Video games: How the German gaming industry is trying to catch up

Video games: How the German gaming industry is trying to catch up

Gone are the days when gaming was ridiculed: video and computer games have long been a billion dollar business in Germany too. But companies rake in the big bucks abroad. That should change.

A lot of money is hidden behind flickering screens, colorful figures and twitching fingers. The Germans spent almost ten billion euros on gambling last year, as the industry association Game recently announced. In the past, only a small fraction of this went to German companies. German games were involved in the home market with just around 4.2 percent, reveal the latest figures collected by the game association from 2021.

Five instead of 100 million euros budget: Germany is lagging behind

According to the association, the games market in Germany has grown strongly in the past, by around a third in the corona year 2020. Sales of German developments, on the other hand, only grew by a good 14 percent at the time. “We’re still lagging behind,” says Jörg Müller-Lietzkow, Professor of Economics and Digitization at HafenCity University in Hamburg.

German games currently do not come close to international major productions such as “Fifa” or “Call of Duty” and development budgets of 100 million euros. One of the larger German publishers and developers, Gameforge, usually invests between 50,000 euros and five million euros in its online games, according to board member Tom Burck.

The company has been based in Karlsruhe for 20 years. Even if business is going well, Burck sees Germany as a difficult location. “If you compare it to the situation in the US or Canada, the whole ecosystem in terms of gaming is very different,” says Burck. He means that there is no heavyweight in the games market with a large pool of specialists in this country. As a result, there is a lack of qualified people. Burck often has to hire people from abroad. According to Burck, the 300 employees at Gameforge come from 32 nations.

Big ambitions, little funding

In order for a gaming location to become attractive and for a local ecosystem to develop, substantial funding is required – researchers Müller-Lietzkow, the Game Association and Tom Burck from Gameforge agree on this. In a global comparison, Canada has been the country with the most intensive funding of digital games since 1997, according to a 2017 games study by the Hamburg Media School. Accordingly, there was a funding volume of 110 million euros in the Canadian state of Québec alone.

In Germany, there has only been nationwide funding for games since 2019. The website of the responsible Federal Ministry of Economics states that the computer games industry not only enables social exchange, but has also established itself as a relevant economic factor. It drives the development of technologies such as simulation, three-dimensional representation and virtual reality.

However, the subsidy is structured differently than subsidy systems in North America. While they rely on tax relief, there is a subsidy pot in this country from which funds are awarded to those who meet the formal eligibility criteria. This year, the Federal Ministry of Economics is allowed to distribute 70 million euros. In addition, individual federal states have their own programs. The highest subsidies are in North Rhine-Westphalia, Berlin and Brandenburg, Bavaria and Baden-Württemberg, they are in the low single-digit million range.

“I think we’re still promoting a little too unspecifically, maybe a little too harshly with the watering can,” says Burck. In addition, the process is terribly bureaucratic. Gameforge received support last year, but has not applied for any further funding at the moment due to the high level of effort involved.

Mobile games dominate the market

Germany was already very attractive as a location, as economist Müller-Lietzkow reports. Hamburg-based companies such as Bigpoint and Goodgame Studios in particular published many successful browser games from the late noughties until around 2013, the expert explains. After that, however, the trend towards video games for mobile phones was not mastered well enough, he continues. The so-called mobile games now dominate the business. According to the latest figures from the Games Association, they account for the largest share of games sales at 2.8 billion euros compared to PCs and laptops as well as game consoles.

The Game Association announced that the effects of the nationwide funding are now being surveyed in a study. This year, the industry is therefore expecting new figures on the share of German companies in the domestic games market. “The first effects of the games funding can already be observed,” reports Managing Director Felix Falk. The number of employees has increased by around twelve percent in the past two years. At the same time, there are 26 percent more companies – and the trend is rising. Gameforge board member Burck also has the impression that since the introduction of nationwide funding there has been a lot going on when it comes to German productions. In his opinion, as a publisher, Gameforge is getting more games from German companies.

“Many other positive effects of the still very young nationwide games funding are not yet visible today,” emphasizes Felix Falk in turn. After all, the development of most games takes several years.

Source: Stern

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