Currently ranked third in the world, behind that of America and Japan, the UK gaming industry turned over £4.03bn in 2008 whilst contributing to £2bn in global gaming sales. However, this has come under serious threat with other countries gaining tax breaks which allow them to poach British talent. An unnamed source said “Our best technical guy was offered 2.5 times his UK salary, 100% subsidised relocation costs and a comprehensive support programme… to move to Canada… We simply cannot compete with that.”

To attempt to prevent this, insiders are asking for tax breaks similar to those that the film industry already enjoys. Eidos president Ian Livingstone said “Over the years, the government has failed to support the games industry regarding the problems caused by rising costs and inadequate graduate skills… (it) has failed to introduce a production tax credit scheme to enable the UK to compete globally on an even playing field whereas many foreign governments have invested heavily in their own games industries. The government is ready to help traditional industries that are hurt by the recession. But for our long term interests it should invest in a digital future rather than prop up a failing past.”

With no aid, the industry predict that the UK’s gaming sector will fall to fifth in 2009, with further falls in 2010.

Explaining that the firm had seen an 18per cent rise in retail sales in Germany, he expressed that the future expansion of digital downloads would aid the market. “We’re seeing companies like Amazon take a larger market share, and the growth of digital distribution, but it’s going to be a long-term development as people still want to have something in their hands,” he explained.

Meanwhile British based publisher Eidos spoke of the problems the gaming industry are experiencing with the second-hand sector. President Ian Livingstone said “The pre-owned market is a serious problem, because there is no benefit to developers or publishers. A shop makes a bigger margin on a pre-owned title, and can sell them six or seven times, so there is no incentive for them to reorder and the content creator gets no slice of the action.” This is because though retailers have to pay royalties for sales on new products, second hand games can be sold for sole profit.

Mr Livingstone predicted that over 25per cent of the gaming sector’s turnover was created by second hand game sales and that as a result developers were changing their methods. Industry leaders explained that most companies now needed to make top ten products to turn a profit, meaning that developers were becoming far more careful with the games they created.