Game On

The gaming industry in Germany is enjoying exponential growth, driven by diversification of platforms and new niches, as well as a surge in “middle-youth” players. With investment opportunities opening up across multiple niches, the virtual world offers real returns.

June, 2018

The world of investment is full of references to gambling and game theory: you “hedge your bets,” you “stick or twist” but ultimately you will have to “back your horses.” It’s an inherently risky business and strategies may be taken to their end game or abandoned mid-way.

The gaming industry in Germany, however, is actually one of the safest bets for investors looking for relatively quick wins, new levels of excitement and high prizes.

Gaming enthusiasts queue outside Gamescom 2017, the world’s largest computer game fair on the grounds of Koelnmesse, Cologne. This year it runs from August 21 to 25.

© picture alliance/Geisler-Fotopress

Germany is Europe’s largest gaming market with over 34 million computer or video gamers – a number growing by the minute – and it has seen a greater surge of online games than any other European country.

Statistical data also dispels the notion that this is solely a market for bored teenagers and geeks: the average age of a German gamer is 35, while the fastest-growing (and biggest) group of players is the 50-plus bracket, according to statistics from the former Bundesverband für Interaktive Software (BIU) for 2016. It’s a huge market of willing customers who are ready and waiting to be entertained, and is full of niches to be explored and new values to be created.

Rapid market developments

Perhaps in response to this – and befitting an industry that can hardly be regarded as niche any more – the two industry associations, BIU and GAME, merged at the end of January under a new moniker: “game – the German Games Industry Association.”

“It is a historic day for the German games industry as a whole,” says Felix Falk, Managing Director of the new organization. “The forward-looking merger of the two associations unites the industry, enabling us to advocate jointly, and therefore even more persuasively and powerfully, for the interests of the entire German games industry.”

Those interests are significant. Germany has the most internet users in Europe and the largest physical population, and therefore holds significant potential for more business.

Its mobile device market is also growing rapidly: traditional sales of physical or downloaded games accounted for 63.2 per cent of revenues in a €1.9bn market in 2015, according to game.

The German games market is founded on a winning combination of moderate costs, excellent infrastructure and a large talent pool of technology specialists, which is why Germany’s digital hubs in Berlin, Hamburg and Munich are attracting so many innovative startups.

But it’s the multiple niches that exist within this market, and the opportunity to create new high-value ones, that make Germany so appealing to investors and international gaming companies.

2.13 bn

turnover from games software sales (including in-game purchases) in Germany in 2016

The more people play and interact, the more value-creation opportunities are generated within the game development world. It’s an industry that is capable of sustaining exponential growth.

Sales of apps and items drive growth

Game apps are one of the greatest drivers of growth in the computer and video games industry, as well as in the mobile ecosystem of smartphones, tablet, app stores and the mobile internet. The market for in-game purchases and “item selling” such as more lives, unlocked levels and virtual equipment was worth €562m in 2015, up from €209m two years before.

While the PC remains the top gaming platform, game estimates that the number of gamers on smartphones increased by 14 per cent between 2014 and 2016, while the number of tablet gamers increased by 44 per cent over the same period.

“Gaming and related services is actually a bigger market in Germany than, for example, the movie industry,” says Oliver Wilken, Digital Economy Manager at Germany Trade & Invest. “Germany attracts international gaming companies with its highly-skilled and internationally-minded workforce, its state-of-the-art IT infrastructure and government support, as well as numerous gaming industry events, such as the world-renowned Games­com in Cologne in August.”

“Casual gaming, social gaming and free-to-play MMO (massively multi-player online) games are driving this growth. The increasing number of smartphones in Germany has resulted in greater demand for mobile games – and it has opened up completely new customer groups.”

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