A "severe skills shortage" could challenge the UK's position in the global games biz, says a new report from the country's National Endowment for Science, Technology and the Arts, warning that the UK could fall to fifth place in the world by 2009.
The UK games development sector was ranked third in the world in 2007, but NESTA's report warns it could be overtaken by Korea, Canada and China in 2009 if it can't retain talent, secure more government support, generate more original IP and keep pace with online gaming.
NESTA is now leveraging its report to support the solutions it hopes will halt the "projected decline" of the games industry in the UK, including a simplified research and development tax credit system comparable to the one the film industry enjoys.
Foreign competition from countries who offer more generous tax credits is "stripping the UK of talent and tilting the playing field against UK studios," although NESTA stops short of stating that the nation necessarily needs its own production tax credit.
Nonetheless, says the report, "The UK must wake up to the value of this sector to the economy and match foreign incentives with its own supportive measures."
The report also says dev students in the UK are insufficiently trained by specialist courses, from which only 18 percent of graduates are able to get industry jobs.
NESTA also urges more support for the development of original IP, asserting too much work for hire is "stunting UK innovation in the sector."
"Addressing this through public development grants and support incentives will be the key to developing sustainable business," says NESTA.
"The UK must not fall under the false assumption that our games sector is alive and healthy based on the success of one blockbuster video game -– namely Grand Auto Theft IV
-– when behind the gloss the reality is increasingly about studio closures, relocations and workforce downsizing."