Dundee’s expanding gaming sector does look to have helped turn the city’s fortunes around. Now policy should attempt to broaden its sources of growth to encourage the further expansion of its economy.
Dundee is famous for its video game industry – illustrated by Keir Starmer giving it a name check in his recent speech. The Scottish city is home to several studios and is responsible for video games such as Lemmings, Grand Theft Auto, and Minecraft. But what impact does this have on its wider economic performance?
There is undoubtedly a locally significant clustering of gaming companies in Dundee. According to Data City – a company that has developed Real-Time Industrial Classifications (RTICs) as an alternative to industrial classifications by ‘web-scraping’ words from company websites – there are at least ten gaming companies with a registered address in Dundee. This is the highest share of gaming companies per working-age population of all British cities; around three times more than Brighton, the second-highest city.
Employment data also supports this and shows how the sector has grown in recent years. In 2010, the gaming sector accounted for 0.1 per cent of all private sector jobs in Dundee, the fourth largest of any city in Britain. It became the city with the largest share by 2013 and by 2020, as Figure 1 illustrates, 1.1 per cent of all private jobs in Dundee were in the gaming industry, significantly above the national average.
Source: NOMIS. Gaming includes the following sectors (2007 Standard Industrial Classification, 5 digit classification): Ready-made interactive leisure and entertainment software development and Publishing of computer games. Private sector jobs excludes ‘Publicly-funded services jobs’, further details can be found in Centre for Cities data tool.
When compared to cities and large towns (outside the Great South East) with a similar number of jobs, the role of Dundee’s gaming industry becomes more evident. Figure 2 shows that Dundee was one of the few cities which saw knowledge-intensive service (KIBS) jobs play an increasing role in its economy in the last decade. And of this increase, around half of that increase is explained by the gaming industry. The increase in gaming jobs alone (one percentage point) was larger than for all KIBS sectors in the cities analysed, except for Birkenhead.
Source: NOMIS. Gaming includes the following sectors (2007 Standard Industrial Classification, 5–digit classification): Ready-made interactive leisure and entertainment software development and Publishing of computer games. Private sector jobs excludes ‘Publicly-funded services jobs’, further details can be found in the Centre for Cities data tool. Dundee and nine cities with the lower number of total jobs outside the Great South-East.
‘Exporting’ activities such as gaming tend to have higher productivity levels and growth rates, so improving a city’s productivity is dependent on the growth of this part of its economy. In 2004, Dundee’s productivity was the lowest of all British cities and large towns. Since then, as Dundee increased its KIBS jobs (especially gaming), real productivity has grown by 57 per cent. This was one of the fastest increases of any city in the country and meant that it went from trailing its comparator cities in Figure 3 to leading them.
Source: ONS, NOMIS. Centre for Cities calculations. Productivity calculations based on GVA (chained volume measures in 2016 prices) and total hours worked. Dundee and nine cities with the lower number of total jobs outside the Great South East.
In the 1980s, Dundee’s gaming sector started with just a few firms, such as DMA Design. It grew as new firms – such as VIS Entertainment (1996) and Denki (2000) – were subsequently founded by former employees. Although DMA Design (currently Rockstar North) moved its HQ to Edinburgh in 2000, this has not stopped the growth of the sector in the last decade (Figure 1 above).
Its more recent growth appears to have in part been helped by the university. In 1997, Abertay University became the first university to offer gaming-related degrees. The university also accommodated some firms on its premises over the years. Since then, new gaming firms have been founded by its alumni (e.g. Yoyo games, Pocket Sized Hands) and it attracted a major international firm.
There are though two notes of caution when looking at gaming in Dundee. The first is that, while it is significant locally, it is very small in a national context. In 2020, it accounted only for 2.7 per cent of all British jobs in gaming. The sector is dominated by London: around one-third of gaming firms have their registered address in in the Capital, which accounts for 22.5 per cent of all jobs in the industry. This is followed by Edinburgh, Manchester, and Liverpool.
The second is that while the growth of gaming is certainly good news, its growth in the absence of other knowledge-based activities leaves the city dependent on it. It also means that its overall share of knowledge-based jobs is low – it ranks 53rd out of 62 for its share of knowledge jobs more generally and helps explain that despite its strong growth in productivity in recent years, levels of productivity are still below the national average.
The history of cities that are overly dependent on single industries is not a hopeful one. Dundee is better off for the growth of its gaming industry but for local policy makers the goal now should be encourage a broader number of industries to complement the growth in gaming.
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