Posted on November 3, 2017 by staff

Former SEGA CEO: Gaming talent driving UK innovation


The former CEO of SEGA for Europe and America believes the UK’s deep seam of video game talent will drive digital innovation across society as it branches out into other sectors.

Mike Hayes is now the digital lead for investment group Mercia Technologies, which looks to scale innovative technology businesses with high growth potential from the UK regions.

Warwickshire-based Mercia has more than 400 businesses in its portfolio, has overseen 11 IPOs and manages in excess of £330 million of third party funds.

Hayes says five per cent of that is with businesses under his remit – a figure he expects to increase with time as digital technologies such as virtual reality impact all sectors and areas of society.

“Forecasts for 2025 show that market will be worth something like $35 billion,” he told BusinessCloud. “Probably only a third of that will be around games.

“I’m confident that the other two thirds will be driven by the skills of these games engineers, who are very good at engaging people, rewarding them to keep them playing – then are able to surprise and delight them with unlockable content.

“Take training, education, health, other services and the military: all of these things apply if you want to engage and educate people. We’re seeing a terrific amount of that at the moment.

“To look around a trench in VR is motivating, but not wholly educational – you’ve got to draw people in, take them on an interactive journey then surprise them so they go back again.

“Whether you’re training someone to work on a factory floor or educating someone in biology in a secondary school, you need these skills to make it interesting.

“The UK is right at the centre and heart of that and there is a great opportunity for us to see how these businesses grow and become dominant in the next few years.

“The amount of dealflow we’re seeing in digital is phenomenal.”

Hayes says that the UK’s gaming talent was slower to adapt its skillset than countries such as Germany and America, owing to its illustrious history as a “hit-driven” industry delivering world-famous games, but has caught up.

Hayes was UK marketing director at Nintendo when the phenomenally popular Game Boy and Super Nintendo launched and also worked at Codemasters.

He then helped lead SEGA’s reinvention as a third-party games publisher after it dropped out of the console hardware market in the face of intense competition from Sony’s PlayStation and Microsoft’s Xbox in the early Noughties.

His hands-on experience was perfect for Mercia’s unique funding model.

“Mercia’s CEO Mark Payton came to me four years ago and said ‘we’ve got a lot of digital dealflow – would you mind having a look at it?’” Hayes explained.

“The whole thing snowballed from doing a bit of consultancy to being a 100 per cent PAYE, helping them out with their digital business.

“Mercia’s strategy is to employ investment directors who have walked the walk. We have either run big businesses in the sector we’re employed in or have built companies ourselves, made some money and now want to help other people.

“My focus is anything where games and games engineers are creating an output – whether that is in entertainment, or solving problems.

“When we find interesting companies, they like the fact we’re able to talk on their terms and can help them. I may have grey hair and look like an old fart, but I’ve got contacts and can help these young entrepreneurs and guide them.”

One of these firms is Farnborough-based nDreams, one of the first UK firms to develop for VR, which Hayes tips for big things.

“We invest early stage but we believe in this buzzword of ‘patient capital’ – we have the ability and the funds to work with the company right through their journey,” he said.

“We invested £200,000 in nDreams back in 2014 and now we’ve invested in excess of £7m into them, across our funds.”

However Mercia’s main focus is outside the South East – with that in mind, the firm doesn’t even have an office in London.

“You have places like Leamington Spa, where there is huge talent but a lack of investment – our regional approach helps these businesses along,” he said.

“There is a firm in Preston which is also flying: its game Soccer Manager Arena is phenomenal and has been hitting the charts high and generating good revenue.”