Winning Strategy for the Games Industry

Germans are mad about games of all varieties – this has become evident during the corona lockdowns. And Brexit has increased Germany’s appeal as a location for international game developers, producers and marketeers.

August 2021

Germany is not the first country you might associate with light entertainment. But Germans are avid game players, representing the world’s fifth largest market behind China, the US, Japan and Korea. It’s a trend that has only increased during the pandemic, as people have been forced to spend more time indoors.

None of this is news to Ubisoft Blue Byte, the maker of such games as Rainbow Six Siege, Beyond Medusa’s Gate and The Avatar Project. The German subsidiary of Ubisoft, the world’s largest game developer, actually scaled up its three German studios in Berlin, Düsseldorf and Mainz last year, while some businesses were trying to just hold on. Since 2015, Ubisoft has more than doubled its German-based developers to 680, and expects to be up to 1,000 by 2024.

Ubisoft isn’t alone. The German Games Industry Association – which represents the computer games industry – reports that its members are quite optimistic about their business prospects, with 70 percent expecting growth in 2021 and 45 percent planning to hire more staff. Not bad considering the pandemic-driven economic downturn. But there is still headroom to grow. “The share of German-based companies’ games in the domestic market has hovered below five percent,” says the association’s managing director Felix Falk. “So there’s a clear urgent desire to release the brakes through public game funding and to level the playing field compared to other markets.”

A colorful character at gamescom, the world‘s largest computer games trade fair at the Koelnmesse congress center in Cologne. © picture alliance/Geisler-Fotopress/Christoph Hardt

Serious commitment to fun

The German government is well aware of the considerable economic clout of an industry devoted to leisure time. Last year, during the second coronavirus wave, which was accompanied by a gaming boom, it launched a five-year program of EUR 50 million in annual subsidies to help game developers. These funds help protect companies against many of the inherent risks that are associated with games development, such as the need to pay fixed salaries between projects in order to retain talent. “The new funding program adds to Germany’s strongest selling point of robust growth in an unsaturated market,” says Ubisoft Blue Byte Managing Director Benedikt Grindel. “It can help us in scaling up projects from prototype all the way to the production stage, which is otherwise risky.”

The Bottom Line

Germany’s games market is already the fifth largest in the world. But now, thanks to Brexit, the coronavirus pandemic and government support, this unsaturated sector is all set for unprecedented growth.

Germany’s biggest gaming competitor in Europe is the UK. But Brexit and the high costs of maintaining studios in London may change that, says Oliver Wilken, GTAI senior manager for the digital economy. “When foreign games companies were considering investing in Europe, they tended to look at London first and then at eastern Europe, where there may be deficiencies in terms of ease of doing business. Germany is now positioning itself as the optimum choice.”

Businesses with international sales and distribution know-how are also in demand since the German games sector is still lacking the business case and marketing experience that can be found in East Asian countries.

32%

Games market growth in Germany in 2020
Source: German Games Industry Association

41,3%

Federal Republic of Gaming: Germany has 34.3 million gamers, or 41.3 percent of the population. That’s roughly equal to the combined populations of the Netherlands, Belgium and Denmark.

Source: German Games Industry Association

A Shot in the Arm

The German government’s new funding program for game developers totals EUR
250 million. It injects EUR 50 million annually in grants to specific projects, covering up to 50 percent of investment.

The definition of a project is wide, including new projects, project segments, expansions of existing projects or prototypes.

The projects are required to pass a “cultural test” as part of the funding application. This set of questions helps the government to assess whether the games serve the ideal of cultural advancement.

In some cases, at least half of the team members must primarily reside in Germany, be taxed there or be otherwise familiar with German culture, for instance, having studied and acquired qualifications in Germany.

Team members must fall under one of the following categories: producer, art director, technical director, leading texter, author, concept developer, composer, sound designer, game designer.

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