The Directors believe the Group’s competitive advantage lies in its scale, management systems, technology and creative solutions, which enable it to offer flexible co-development and full end-to-end solutions for publishers and other developers. The Company also operates a lower risk contracting model through long-term contracts, which generally have milestone payments.

The growth of digital distribution and backwards compatibility of new hardware releases has resulted in a smoothing of console cycles seen historically and an increase in the demand for high quality creative output from publishers to satisfy consumer requirements. The directors believe that the Company is well positioned to benefit from this growth in demand.

The video games market is also benefiting from global emerging markets. In China, the sale of games consoles was banned in 2000 by the government. However, the ban was lifted in January 2014 and Microsoft entered the market in September 2014 and Sony in March 2015. There is also huge potential demand from South America (+15% CAGR for retail sales, FY16-21, the fastest of all geographies).

The chart below shows the value of the video games market by region, with year on year growth rates.

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