Changing the Rules of the Game

Economic, Management and Emerging Issues in the Computer Games Industry

S. Hotho, N. McGregor, S. Hotho, N. McGregor

• Publisher: Palgrave Macmillan
• Year: 2013
• Print ISBN: 9780230303539
• eBook ISBN: 9781137318411
• Topic: Social Sciences
• Subtopic: Management
• Index: Social Sciences

The computer games industry is one of the most vibrant industries today whose potential for growth seems inexhaustible. This book adopts a multi-disciplinary approach and captures emerging trends as well as the issues and challenges faced by businesses, their managers and their workforce in the games industry.

1

Problematizing a Homogeneous Spatial Logic for the Creative Industries: The Case of the Digital Games Industry

Katherine Champion

Introduction

The computer games industry can be regarded, in many ways, as a paradigmatic sector of the creative economy. It has been firmly on the policy agenda in the United Kingdom since New Labour’s election in 1997 and, in particular, since 1998 with the inclusion of digital games as a sub-sector of creative industries as defined by the Creative Industries Task Force. Its high public profile has been justified by claims of economic weight and potential externalities (DCMS, 2012a; TIGA, 2012). As well as a belief that the sector can provide direct benefits to the economy, it is suggested that it also provides additional advantages through a multiplier effect and can even ameliorate the impact of the recent recession. In terms of policy interventions aimed at fostering growth within the computer games industry, many efforts have taken a spatially targeted focus including the funding and development of hubs and clusters. The rationale for this attention rests on a belief that the sector has a particular spatial logic in common with the wider creative industries, which preferences proximity and is subject to advantages of agglomeration. Despite a paucity of empirical research specifically reviewing the spatial rationale of the computer games sector, significant work has been undertaken to identify the location patterns within the wider creative economy. The existing research suggests that the creative industries have a dominant spatial rationale which tends to favour co-location, and that large metropolitan centres act as natural hubs of activity, but there remain gaps in the evidence base.

This chapter explores the emergence of the creative industries sector as a policy priority and then reviews the existing evidence of a common spatial rationale. The key attributes of the computer games industry are compared to those of the wider creative industries sector to determine if the former reflects the key characteristics seen to define the latter. Next, the existing empirical evidence regarding the spatial organization of the games sector is examined to determine convergence or deviation from the accepted creative industries logic. A scarcity of robust evidence is highlighted alongside an examination of some of the key challenges of researching the computer games industry and the wider creative industries sector. Finally, it is argued that a tendency towards the social construction of the sector as a discrete industry can do more to obscure than reveal trends, especially in a time of increasing convergence and digitization affecting the economy as a whole.

The development of the creative industries as a policy priority

The historiography of the current term creative industries began with Max Horkheimer’s and Theodor Adorno’s definition of the cultural industries (1944), which focused on industrially produced commercial entertainment as distinct from the subsidized arts sector. The term was deployed in an ironic fashion to demonstrate what they saw as the absorption of the arts within capitalist industry (Flew, 2002). Culture and industry were argued to be opposites and the term was used to express dissatisfaction with popular forms of culture such as magazines and films (UNCTAD, 2008). Similarly, and much later, the Greater London Council used the term cultural industries during the 1980s to emphasize the mass consumption and wealth creation of the cultural goods of the non-subsidized part of the sector (O’Connor, 2000).

The term creative industries first appeared in Australia in 1994 when Creative Nation was published, a report in which an Australian federal government developed, for the first time, a comprehensive cultural policy (UNCTAD, 2008); the term reached the United Kingdom in 1997, shortly after the election of New Labour, when the Department of Culture, Media and Sport (DCMS) was set up. The DCMS created the Creative Industries Task Force, which was mandated to define, map and measure the creative industries. Two mapping documents were published in 1998 and 2001 and significantly raised the profile of the sector (Oakley, 2004). These documents highlighted the economic weight and regenerative possibilities of the sector.

Britain’s Creative Industries Task Force defined the creative industries as ‘those activities which have their origin in individual creativity, skill and talent and which have a potential for wealth and job creation through the generation and exploitation of intellectual property’ (DCMS, 2001: 3; 2011). This definition identifies the central role of intellectual property rights as the criterion for inclusion (Taylor, 2006). Though not universally accepted, this definition is commonly deployed in UK policy and academic discussion. It has been argued that the change in terminology from ‘cultural’ to ‘creative’ represented a repositioning towards the more universal and democratic connotations of creativity (Matarasso and Landry, 1999; O’Connor, 2000). It represents a move away from the traditional connotations of culture, which can be ‘seen to reflect a top-down dispensation of elitist cultural values developed in the context of time and class, and which neglected or dismissed many forms of cultural expression and identity’ (Matarasso and Landry, 1999: 13).

