Long-awaited tax breaks for the games industry have been announced in the budget.
Chancellor George Osborne said he planned to introduce corporation tax relief from April 2013 for the video games, animation and high-end television industries.
The industry has lobbied for such changes for several years.
The chancellor said he wanted to make the UK the technology centre of Europe.
Richard Wilson, chief executive of video games industry trade body Tiga, said: "This is a brilliant decision by the government and terrific news for the UK video games industry. It is also a decisive victory won by Tiga through audacity, determination and endurance.
"Like a boxer knocked down by his opponent, we refused to accept defeat and kept getting back in the ring. This victory will benefit not just the UK games development and digital publishing sector, but also the wider UK economy."
Mr Wilson predicted that tax relief for the video games sector should generate and safeguard 4,661 direct and indirect jobs, offer £188m in investment expenditure by studios, increase the games development sector's contribution to UK GDP by £283m and generate £172m for the Treasury.
In 2010, then Chancellor Alistair Darling promised tax incentives for developers, a pledge that he never delivered because Labour lost the next election.
Bobby Kotick, chief executive of Activision Blizzard, the world's largest video games publisher employing over 400 people in the UK, added described it as "a great first step".
"It should put the UK in a stronger position to compete with other countries offering incentives for video games production. The UK is an important centre for development talent, employing 9,000 people in the video games sector, and anything that promotes further investment should be welcomed," he added.
But Julian David, newly appointed director general of Intellect, the trade body for the UK's technology industry, felt the government could have gone further.
"What we need now is action to turn this vision into reality," he said.
"We need to go much further than today's announcement on the creative industries and broadband and take some real action to optimise the full potential of the entire UK tech sector.
"We have to be world leaders not only in the creation of new technology but also its use and exploitation."
Mr David recommended that the government look at ways to make sure businesses were using the most up-to-date technology, and take further action to aid exports.
The news came as struggling video games retailer Game said that it intended to file for administration.