Annual Report of the German Games Industry 2025

Editorial

Dear readers,

From the perspective of the German games industry, 2024 can certainly be described as bumpy. Although the wave of consolidation in the international games sector slowed last year, projects continued to be cancelled, employees laid off and studios closed worldwide. These developments pose a challenge for the German games industry in particular, which is dominated by small and medium-sized studios that rely to a large extent on international publishers and partners to realise their projects. This is especially true when, as in 2024, an absence of reliable long-term games funding in Germany brings cost disadvantages of 30 per cent compared to relevant international locations.

However, particularly in the second half of the year, there was also good news. On the occasion of gamescom, the new funding guidelines of the then responsible Ministry for Economic Affairs and Climate Action were announced. While these guidelines in part worsened the situation for many companies, they also clarified the conditions that are to apply when the government resumes acceptance of funding applications. And the 33 million euros made available by the German Bundestag to the Minister of State for Culture and the Media one year earlier for the promotion of game development were implemented in exciting form: the Press Start: Games Founding Grant, the first programme to provide targeted support to game developers over a period of a year and a half for realisation of their projects. The overwhelming demand demonstrates that there continues to be a huge desire to develop games and take the leap into entrepreneurship in Germany.

In the midst of this back and forth on games funding, Germany’s governing coalition of the SPD, Bündnis 90/Die Grünen and FDP also collapsed. The budget for 2025 had not been resolved up to that point. This in particular brought added challenges for games companies. As became apparent shortly before the end of 2024, when funding applications could once again be submitted, this uncertainty gave rise to tight restrictions that the practical reality of game development makes virtually impossible for applicants to comply with. As a result, despite the resumption of the funding application process at the end of 2024, many games companies lack the necessary internationally competitive framework conditions. Our game industry barometer showed at the start of 2025 just how negatively companies assess Germany’s international competitiveness.

The development in the number of employees and companies in the sector clearly shows the impact of the difficult conditions on Germany as a game production location: after years of strong growth in some areas, both figures are now declining. The launch of the Federal funding for video games in 2020 was largely responsible for the subsequent boom in start-ups, which in turn led to a significant increase in the number of employees in the industry. Meanwhile, the challenging conditions internationally and the unreliable and unpredictable funding situation in Germany have put an end to this development for the time being.

Against this backdrop, the coalition agreement between the CDU, CSU and SPD following the federal election at beginning of 2025 gives cause for hope. The new governing coalition of Christian Democrats and Social Democrats not only recognises the huge cultural, economic and technological potential of the games industry and its role as a pacesetting driver of innovation, but has also announced the introduction of additional tax breaks for game development in Germany. And less than 50 days after taking office, the new federal government, most notably the federal minister responsible for research and games, Dorothee Bär, followed up on the coalition’s pledge to increase support for the industry by designating 88 million euros for games funding in the budget proposal for 2025 and 125 million euros from 2026 onwards. This gives companies significantly greater planning security as well as the breathing space they need until the additional tax breaks announced in the coalition agreement are implemented.

The importance of this not only for German games companies, but also for Germany as a business location and even for federal revenue as a whole, is demonstrated by a study, conducted by Goldmedia on our behalf, on the leverage effects of tax breaks for games. The results are striking: every euro in funding generates an additional 3.40 euros in tax revenues and social security contributions, 4.80 euros in additional investment and 8.70 euros in additional gross value added. In other words, every euro that goes into games funding multiplies, generating new revenue for Germany.

Developments in the German games market were mixed in 2024. After attaining completely new heights in recent years, revenue from games, games hardware and online gaming services dropped by 6 per cent, its first decline in a long time. Among the reasons for this are that there were fewer major game releases last year and that demand for game consoles returned to normal. The greatest growth could be seen in online gaming services like cloud gaming – which underscores the perpetual dynamics and innovative strength of the games industry. In combination with new game consoles and blockbuster titles that have already been announced, this promises renewed growth in the near future.

Further cause for this positive outlook is delivered by gamescom. The world’s largest games event broke multiple records in 2024, including in the number of exhibitors, the internationality and, above all, international reach. As the annual highlight of the global games industry, gamescom once again took a huge leap forward, underscoring the positive future outlook for games and the global games market.

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.