Specialist R&D Tax & Grant Funding Advisors

How e-sports impacts the gaming industry

E-sports is a relatively new phenomenon, but thanks to the likes of YouTube and others its popularity has now grown to become a billion dollar industry.

Barrie Dowsett

Chief Executive Officer


E-sports is a relatively new phenomenon, but thanks to the likes of YouTube and others its popularity has now grown to become a billion dollar industry. It’s a particularly inclusive way to enjoy sports, as you don’t have to be a certain height, weight or athletic standard to join in; it’s open to all and is highly engaging.

But what is e-sports?

Short for “electronic sports,” e-sports makes video gaming online a spectator activity. People gather online to watch a professional sporting event of some kind, but instead of being there physically, spectators watch professional gamers playing each other online. Admittedly it sounds a little odd; why would anyone want to watch random strangers playing video games? But actually, if you think about it, it’s only like watching your favourite tennis player scoring a point or a football player scoring a goal. You marvel at their skills and dedication to their cause. Over time you start to follow their progress and they’re no longer strangers - and it’s easy to get hooked!

Why are e-sports growing in popularity?

Being an e-sports spectator is fun, adrenaline-filled and very sociable too - just like any other sport. However, e-sports has far fewer limitations, and is not dependent on culture, age, gender or geographical location. It’s also very fast paced and scalable, due to the fact that it relies on digital technology alone. There are no physical boundaries either, for example a game can have a limitless number of players that would never actually be able to fit in a real-life sports court.

What are the challenges that e-sports developers face?

With e-sports having a global appeal, companies working in this sphere will face a number of challenges - not least how to meet a multitude of international gaming requirements, styles and needs. The genre appeals to a huge number of people from all walks of life, all cultures and all expectations. E-sports audiences also tend to expect different things from their viewing experience compared to spectators of more traditional sporting events, for example more interactivity. It’s an emerging market still, and many companies don’t know if a concept or piece of software will be a success until they’ve tried it.

With the new e-sporting era comes a whole new fan base, with some fans playing very regularly and following all the news, and others who simply dip in and out. This brings with it a whole new set of challenges around marketing and games development, as different types of fans will have different interests and experiences.

The future of e-sports

Whether it’s a real sport or not is still a hot topic, and many people consider it a negative influence - but one thing we can be certain of is that e-sports is here to stay. Various educational centres around the world are beginning to develop degrees and study programmes in e-sports, just as they have always done for traditional sports. Based on a student’s natural sporting ability, academic grades and team contributions, they are backed by a number of game analysts, coaches and talent scouts.

Staffordshire University here in the UK already offers a host of games development, computing and design courses, but it’s also leading the way in offering a BA (Hons) degree in e-sports. The course is now in its second year and focusses on the business side of e-sports, including how to develop teams and manage fan bases, organise event and host tournaments. It also goes into detail about game genres, digital marketing, streaming and much more. With the popularity of the course growing, no doubt more educational institutions will follow suit in the years to come.

In terms of the games themselves, many companies are now working on creating a larger number of diverse games to appeal to a range of different preferences and age groups. As time goes on, e-sports will be less about niche or highly skilled gamers who can game for 2 days straight without a bathroom break. Instead it’s likely to become popular with younger children and with those who have little interest in gaming or sports at all, but who enjoy the fun, social opportunities and relaxation that e-sports brings.

VGTR and R&D Tax Credits

Since the early 2000s, the UK has offered a number of tax relief incentives to help companies develop and grow through scientific and technological advancement. This means that companies in the gaming industry, and software developers, could stand to gain a serious financial boost. The R&D Tax Credits scheme came first, but when the Video Games Tax Relief (VGTR) was subsequently launched in 2014, it made a big difference to the way that many games companies claimed R&D tax relief.

It’s an extremely complex, time consuming area, and for many gaming companies compiling a tax relief claim is daunting. Identifying and separating out costs associated with each game necessitates thorough investigation and in-depth tax knowledge. There’s an awful lot of uncertainty and grey areas, and total accuracy is paramount.

Which option is better in terms of money?

As VGTR is less generous than R&D Tax Credits, it’s vital that companies consider which scheme (or combination of schemes) best matches their specific circumstances. Typically speaking, video game developers will most benefit from claims made under the R&D Tax Credits option (rather than VGTR), if the work completed is eligible. However there will be times when VGTR can still bring about substantial sums of money and it is possible to claim them both in certain circumstances. This is why it’s very strongly recommended you speak to R&D tax relief experts like ourselves before any claim is started.

How Myriad Associates can help

Made up of a highly skilled and experienced team of accountants, specialists and R&D tax advisors, we will work with you in putting together an R&D Tax Credit and/or VGTR claim. Using our comprehensive knowledge, we’ll show you where you can claim, how much for, and what you need to do for the maximum chance of success.

Pick up the phone and call us now on 0207 118 6045 or use our contact form to get the ball rolling. Financially speaking, it could be the best decision you make this year.

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