The sector has risen substantially in profile in the United Kingdom since 1997 and there are features of it which are regarded as providing particular opportunities and advantages. The statistics tell an impressive story. The creative industries accounted for 10.6 per cent of the United Kingdom’s exports in 2009 and, in the same year, the sector contributed £36.3 billion in gross value-added (GVA) to the United Kingdom, 2.89 per of total UK GVA (DCMS, 2011). Overall there are calculated to be 1.5 million people employed in the creative industries themselves or in a creative role in other industrial sectors, constituting 5.14 per cent of UK employment (DCMS, 2011). For these workers incomes are generally higher than average, particularly for those employed in the software, computer games and electronic publishing sectors. In 2006 incomes were 36 per cent higher than the UK average, although since then there has been some slowdown. Creative occupations generated over £40 billion in salaries and wages in 2006, while support staff in creative industries earned an additional £16.8 billion. Overall, the creative industries workforce earned 9.6 per cent of all UK earnings (Higgs et al., 2008).

The benefits associated with developing the sector have led to its identification by the UK government as a key area for employment growth, with a raft of policy interventions aimed at cultivating jobs in the sector. Beyond pointing to the growing economic weight of the creative industries, advocates also stress their potential for regeneration. As Hutton (2009: 987) describes, the sector ‘can be seen as phoenix rising from the ashes of traditional manufacturing, light industry and engineering sectors’. These proposed spillover effects are often associated with city renaissance and linked to prospects for increased liveability and quality-of-life advantages (Landry, 2000; Florida, 2002; Champion, 2008). In particular, there has been a significant policy thrust from former industrial cities to build a share in this sector, often touted as a panacea for urban decline, although critical evidence regarding the possibilities for this is hard to find. Many of these policies are spatially targeted and focus on hubs and clusters of activity which have either emerged organically or have been state-led. This place-based focus for policy assumes a spatial rationale which favours proximity and co-location. The next section explores the commonly identified spatial characteristics of the creative industries sector from which this picture stems.

Spatial logic of the creative industries

Particular spatial and place-based factors are argued to be central to the development and organization of creative industries. The need for proximity is commonly identified as a priority in this sector to allow flexibility, develop networks and offset risk (Banks et al., 2000; Scott, 2001). Creative businesses are also said to ‘thrive in milieus, networks, clusters, embedded knowledge and informal infrastructures of the city’ (Banks et al., 2000: 454). Other place-based factors relating to the built environment, existence of cheap space, public sector support framework, connectivity, local identity, institutional environment and availability of amenities are also drawn upon as possible influences on the locational choices of creative industry firms (see, for instance, Helbrecht, 1998; Leadbeater and Oakley 2001; Drake, 2003; Hutton, 2004; Markusen, 2006; Champion, 2010).

Research suggests that co-location is an ideal environment for creative industries to operate within. Commonly drawn upon as one of the most crucial factors in creative industry success is the presence of human capital. Mommaas (2004) draws on three factors which demonstrate the importance of clustering in the creative industries. He asserts that clusters are expected to create a local climate favourable for creative workers to be active in. There is also thought to be a wider symbolic and infrastructural spinoff, which is likely to attract more workers. Finally, clusters are expected to function as a context for trust, socialization, knowledge, inspiration, exchange and innovation in a product and service environment characterized by high risk. Geographically clustered networks of resources, including human capital, are very important to the creative industries and are often considered the key to successful project work. Deep local pools of creative and skilled labour are advantageous both to firms and employees (Reimer et al., 2008). The literature suggests that the geographic proximity of individuals possessing human capital, skills, expertise or creative capabilities enables interactions which result in the spillovers that are crucial for innovation (Stolarick and Florida, 2006). This appears to be true, for example, in the film industry where access to networks is crucial both in the United States (Hollywood) and the United Kingdom (London) (Ekinsmyth, 2002). Further to this, there may be an atelier effect where the number of skilled individuals exceeds the labour demand, paving the way for new entrepreneurial activities (Santagata, 2002). In Cook and Pandit’s (2007) study comparing the broadcasting industry in three city-regions, London was found to be advantaged by several factors relating to the possibility for knowledge spillovers. The labour market in London offers a pool of talent unrivalled in the United Kingdom. The highest financial rewards and the most prestigious projects are located there. Moreover, as a deep labour pool is necessary for the security of employees, skilled workers are likely to be encouraged to settle in a large urban centre offering a range of employment opportunities.

