65% of studios in the UK employ four or fewer people, according to new research from the country's games trade association TIGA.
The number of micro-studios has increased from 60% in 2014. TIGA added that 16% of studios employ 15 or more people, and only 2% employ more than 150 people.
“The prevalence of micro-studios reflects the popularity of mobile games development and a strong start-up culture in the UK’s games industry," said TIGA CEO Dr Richard Wilson.
"There are now 688 games development businesses in the UK, up from 664 in 2014.
“Small studios play an important part in creating jobs and promoting innovation. Yet they are also vulnerable.
"Over 130 games companies closed down in the year to March 2016 (nearly 12% of the entire studio population). 69% of companies closing down had under five staff, which demonstrates that the smallest companies are the most vulnerable, especially when self-publishing."
However, while there are more micro-studios than before, the larger companies are hiring far more people, and have helped the number of developers in full-time roles in the UK reach almost 12,000.