The games industry is looking at Hollywood production models as a way to overcome the cost-ineffectiveness that marks the current game studio model. Gamestate magazine argues that business models for the gaming industry has not changed much in three decades. Typically built around a core technology team, gaming companies have much in common with traditional software developers that mechanically update databases. However, as roles and skills become more specialised, the cost of human capital is rising so much so that the structure of movie production companies is starting to look appealing. Instead of being large and inflexible companies, film production occurs via loose networks of individuals who come together for a project, disband upon completion, only to regroup in a different array for the next project.
Some of these competitive issues faced by game companies worldwide are common to the creative industry within the Highlands & Islands as well. Market conditions is increasingly one of high fixed costs, and relatively low variable costs, plus the need for specialised talent (which are often in short supply) for a limited time periods. While distance and modest markets have conspired to keep Highlands & Islands companies from reaching the economies of scale necessary in traditional industrial growth, it also meant that the region’s companies tend to be more loosely coupled, and used to ceaseless foraging in comparison with major market firms. What was once a weakness can potentially turn out to be a strength as success for firms today becomes more a matter of agility, and less an issue of size. In addition, the dynamics of growth too are now on the side of small firms, with small companies outperforming larger firms in the FTSE over the past few years.
Despite all the signs for optimism, the region still needs the accumulation of sufficient numbers of precedents of collaborative successes before its potential for a flourishing creative industry can be successfully catalysed.
How far away you think that day is will probably influence the way you decide to place your business bets.
