place a heavier burden on independent developers, who may lack the compliance capacity of larger studios.

Despite industry growth, access to finance remains a significant issue, particularly for small and independent studios. Limited assets and unpredictable commercial success mean many studios find it difficult to secure sufficient investment for growth or scaling. As a result, they are often bought by foreign companies. Figures from PEC show 118 transactions where a UK-incorporated video game studio has been acquired by overseas buyers since 1993, highlighting an ongoing trend toward international ownership.

The Video Games Expenditure Credit (VGEC) has helped drive growth in the UK, but this competitive advantage has been eroded over the past decade according to UKIE. Jurisdictions such as France, Australia and Quebec now provide more generous tax incentives, meaning UK studios may struggle to compete internationally for investment. Reforms have been proposed by industry bodies, but policy uncertainty remains.

The Creative Industries Sector Plan includes a £30 million Games Growth Package to support new start-up studios, nurture talent, and attract international investment. Plans to enhance the UK Games Fund and strengthen investor partnerships via the London Games Festival may also help alleviate some of the sector’s funding challenges.

Without improved access to finance - through more competitive tax relief and a broader mix of financial options comprising grants, loans, guarantees, equity and debt - the UK risks losing talent and intellectual property to countries offering more substantial financial support.

The market for physical video game software continued its long-term decline in 2024, with sales falling by 34% year-on-year, representing around only 4% of total consumer spend. Boxed games account for only a small proportion of new releases, as players shift towards digital ownership through downloads of games.

Subscription services are also a growing feature of the market. In a survey by Ofcom, 36% of UK gamers subscribed to at least one gaming service in 2024. Platforms such as Xbox Game Pass and PlayStation Plus provide extensive game libraries, increasing discoverability for developers whose games are featured. Although early concerns suggested that subscriptions could undermine individual game sales, recent research indicates only limited cannibalisation compared with the impacts seen in music, film, and television streaming. Nonetheless, questions remain over the payment models for developers whose titles are included on these platforms.

In-game purchases are now widespread across multiple platforms, reflecting a transition over the last two decades from one-off purchases to ongoing monetisation through downloadable content, virtual items and live-service models. Although generating significant revenue, they bring new challenges related to consumer spending, transparency and regulatory oversight. In particular, paid randomised rewards (loot boxes) remain under scrutiny. Whilst the Government opted for industry-led protections over direct gambling regulation in 2023, inconsistent enforcement has drawn continued criticism.

The size and diversity of the UK video games industry means that any list of notable players will not be fully representative or comprehensive. That said, some examples of noteworthy players are set out below.

• Codemasters - Southam-based studio known for racing simulation games including the F1 series, DiRT and GRID (owned by EA).
• Frontier Developments - Cambridge-based developer and publisher known for simulation/management games such as Planet Coaster, Planet Zoo and Elite Dangerous. Listed on AIM.
• FuturLab - Independent game developer based in Brighton, best known for the innovative breakout hit PowerWash Simulator.
• Hello Games - Independent developer and publisher based in Guildford pushing boundaries in procedural generation. Best known for its large‑scale exploration game No Man’s Sky.
• Jagex - Cambridge-based developer and publisher of the MMORPG RuneScape. Known for its live game operations and community engagement (acquired by CVC & Haveli in 2024).
• King - London-based leader in the mobile games segment, known for Candy Crush (owned by Activision Blizzard, now part of Microsoft).
• Media Molecule - Guildford-based studio known for LittleBigPlanet and Dreams (owned by Sony).
• Mediatonic - London-based studio behind the hit Fall Guys (owned by Epic Games).
• nDreams - Farnborough-based developer and publisher specialising in immersive experiences (owned by Aonic).
• Playground Games - Development studio based in Leamington Spa, known for the Forza Horizon franchise (owned by Microsoft).
• Rebellion Developments - Large independent developer based in Oxford, known for the Sniper Elite series. Also produces books, comics, TV, film and board games.
• Rockstar North - Edinburgh-based studio behind the blockbuster Grand Theft Auto series (owned by Take-Two Interactive)
• Sad Owl Studios - Scottish independent studio whose 2023 debut title Viewfinder innovatively uses photography as a core game mechanic.
• Side Global - London-based company focused on voice production, casting, performance capture and audio services for the video games industry (owned by Keywords Studio).
• Sports Interactive - London-based studio behind the Football Manager franchise, specialising in deep sports simulation (owned by Sega).
• Sumo Digital - Sheffield-based studio focusing heavily on co‑development for major publishers (owned by Tencent)
• Team17 - Wakefield-based independent developer and publisher, known for Worms, Overcooked and other indie titles. Listed on AIM.
• Universally Speaking - Cambridge-based video game services company providing quality assurance, localisation and player support for game developers and publishers.
• Ubisoft Reflections - Newcastle-based studio known for the Driver series and racing titles.
• Uplift Games - UK indie studio focused on social games, including the top Roblox hit Adopt Me!

ICAEW’s Library & Information Service can provide information on UK and Irish participants in the video games industry via its wide range of company information services. This includes:

• Information on company acquisitions in the sector
• Private company transaction multiples
• Company data
• Beta values for companies and the sector
• P/E ratios for companies and the sector

For more information, please contact our enquiry team on +44 (0)20 7920 8620 or at library@icaew.com to discuss your requirements.

The websites of professional bodies and other organisations in the sector are a useful source of industry overviews, contacts and statistics.

UK

• Creative Industries Council
• Creative Industries Policy and Evidence Centre
• Creative UK
• Creative Wales
• ERA (Digital Entertainment and Retail Association)
• Scottish Games Network
• Scottish Games Developers Association
• TIGA
• Ukie (UK Interactive Entertainment)
• Video Games Council
• Women in Games

Europe and Global

• European Games Developer Federation (EGDF)
• International Game Developers Association (IGDA)
• Video Games Europe