Press start on a new era: Where is UK video gaming heading next?

According to Gavin Smith, Senior Commercial Banker to the video gaming sector, the industry has now come full circle. Investment slowed dramatically over the past two years, as publishers and investors became more risk-averse, and a saturated market made it harder for games to be discovered. Many companies expanded aggressively during the boom years, only to struggle when acquisitions and investment deals failed to deliver. This has led to layoffs, restructurings, and a more cautious industry overall.

And yet, 2024 tells a different story.

According to our Business Growth Index, the number of gaming companies in the UK has increased from 5,570 in 2023 to 6,933 in 2024 – a 24% year-over-year increase.

To put this into perspective:

• That is equivalent of over 3 new gaming businesses launching every day (or over 100 every month)
• Every 8 hours, a new company joins the UK video gaming ecosystem
• At this rate, the UK could see 10,000 companies by the end of 2026.

Where is the growth? And what does it mean for the future of the industry? If investment has slowed and risk tolerance remains low, why are so many new studios being formed?

We explored the data with Gavin, and his perspectives are below.

The resurgence of independent (indie) studios breaking away from big publishers

Despite a difficult investment environment, Gavin sees a clear resurgence of the independent studio in the UK. Many new gaming businesses being registered are either led by industry veterans breaking away from larger groups or indie developers forming new studios after unsuccessful acquisitions.

This shift may explain why some of the biggest success stories in recent years have come from smaller, independent studios that achieved global recognition. Notable examples include:

• Poncle (Vampire Survivors) is an indie project that became a global hit
• Boneloaf (Gang Beasts) is a multiplayer cult favourite that continues thriving
• Playstack (Balatro) is a breakout indie success showing the power of smart publishing.

Gavin believes this shift is not just about creativity, but about necessity. As studios become more streamlined, they are finding ways to run leaner operations and focus on long-term sustainability. Unlike in previous years, when growth was often tied to major funding rounds or acquisitions, today’s indie studios are thinking more carefully about monetisation, audience engagement, and efficient business structures, while keeping creativity and innovation at the heart of the industry.

Regional gaming hubs on the rise

London remains the dominant force in UK gaming, with 2,474 registered gaming companies in 2024 – far more than any other city. But the latest data suggests that growth is spreading beyond the capital, with new studios emerging in unexpected places.

One of the most exciting developments is Belfast’s 410% increase in registered gaming companies. This surge highlights the city’s growing role in the UK’s gaming ecosystem, with more studios establishing themselves and contributing to a thriving creative industry. As investment and talent continue to expand, Belfast is shaping up to be an exciting hub for game development.

Meanwhile, Ilford (+209%), Wolverhampton (+114%), and Sheffield (+105%) are also showing remarkable growth. 

Gavin sees the bigger trend in companies adapting to lower costs and different funding models. Whether in Belfast or elsewhere, many of these new studios are founded by experienced developers looking for a way to build sustainable businesses in a changing industry.

The UK is attracting overseas game studios

The UK has long been an attractive destination for game development, offering competitive tax incentives and access to a highly skilled talent pool.

Gavin Smith shared that Arbuthnot Latham has supported a number of US-based gaming companies in establishing their UK subsidiaries over the past year. This highlights the appeal of the UK for studios looking to expand internationally. However, will this trend continue?

While the UK remains a compelling option for studios seeking sustainable growth, global economic pressures and shifting investment priorities could influence future inward investment. Will more US-based studios choose the UK as their next development hub, or have we reached a turning point? The coming years will determine whether the UK can sustain its position as a key destination for international game developers. 

Are we seeing a return to what gaming does best?

Gavin believes that despite recent challenges, the industry is shifting its energy back to what matters – making fun games.

For years, gaming was dominated by hype cycles, such as NFTs, the metaverse, and aggressive acquisitions, but many of those projects failed to deliver. Now, Gavin sees studios focusing on gameplay and player experience rather than chasing every new trend.

He notes that AI is still a major factor, but unlike other emerging technologies, it seems it is being integrated more thoughtfully into development processes. At the same time, Meta continues to invest in AR/VR, which could indicate long-term opportunities in immersive gaming. But will developers embrace it, or are they more focused on delivering solid, proven game concepts that players want?

What happens next?

The UK gaming industry has seen a 135% increase in five years, with gaming businesses growing from 2,951 in 2019 to 6,933 in 2024.

This rapid expansion raises an important question – how many of these businesses will stand the test of time?

The gaming industry has seen cycles of growth and contraction before, often driven by shifts in investment, technology, and consumer trends. While some studios will thrive – adapting to market demands and developing sustainable business models – others may struggle in an increasingly competitive space.

Are we witnessing the rise of a stronger, more resilient UK gaming industry, or will this expansion lead to another wave of consolidation?

One thing is certain – the landscape is evolving. Whether that leads to long-term stability, or another period of adjustment remains to be seen.

About our Business Growth Index

Arbuthnot Latham has developed an analytical in-house tool to comprehensively examine Companies House data over the last two decades. The Business Growth Index gives us unique insight into business registrations from a geographical, sectoral, and demographic point of view, and enables a granular view of activity using city, postcode, gender, and age metrics.

Methodology for this report

To create this report we used a proprietary Arbuthnot Latham tool to analyse Companies House data and compare the average population in each city to the number of businesses registered there in 2023 and 2024. The final Business Index Score ranking was calculated by multiplying businesses per capita by 1,000.