The UK games development sector is facing its most severe downturn on record, with employment falling at the fastest rate ever measured and start-up activity collapsing to a 15-year low, according to new research from TIGA, the trade association representing the UK video games industry.
The findings from the latest TIGA Making Games in the UK report show that the sector lost 1,537 development jobs in the year to September 2025 – a 4.5 per cent fall that abruptly ends 14 consecutive years of growth for the UK games sector. Including knock-on effects in the supply chain (2,810), an estimated 4,347 jobs have been lost overall.
TIGA is urging the UK Government to act quickly and enhance the Video Games Expenditure Credit to prevent a short-term shock becoming a permanent decline in one of the UK’s most successful creative technology sectors.
Key findings from Making Games in the UK
- Employment falls at record speed: UK games development employment declined by 4.5 per cent, the fastest rate ever recorded and the first decline since 2011.
- Job losses outweigh job creation: Between May 2024 and September 2025, 491 companies cut 3,655 full-time development roles, while 513 growing companies added only 2,751 jobs.
- Over 27,000 people now make games professionally in the UK: Total workforce fell from 28,516 to 27,347 between May 2024 and September 2025, despite growth in the freelancing sector to more than 4,245 contractors.
- Start-ups collapse for third year running: New studio formation fell by over 30 per cent for the third consecutive year, dropping from 281 start-ups to just 137 during the period, the lowest level in 15 years.
- Studio numbers decline: The UK now has 2,110 games development companies, down from a peak of 2,175 in 2023.
- Games company mortality stays high: 206 companies closed down or exited the games industry during the survey period, the second highest on record after the 2024 survey. On an annualised basis, this represents 10.2 per cent of all companies (both alive and dissolved during the research period).
- Larger studios hit hardest: Studios with more than 15 staff accounted for the majority of losses. Studios employing 15 or more staff shed nearly 1,800 roles.
- Regional contraction across the UK: Almost every UK region lost development jobs, with the biggest falls in London (-571 jobs), the South East (-387 jobs) and Yorkshire (-178 jobs).
The report highlights a combination of structural pressures driving the downturn, including sluggish global games sales, poor access to finance for early-stage studios, pandemic-era over-investment followed by restructuring. The UK games industry also competes on an unlevel playing field, with jurisdictions including Australia, France and Quebec offering more generous tax incentives for games production than the UK.
While the outlook is challenging, the report identifies clear areas for recovery:
- Micro and small-sized studios continue to grow during the downturn: Studios with 1-4 development staff grew headcount by 3.2 per cent, while studios with 5-15 staff increased headcount by 9.2 per cent over the period May 2024 to September 2025.
- Console development remains resilient: Console-focused studios saw employment fall by just 2.1 per cent, far less than mobile (12.9 per cent fall) and PC development (13.2 per cent decline).
Policy interventions
- Enhance the Video Games Expenditure Credit (VGEC): Government could introduce a rate of 53% on 80 per cent of qualifying costs for projects up to £23.5 million. This could boost GVA by £482 million and create 6,952 jobs (including 896 development roles). It would ‘cost’ HMRC £135 million but generate £156.4 million in tax revenue. Even if the enhanced VGEC was restricted to games with budgets of up to £15 million, this would increase the sector’s GVA by £434 million and create 6,264 jobs, including 807 development roles. It would cost HMRC £122 million but generate £144million in tax receipts.
- Increase the VGEC rate. Raising the rate of VGEC from 34% to 39% could boost GVA by £436.2 million and create 6,291 jobs (including 760 development roles).
- Raise the proportion of qualifying expenditure: Increasing the proportion of qualifying expenditure from 80 per cent to 100 per cent could increase GVA by £731.7 million and generate 10,551 jobs (including 1,292 developers).
- Retain and boost the UK Games Talent and Finance CIC: The UK Games Fund’s Prototype Fund provides grants of up to £25,000 and the Content Fund provides grants of up to £150,000. The size of both grants should be increased to enable more studios to start-up, scale-up and grow. For example, the Government could explore the case for increasing the size of the prototype grant to £100,000 and the content fund grant to £250,000. The potential for £ for £ match funding could be explored, to crowd in private sector investment. The Government announced an increase in funding for the UKGF in June 2025 as part of its Games Growth
- Regional games clusters could be supported: The UK is home to numerous games clusters, where start-up studios could be supported. For example, plans to grow the games industry in the East of England were published by Norwich University of the Arts in November 2024.
Dr Richard Wilson OBE, CEO of TIGA, said:
“The UK video games industry is the largest in Europe, has world-class talent, studios and universities, and previous TIGA research with the University of Portsmouth shows that the sector generates £12 billion in GVA.
“However, after 14 years of uninterrupted growth, we are now seeing a decline of unprecedented scale and speed. Without decisive policy intervention, the UK risks losing thousands of highly skilled jobs and ceding ground to better-supported international competitors. Enhancing the VGEC could create thousands of development jobs, improve studios' financial strengths, enable the development of new IP and put the sector back on the path of growth.”
