Figures released by TIGA the number of creative staff in studios grew from 8,888 to 9,224 in 2012, ending a three-year decline in employment.
Annual investment by studios also rose from £411 million to £427 million between 2011 and 2012.
The research is based on an extensive survey of UK games businesses conducted by Games Investor Consulting and published by TIGA, the trade association representing the games industry.
The results will be published in the forthcoming report Making Games in the UK Today. A Census of the UK Developer and Digital Publishing Sector.
Figures also show the number of jobs indirectly supported by studios rose from 16,250 to 16,864; studio numbers rose from 329 to 448; direct/indirect tax revenues generated by the sector for the Treasury increased from £376 million to £400 million; annual investment by studios rose from £411 million to £427 million; and the sector’s contribution to UK Gross Domestic Product increased from £912 million to £947 million.
Dr Richard Wilson, CEO of TIGA, said: “The UK economy may be on the verge of a triple dip recession but the recovery in the UK games development sector has taken off. Employment, investment and start-ups are up. The games development industry is growing again.”
He said the growth was due, in part, to the increasing prevalence of mobile and tablet devices which have created a growing market for games. Studio were, he claimed, being set up to meet this demand.
But he added there were other factors. “The closure of big console based studios has been followed by an explosion of small start-up companies and the advent of Games Tax Relief, which TIGA was instrumental in achieving, is already stimulating growth.”
Games Tax Relief, which comes into effect in April, will reduce the cost of games development. TIGA says it has contributed to inward investment by major international games companies including Activision Blizzard, Gree, Konami and Microsoft in British studios in 2012.
“Jobs and investment in the games industry are set grow further once Games Tax Relief comes into effect from April 2013,” Dr Wilson said. “The UK games industry suffered badly during the last four years without Games Tax Relief: developer headcount and investment levels remain below the 2008 peak. Additionally, start-up studios are vulnerable. At least 21 per cent of start-ups in 2010 – 12 have already gone under. Our challenge now – and TIGA’s top priority – is to help build sustainable independent games development and digital publishing businesses. TIGA will do this by delivering services that improve developers’ access to finance and which enhance their commercial skills.”
The news has been welcomed in the industry. Jason Kingsley, CEO and Creative Director at videogame company Rebellion, said: “The UK games development sector is back on track. Mobile and internet based gaming provide opportunities for growth; we have access to a highly skilled and creative workforce; and TIGA’s Games Tax Relief will give a further boost to employment and investment from April 2013. The UK has everything to play for.”
The news comes as Chancellor George Osborne says he will be forced to reveal a downgraded growth forecast and a £8 billion borrowing overshoot in this week’s Budget.