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Britain’s computer games industry is in danger of losing out to competition from Canada and Australia as countries vie to attract talented developers.

In the latest sign that the UK is losing its hold, SCi Entertainment, the country’s biggest games publisher and owner of the blockbuster Lara Croft Tomb Raider franchise, is to open a studio of 210 developers in ­Montreal.

Many in the industry think the government should be doing more to support the burgeoning games industry. According to Tiga, the trade association for UK games developers, the number of independent studios has shrunk from about 400 in 2001 to just 150 today.

The Tomb Raider titles – which celebrate their tenth anniversary this year – are now developed in California. Hitman, another blockbuster series for the company, is made in Denmark. Once SCi’s Montreal studios are fully staffed, only about one-fifth of the company’s more than 800 developers will be based in the UK.

For further expansion Jane Cavanagh, chief executive, said she was looking at locations such as China rather than Britain. “The UK still has a good talent base, but other places are making a concerted effort to draw talent,” she said.

Montreal is offering to pay about 40 per cent of the salaries of the SCi developers and to give them a tax holiday for three years. Such grants have also enticed global publishers, such as Electronic Arts of the US and Ubisoft of France, to set up in the city.

In Australia, the state government of Victoria is setting up incentives, such as providing A$375,000 (£156,000) over two years to help fund local games development, attracting Atari of France and THQ of the US to the region.

Ms Cavanagh said the UK should consider giving tax breaks to games companies, as it does to the film industry. UK Trade and Investment, the government body responsible for helping businesses locate in the UK, is understood to be examining the issue, with a report due before the summer.

“The UK has a fabulous track record for creating genre-defining games and it would be very easy to rest on our laurels and say look at Lara Croft and Grand Theft Auto,” said Rick Gibson, an independent games analyst at Games Investor Consulting.

“But the market for games development is getting increasingly competitive, with the advent of major government intervention in places like Quebec and ­Victoria.”

The UK’s independent games developers have long been under pressure from the cost of producing games for new consoles. Creating a game for the latest and most sophisticated consoles – Sony’s PlayStation 3 and Microsoft’s XBox 360 – takes a team of 75 to 100 developers compared with about 30 for previous platforms.

A number of British development studios, such as Argo­naut and Warthog, have gone out of business in the past few years.

Others have been taken over by large foreign-owned organisations such as ­Microsoft, which bought Peter Molyneux’s Lionhead Studios.

UK developers still create groundbreaking games. For example, Singstar, the karaoke game for the Sony PlayStation, was created in London. But the game’s development team was part of Sony and the intellectual property belongs to the Japanese company.

Increased foreign ownership could make the UK industry vulnerable, warned Fred Hasson, chief executive of Tiga. “People are beginning to question the skills base of the UK and the cost of being here. EA and Take 2, for example, have recently moved their European headquarters from the UK to Switzerland,” he said.

Shaun Woodward, the creative industries minister, has said he is looking at ways to support the ­industry, including the creation of a national “academy for geeks” to train people for the games sector. He also wants to encourage venture capital funding of games companies.

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