The UK game industry faces being overtaken by Korea, Canada and China in 2009 and dropping to fifth place in global rankings, according to a report by NESTA.
The report, Raise the Game, cites a skills shortage, funding crisis, a lack of global scale publishers and poor online development in the region as the cause of the decline, which would represent a drop of two places since the UK fell to third place in 2007.
"UK videogames producers are recognised to be amongst the most innovative in the world. Our recommendations offer ways that the Government can boost the power of this sector so that we maintain our strong global position," said Jonathan Kestenbaum, chief executive of NESTA.