Annual Report of the German Games Industry 2024

Editorial

Dear readers,

The past year was particularly challenging for games companies. Many companies around the world had to cut jobs, and in some cases game development studios shut down entirely. There are a number of reasons behind this. While many games markets largely maintained their high level of growth after the Covid-19 pandemic, the trajectory in other countries dipped slightly. At the same time, the investment climate has worsened significantly, due in part to the war in Ukraine, months of high inflation and the resulting high interest rates. The rash of postponements in the years of the pandemic contributed to more top-class games being released in 2023 than ever before in a twelve-month period. This abundance on the market meant that many games – even some with top ratings – fell short of the sales success that the studios had hoped for.

All of these factors have left their mark on German games companies. A look at our game industry barometer shows just how difficult the companies consider the situation to be. According to this survey, only 12 per cent of them expect the German games industry to develop positively in 2024, as compared to 48 per cent a year earlier. This is because the deterioration in the international investment climate is hitting development locations like Germany especially hard. If the general conditions for game development in Germany are barely competitive internationally, times like these make it even tougher for studios here to attract collaborating partners and publishers. This illustrates yet again the great importance of reliable, predictable and internationally competitive framework conditions.

We are still a long way from achieving this – as indicated by the international comparative study of games locations carried out on behalf of game jointly by Nordicity and Goldmedia, in cooperation with Games Germany, the association of state-level game networks and funding bodies. Even without the current funding application freeze, Germany’s games funding situation would still place undue constraints on our competitiveness. This follows from the uncertainty in the sector caused by the ongoing lack of clarity around the availability of already-approved funding. All of which stands seemingly at odds with the evaluation of the funding programme by the Federal Ministry for Economic Affairs and Climate Action showing unequivocally that the games industry has delivered. A summary of the findings of the study with regard to the effects of games funding to date: more games developed, more employees hired and more sales achieved.

The fiscal policymakers in the German Bundestag are well aware of the importance of the funding for games companies when it comes to Germany’s standing as a games location. Despite these financially demanding times, they have appropriated additional games funding for the second time in a row – in the amount of 33 million euros per year! This clear signal in turn calls for action by Minister of State for Culture and the Media Claudia Roth, whose ministry, in an unexpected change, is the one to have received the funds. We now finally need answers to the questions of how and when these funds are to be allocated to games companies.

Even in the face of the major challenges currently facing the companies, the medium-term prospects for the games industry remain good. While the current wave of consolidation has also affected studios in Germany, employment figures show that its overall impact here has been less severe than in other locations. One reason for this is that many games companies in Germany are currently in the middle of projects that have received funding. This is clearly a stabilising factor. A look at game markets globally offers additional reason for hope. The post-pandemic growth slump now appears to have been overcome and forecasts indicate an upward trend. The German games market made strong gains again in 2023. Sales of games, games hardware and corresponding online services increased by a solid 6 per cent, to 9.97 billion euros. Among the largest drivers of this growth are game consoles and related accessories, as well as in-game and in-app purchases.

A further reason to look to the future with optimism was gamescom 2023, which once again made a huge leap forward. In established areas of strength, it went on to set new records, drawing more exhibitors from more countries than ever before and reaching millions of people all over the world. The global relevance of gamescom is also demonstrated by the many internationally renowned industry leaders who were there in person. gamescom 2023 had attracted over 330 million digital views, with some 320,000 visitors attending on-site in Cologne.

In recent years in particular, international attention for gamescom has increased significantly. Together with our partner Koelnmesse, we aim to take yet greater advantage of this global appeal. As of June 2024, gamescom asia in Singapore has been joined by a second international satellite event: gamescom latam in São Paulo, which is tailored to the particularly dynamic and fast-growing games market in South America. In keeping with our conviction that games are an emotional and social medium, we see continued importance for on-site events in the games industry, even in times of widespread live-streaming. Anyone who has been to gamescom has experienced the unique community feeling, the positive apprehension of the here and now and the hunger for the future that it fosters. In these times, especially, you can never get enough of that.

This annual report offers an overview of these and many other developments in the games industry in Germany.

I wish you enjoyable reading and interesting insights.