There's no doubt that the UK games industry dominated during the 8-bit and 16-bit era of home computers with some very memorable and well known publisher and software giants producing a large amount of games during the 80's and early 90's. Things, however, came to a turning point during the following decade. The Financial times reported that an estimated 400 independant studios in 2001 in the UK had drastically shrank to just 150 in 2007. The landscape for game development had shifted, with Australia being cited as one of the many competing countries as the new game development hotspot.
Things have not been looking up since either, as a new article at Gamasutra has reported that an additional 44 studios, representing 15 percent of the UK games industry, was lost during the last two years.
British Shadow Culture Minister, Ed Vaizey, has lamented on the lack of Government support for their games industry and fears that their place in the world as a prominent game development sector could slip even further without the tax breaks and support needed which other countries like France, Germany, South Korea, Japan, and the U.S have for game developers. From Gamasutra...
"Global competition is incredibly fierce, and high development costs in the United Kingdom are slowly killing the industry," said Vaizey in a speech given at the London Games Conference. "Given what is happening, you would expect our Government to be acting urgently."
Research suggests that the UK video games industry could shrink a further 16.5 percent in the next five years, resulting a loss of more than £180 million in external investment and roughly 1700 jobs.