The UK Department of Trade and Industry (DTI) is investing in games.
The games industry was worth £11 billion worldwide at the end of 2001, the DTI claims. It believes more investment is required to help the UK keep pace with gaming technology.
The DTI forecasts that global games software sales will reach £20 billion by 2007 – mostly driven by the console market.
However, UK games software developers face a chasm between game production costs and the price consumers are willing to pay.
"As platforms become more powerful and storage increases massively so the expectations of consumers grow ever more demanding," says the DTI.
"With a development project lasting up to 18-24 months with a team of around 20-30 costing £1-2m, small UK developers are increasingly stretched for both staff and funding," it explains.
The situation is causing concern across the worldwide games industry. Destineer/Bold's president Peter Tamte predicts a split in the market between high-end games that support advanced technologies and low end ones that do not.
Tamte explained: "To create titles that fully exploit new graphics solutions requires major investment in graphics artists by the companies, which raises concerns over digital copyright protection."
"Buyers want to pay less, but technology is costing manufacturers more, putting pressure on them to sell more games to cover costs," said a spokesman at Elspa (European Leisure Software Publishers Association).
UK-developed titles took the top spot in both the US and UK markets in 2001, with Grand Theft Auto 3 winning in the US and Who Wants to be a Millionaire in the UK. Who Wants to be a Millionaire is now available for Mac from UK games publisher, Feral interactive.
The DTI will invest in a UK stand at giant US games trade conference E3, and plans to fund major technology fact-finding missions.
"The games industry is an important part of the economy and the Government is determined to play its part in helping it towards a successful future," said e-Commerce minister Stephen Timms.
The UK games market generates over $1 billion in revenues and employs 20,000 people.