The computer games industry in Dundee has been jolted by the announcement that leading firm Denki has been forced into a major restructuring which could lead to three-quarters of the workforce losing their jobs.
A consultation is under way, but it is understood that as many as 19 of the 25 staff employed at the independent developer are to be let go after it failed to find a publisher for its latest project.
“It’s with a heavy heart that I have to announce a major restructuring of Denki that will inevitably involve losing many of our supremely talented colleagues-not to mention friends-from the team,” said managing director Colin Anderson in a blog on the company’s website.
“After 10 years in business and despite weathering some truly awful periods in the industry during those years, it’s the first time we’ve been forced to take such extreme measures.
“So it’s probably a good indication of just how tough the market conditions are becoming for mid-size developers at the moment.”
Denki was founded by former employees of DMA Design, now known as Rockstar North, which was responsible for creating Grand Theft Auto and Lemmings.
It has been involved in creating TV-based games for Sky, and more recently completed Quarrel for the Microsoft Xbox.
Mr Anderson said, “The main reason is that Denki has been running on an old business model.
“We rely on ‘the industry’ for funding. Which wouldn’t be so bad, except we’re making games for people who love games which isn’t necessarily ‘the industry’ unfortunately.”
He said the decision to restructure and scale back the business based in West Bell Street had been “extremely difficult.”
“It’s hoped this will give Denki the opportunity to build itself back up with a different business model as a publisher of an entirely new category of game,” he added.
TIGA, the trade association representing the UK’s games industry, said it had been a “difficult last few years” for some companies.
“Since July 2008, 7% of people working in the industry in the UK have lost their jobs,” said chief executive Richard Wilson.
He said this was largely the result of the tax regime in the UK, where gaming companies didn’t have the advantage of relief afforded to their counterparts in places such as Canada.
That situation is now to change, and it is expected there will be benefits for companies in Dundee.
Useful link: Denki, downsizing and the bleak future for mid-sized developers