We have just published the Autumn edition of our Interactive Entertainment newsletter.
This edition brings together some of our recent articles exploring a range of issues affecting the industry, including advertising regulation, strike action, immigration issues for talent, online safety and intellectual property. We also share some takeaways from our attendance at key events following the end of a very busy industry conference season.
We have prepared this editorial to accompany the newsletter, summarising trends and standout regulatory developments we have been observing this year.
The international video games market has continued to grow, demonstrating its resilience even if the recovery from recent challenges has been slower than anticipated.
The Autumn Budget has just confirmed the significance of the creative industries, with DCMS prioritising a package of support including the continuation of the Games Fund. Video Game Expenditure Credit has also been continued, with some administrative changes relating to the British certification condition, the treatment of unpaid amounts and regulation-making procedure. These are minor changes intended to ensure companies familiar with existing relief schemes can continue to claim without disruption.
We have seen the launch of some highly anticipated AAA titles including Black Myth: Wukong, Final Fantasy Rebirth and Call of Duty Black Ops 6. The use of trusted IP and franchises has certainly been a trend this year, and there is more to come in that regard. Similarly, the creation of ever more impressive game worlds has continued as developers seek to hold onto players with a more immersive game experience. Something else we are increasingly seeing with new releases across the market, and not just for AAA titles, is the use of early access.
Despite a perception that investors may be more cautious and funding harder to come by in some areas, M&A activity has also increased for the fourth consecutive quarter, and it appears AI, MR and platform tools have been of particular interest to investors. The trend towards consolidation and growth of gaming-focused private equity groups has continued, and some of the major deals have included EQT Group’s acquisition of Keywords Studios, CVC's acquisition of Jagex and, in an interesting deal with obvious cross-media potential, Disney's investment in Epic Games.
The management of games workforces is still a key focus area. Studio closures and redundancies sadly remain a part of the industry landscape, which has led to calls for unionisation. The SAG-AFTRA strike in light of (amongst other things) the use of voice and mo-cap actor performances and images by AI tools has also made headlines. This is just one example of how the adoption of GenAI tools and machine learning is transforming games development in so many ways.
Although there were some concerns about the growth of VR/AR gaming as compared to more mainstream options earlier in the year, we have seen a steady stream of releases in this market during the year culminating in a slew of AAA VR titles being released in Q4 not to mention significant new hardware this year. It is notable that the relatively accessible Meta Quest 3/3S are bundled with Batman: Arkham Shadow. The impact of this console exclusive on consumer uptake, together with major releases in the final quarter, will be watched with interest.
On a more legal note, 2024 welcomed a raft of increased regulation of video games platforms in the areas of child safety, general online safety, monetising and advertising games. The UK Online Safety Act, EU Digital Services Act, and EU AI Act have all added to the already dynamic regulatory landscape which games companies need to navigate. With phase 1 of the Digital Markets, Competition and Consumers Act 2024 due to come into effect by the end of this year, there is also potential for mobile platform operators soon to be designated as having “Strategic Market Status” in the UK, which could pave the way for alternative app stores here as we have seen in the EU.
The link to our newsletter is below. Please do let us know your thoughts on this edition, and we hope you enjoy reading!
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