The industrial structure of the creative industries sector tends to make clustering even more advantageous than in the wider knowledge economy. The sector contains large numbers of very small firms. This allows them to be flexible but poses certain problems that can be somewhat offset by co-location. The problems associated with small firm size include low access to technological information, restricted resources and high training costs. Clustering is beneficial in this regard, as it ‘can derive competitive advantage by obtaining efficiency gains that a small firm could not manage on its own’ (Wu, 2005: 3). It is further suggested that the spatial clustering of related industries and skilled workers allows the development of an innovative environment likely to lead to a competitive and specialized local economy. Co-location offers benefits in terms of coherence with a shared learning process, path dependence, complementary resources and technological opportunities (Bathelt et al., 2004). Co-operation and competition take place simultaneously as there is a common pool of labour, knowledge, information and ideas (Wu, 2005).

Banks et al. (2000) argue that the market for creative products is volatile and creative firms are not solely profit-orientated, but are also keen to remain innovative. As formal support structures such as banks and business support organizations are generally ill-equipped to help with the needs of creative industries, networks are seen as necessary to temper risk and inspire trust. Informal and untraded relations are often more important in creative industries than are formalized interactions (Bayliss, 2007). For instance, in her study of creative industry firms operating in the lace market in Nottingham, Crewe (1996) identified the use of informal networks and gentlemen’s agreements to derive more secure tenancy arrangements. With the advent of the knowledge economy there has been a shift from permanent to freelance and contract employment. Short-term and temporary collaboration is a corollary of a more reflexive and flexible economy, and the creative industries exemplify this trend. Firms are active in a volatile environment and so an adaptive nature and networking capabilities are needed to help overcome these weaknesses. This leads ‘to the rejection of large hierarchical organizations in favour of networks of small firms able to respond and adapt quickly to changes’ (Antcliff et al., 2005: 6). For example, within the advertising industry campaigns are increasingly responding to current events and face increasing competition for media time and space. Workers need to come together on projects with little notice and on an ad hoc basis (Grabher, 2004). There are several characteristics of this shift. Project work takes place over a limited timescale and consists of interrelated tasks (Sydow and Staber, 2002). Meeting deadlines is the main criterion of evaluating performance (Grabher, 2002a). Importantly, project members tend to be assembled by a project manager and are often made up of past collaborators from the same network of contacts. In this way it is inter-personal rather than simply inter-firm relations which form the basis of the networks coming together to work on projects (Ekinsmyth, 2002).

The structure of project-based work can be described as ‘flexible networks, or latent organizations consisting of groups of workers from different occupational groups, who come together repeatedly to work on successive projects’ (Antcliff et al., 2005: 15). These networks are characterized by mutuality, trust, shared expectations and norms governing behaviour (Antcliff et al., 2005). The findings of Antcliff et al.’s (2005) study of workers in the audio-visual industry in the United Kingdom suggested that individuals in this sector sough...

Table of contents

• Cover
• Title
• Copyright
• Contents
• List of Figures and Tables
• Notes on Contributors
• Introduction: Emerging Perspectives on an Emerging Industry
• 1  Problematizing a Homogeneous Spatial Logic for the Creative Industries: The Case of the Digital Games Industry
• 2  Commercial Business Models for a Fast Changing Industry
• 3  The Role of the Consumer: From Sales to Co-production
• 4  Business Growth, the Internet and Risk Management in the Computer Games Industry
• 5  ‘Some Companies Are Fine One Day and Gone the Next’: Sustaining Business in the Digital Games Industry
• 6  The Role of Creativity
• 7  HR Issues in the Computer Games Industry: Survival at a Price
• 8  How Funny Are Games? Violent Games Content and Studio Well-Being
• 9  Critical Perspectives on the Games Industry: Constructs and Collusion
• 10  The Brief History, Tumultuous Present and Uncertain Future of Virtual Worlds (Terrae Fabricatae)
• Index