Britain’s gaming sector is on the brink of a renaissance that recalls Hollywood’s ET and Star Wars-era boom. But what that boom tells us about the wider economy, could be crucial for all our futures.

Words: Paul Franks, Interactive Entertainment Lead, Coutts Bank

Hollywood execs often talk of a phenomenon known as the ‘Spielberg Moment’.

The moment is a Big Bang at which a period of stifling uniformity suddenly becomes unsustainable, and births a dynamic new generation of fresh, vital new entrants onto the scene.

Its roots are the creative stasis of 1960s Hollywood, and how that uniformity sowed the seeds of its own filmmaking Big Bang. Suddenly, new voices – Steven Spielberg, George Lucas – emerged. Their films packed new stars, great scripts, unprecedented action, special effects; and all played to a killer soundtrack. These young firebrands, rebelling against prevailing orthodoxies, also sow the seeds for whole new genres, new careers, new offshoots… and unprecedented levels of commercial success.

The rest - the wild success of movies like the Star Wars, ET, the Indiana Jones franchises, and everything that followed – showed that at least for the industry figures they left in their wake, the biggest risk was not taking a risk at all.

So what has all that to do with gaming in Britain, in 2025?

Well, the parallels are striking.

For the last 18 months, interactive entertainment as a whole, and particularly its core engine – the gaming industry – has had a bumpy ride.

The covid pandemic and accompanying lockdowns brought a boom in gaming, as well as digital entertainment generally – pushing the annual value of the sector well above $200 billion in 2024, and suggesting a global revenue of $257 billion by 2028. (Sources: Bain Gaming Report 2024. IDC; Euromonitor; PwC; Video Game Insights; TD Cowen; Bain analysis)

But as these extraordinary social conditions retreated again, demand was met, and the gaming industry retracted once more. That meant cuts to budgets, the cancellation of games already in production and redundancies throughout the sector.

It wasn’t an existential crisis by any means. “There’s an enormous ecosystem,” says Sam Collins, CCO of UKIE. He describes the UK as a ‘powerhouse’ for gaming in which not only do 70% of the population play games, but producers, creators, designers and more all thrive and proliferate, showing vitality that would be the envy of many other sectors even now.

The long-term outlook is extremely compelling, too – as you’d expect of an innovative sector that combines tech, creativity and marketing across most media platforms, and which is already showing potential for whole new dimensions to its business model.

But potent markets are by nature competitive ones. And that means buyers and investors wanting a slice of the pie.

That’s led to a recent burst of M&A activity in gaming, as smaller studios are sold to larger publishers. This brings us back to Hollywood’s 1960s homogeneity. Because having bought in, these larger publishers not only centralise functions  often laying off staff – but typically display greater caution over ‘box office risk’ too – as with cinema, you can hype a film as much as you like, but it’s no guarantee you’ll sell enough tickets.

This, in turn, has led to an increasing conservatism. Larger publishers tend to see risk in pushing an unknown entity to consumers whose domestic budgets are tight and for whose attention the competition is fierce. Ultimately, that puts a premium on recognised titles and popular pre-existing game brands.

“There are tens of thousands of new games released each year,” says Nick Button Brown, an investor into groundbreaking interactive education company Brainspark Games. “Yet it’s getting harder to discover new games. Players are sticking to the familiar box office ones. A huge portion of global games income is generated from under 100 games.” 

In other words, consumers feel like there is too much choice, though not necessarily enough differentiation. 

But this entrenchment also brings opportunity.

Those redundancies made by established publishers and studios have seen a lot of new incorporations, as those laid off start new companies. The numbers are astonishing – currently around 500 new gaming businesses, per quarter, across the UK.

These startups – the Spielbergs of our story – have advantages of their own. The combination of experience and knowledge with the agility of smaller challenger start-ups is powerful as they access the well-developed consumer market for new games.

The nuance here will be in developing new games that people want to play, not providing a repeat within the parameters of big brands. Speaking to our clients, it’s clear some have already seen the potential for smaller houses to commit to creativity.

But if there are similarities, there are also differences from cinema 50 years ago.

Today, independent creators, often supported by venture capital, are able to connect directly with their audience, gauging demand and integrating products and sale-points on their platforms.

This allows them to build revenue quickly and keep funds in-house – a capability that’s helping them capture new demographics that were not previously targeted by big game houses.

“The games industry is really exciting right now because of how it’s opening up to all kinds of new audiences and new types of talent,” agrees Michael French, Head of Games & Director of London Games Festival on homegrown talent.

Mobile gaming is the best example of this phenomenon. Robin Milton, Founder of Fairer Games, describes her experience as a small producer, highlighting the sector’s potential, the democratisation of creative development, and the need for further developer diversity: “Each year there’s more cutting-edge software becoming available for free – you’re seeing a rise in creativity and a greater diversity of the people who are making the games.” 

And so the stories announcing studios reducing staff are accompanied by optimism among SMEs.

Because as investors look to take advantage, they are getting on at the ‘ground floor’ these SMEs represent. They’re doing so by partnering directly with this new breed of founders and developers who have a proven track record. So these small studios’ new growth is increasingly supported by focused funding.

The field is set for these new players to flourish. A Spielberg Moment indeed. 

But there’s another major force behind today’s UK gaming scene that Steven Spielberg and George Lucas didn’t have back in ‘70s Hollywood.

The potential for AI is huge – not only to transform the games themselves, but their platforms, distribution and marketing potential.   

But the really exciting question is whether larger, well-capitalised, organisations with legacy processes are best placed to take advantage of AI’s power, or whether more nimble producers will be able to build better games through it.

And there are bigger questions still.

Who can construct a better AI-enabled game production line? Who can white label a gaming AI? How will policy support responsible AI? How will best practice be established within the industry? What will consumers expect from AI?

“AI will impact games, says one Coutts client, “hopefully making games even better for less.” But it’s a testament to how rapidly AI’s capability is evolving, that we simply can’t say with certainty where it’s heading.

What does seem likely is the further democratisation the interactive entertainment industry.

AI is lowering barriers to entry and enables faster and more specified products. (In 18 months’ time we may even see people making games through AI the same way they draft documents today.) This in turn should support gaming collaborations in other sectors, from education to security.  

Supporting British gaming, and players looking to grow within it, has never been more important.

Having been in the interactive entertainment industry for eight years, NatWest has been able to partner with a series of extremely successful founders, developers and publishers, helping them realise business journeys yielding hundreds of millions. And on the investment side, we can help customers understand the industry as a prospect, too.

“It’s critical to have financial partners and banks that do understand the creative sector and gaming in particular,” says Neil Bellamy, National Sector Head for Tech Media & Telecom for NatWest, whose team work closely to support IE entrepreneurs.

“We are seeing a very strong bounce-back, post-Hollywood strikes, across the creative industries as a whole,” he says. “The creative industries were named as a key growth sector in the UK government’s industrial strategy – so we are getting behind that effort and are forecasting a significant contribution of the sector to the national GDP.”