The UK video game industry generated £8.76 billion in 2025, up 7.4% on the previous year, according to industry body UKIE. Grand Theft Auto, Tomb Raider, and Football Manager were all made here.

Yet while France's government publicly celebrates studios like Sandfall Interactive, nominated for 12 BAFTAs for Clair Obscur: Expedition 33, British developers are navigating a record employment downturn and an investment drought driven by the AI gold rush.

Two Point Studios, which British developers Bullfrog and Lionhead veterans established in 2016, launched its operations from a Farnham, Surrey, location with eight staff members. The company currently has approximately 50 workers.

The studio's third BAFTA Games Awards nomination for the British award occurred when its most recent game, Two Point Museum, received nominations for Best British Game and Family Game at this year's ceremony.

"We've wanted to stay a very bijou, boutique studio," co-founder and director Gary Carr told BBC Newsbeat. "We're not too big; we're quite keen to stay a sensible size where everyone feels involved."

Design director Ben Huskins added that the south of England's development scene anchored around Guildford and its surrounding towns remains one of the most collegial in the world. Studios including Supermassive, Hello Games, Glowmade, and Ustwo have all grown within the same network. "We all have worked together at some point," Huskins said. "We look after each other."

The optimism inside studios like Two Point exists alongside a harsher reality. Industry body TIGA has warned of a "record downturn" in employment and a "collapse" in new start-up formation across the UK sector. The cause, according to game writer and journalist Alanah Pearce, is largely structural.

"Most of the investors who are propping up the games industry have frankly fled to AI to a tremendous degree," Pearce told BBC News. Publicly traded companies, she said, have become "very nervous to make anything that isn't almost guaranteed profit", a near-impossible bar in a market competing with TikTok, AI apps, and an ever-expanding library of rival titles.

The squeeze runs from major publishers down to independents. "All the bigger companies, but it goes the whole way down to indies as well, just got scared," Pearce said.

Announced during London Games Festival, the government's new £28.5m games fund offers grants of £20,000 for new studios and up to £250,000 for companies looking to scale. Creative Industries Minister Ian Murray acknowledged that the value of video games to the British economy had been "overlooked for too long".

The independent studio received "really generous" funding, according to indie developer Adam Riches, who developed Loco Motive, which received an IGF nomination from Robust Games. Christopher Dring from The Game Business found the research to be "a strong statement from the government that it is taking video games seriously as an economic and cultural force", although the research funding was limited compared to what the government provides for film and television projects.

The BAFTA Games Awards take place on April 17 at Queen Elizabeth Hall in London. The Clair Obscur: Expedition 33 nominations, together with Britain's industry present situation, will create a dual function at the ceremony which will display the sector's current identity while also honouring its accomplishments.

© The News International