03.2 Games funding

The unreliability of games funding at the federal level has unfortunately continued in recent years. The freeze on funding applications that was put in place in May 2023 extended into 2024.

In July 2024, more bad news followed from the Federal Ministry for Economic Affairs and Climate Action: the previously independent department responsible for digital games was merged with the department for cultural and creative industries. Although existing projects such as the Federal German Games Funding Programme and the German Computer Game Awards were continued, this new lack of independence significantly reduced the visibility of this area and its capacity to act. Seeking to promote the games industry’s profile and scope of action, the German Bundestag had allocated funds in the 2021 federal budget for the establishment of a games department in the then Federal Ministry of Transport and Digital Infrastructure. This allowed for the ongoing, centralised handling of all games-related policy issues. It also placed games on an equal footing with other sectors with dedicated independent departments in the federal government, such as music, literature, film, visual arts, theatre, microelectronics, bioeconomics, AI and many more.

On the other hand, the Initiative for Growth – new economic dynamism for Germany launched by the previous governing coalition brought hope for significant improvement in the competitive conditions for games companies in Germany. As stated in the initiative, the objective of strengthening the country as a location for game production shows the high relevance the former government – consisting of the SPD, Bündnis 90/Die Grünen and FDP – attributed to the games industry for Germany’s future viability in economic and technological terms. Never before had all three coalition partners spoken out so clearly in favour of the speedy introduction of tax breaks for the development of games.

However, the key points of the new funding guidelines presented by Germany’s then Vice Chancellor and Economic Minister Robert Habeck at the political opening of gamescom 2024 gave rise to considerable controversy. From the perspective of games companies, they worsened the situation with respect to certain important criteria. Specific funding amounts remained unclear and therefore unreliable. At the same time, only prototypes and projects with a significantly increased minimum volume of 300,000 euros are to be eligible for future funding. Given that the German games industry is comprised largely of start-ups, this will exclude numerous companies from federal games funding. In addition, combining federal and state funding, an important option for small and medium-sized games companies and standard practice in, for example, the area of film industry financing, will no longer be permitted. And the fact that applications can no longer be submitted on an ongoing basis, but only in response to a maximum of two calls from the ministry per year, will also make planning more difficult.

The degradation of the funding guidelines was poorly received in the games industry also because the evaluation of the previous guidelines by the auditing firm PwC on behalf of the Federal Ministry for Economic Affairs and Climate Action in late 2023 had highlighted many strongly positive effects of the games funding programme. For example, 72 per cent of the games developed in Germany would not have been realised without the funding, and the funds enabled 34 per cent of games to be implemented on a much larger scale than they would have been otherwise. A large majority of games companies that received funding were able to create significantly more jobs than those that did not in the same period. Because funds had been insufficient up to that point – resulting in two application freezes since the start of the funding programme in 2020 – a significant increase in funding was recommended. The evaluation by the Federal Economic Ministry had revealed that, on a per capita basis, Germany provides only one quarter of the budget that other game production locations do.

At the end of 2024, the 18-month freeze on funding applications was finally lifted. This was good news for games companies in Germany and, given the collapse of the governing coalition shortly before that, in November, it also marked a small success. It didn’t give rise to any real spirit of optimism, however, as the stricter conditions imposed by the new guidelines excluded many game development studios, in particular smaller ones, from federal funding. In addition, the failed coalition hadn’t yet passed a budget for 2025, which resulted in significant additional restrictions on the funding programme. For example, after the call for funding, funds were initially available to multi-year game development projects only if their total budget didn’t exceed 900,000 euros. Funding for larger projects and prototypes could initially only be approved if these were to be completed by the end of 2025 – a serious hurdle given that it usually takes several years to develop a game. In addition, the call for funding reduced the maximum project funding amount to 2 million euros. With these heavy restrictions, games funding only truly helped a few companies in practice.

The continuing uncertainty surrounding games funding may also have contributed to the comparatively poor results of game’s industry barometer. There are areas in which German games companies view the country as an advantageous location, such as in the training of young talent and the social climate with regard to games. However, a large majority of companies evaluate Germany’s international competitiveness as a game development location as rather poor or very poor. This total negative rating of 87 per cent comprises 72 per cent, or almost three quarters, that say Germany’s international competitiveness is rather poor, plus 15 per cent that assess it as very poor. Just 13 per cent rate the framework conditions for the games industry in Germany as rather good, and not a single company assesses these as very good.

The commitment of the German political sphere to the games industry received only slightly better marks, with 7 out of 10 games companies (71 per cent) rating government support for the domestic conditions as rather poor or very poor. A strong majority of companies rated government funding of games as poor: about two thirds, or 65 per cent, with respect to big-budget AAA games and 62 per cent in the case of indie games. By contrast, when it comes to the training of young professionals, companies are significantly more positive. Just under two thirds, or 63 per cent, view Germany as a rather good or even a very good location. The social climate towards games is perceived similarly, with a total positive rating of 66 per cent. The further infrastructure for games companies, such as hubs and networks, is seen the most favourably, with 78 per cent of companies rating it as rather good or very good.

Despite these challenging conditions, the desire to develop games in Germany remains strong. This is demonstrated by the Press Start: Games Founding Grant, a funding programme launched in mid-October 2024 by then Federal Government Commissioner for Culture and the Media Claudia Roth to support the establishment of new game development studios in Germany. Over a period of 18 months, company founders receive a grant of 2,750 euros per month to help them focus their efforts during the start-up phase and further the development of their own games. Grant recipients also benefit from a comprehensive education and networking programme along with accompanying coaching, to provide them with optimal support for their start in the games industry. The promotional programme met with overwhelming interest. The 24-member expert jury worked through over 1,000 applications, ultimately selecting 132 grant recipients.

Further positive news came after the federal elections and the subsequent coalition negotiations between the CDU, CSU and SPD in early 2025. The coalition agreement takes up central demands of the games industry that are intended to make Germany a strong and internationally competitive game development location in the coming years. The governing coalition of Christian Democrats and Social Democrats acknowledges the great cultural, economic and technological potential of the games industry and its leading role as a pacesetter and innovation driver. A key step forward is the planned introduction of new tax breaks for games in Germany, which are designed to reliably offset the country’s current 30 per cent cost disadvantage compared to other game locations worldwide. The coalition agreement additionally accords esports clubs non-profit status. While this was also part of previous coalition agreements, it had yet to be implemented. For the first time, the new federal government has assigned games to the Federal Ministry of Research, Technology and Space. This puts them under the responsibility of Dorothee Bär, who has a track record of commitment to the medium and the games industry. During her first appearance as the new ‘games minister’ at the German Computer Game Awards 2025, she announced the establishment of an independent games department within her ministry.

At the beginning of 2025, game presented its proposal for the additional tax-based funding of games development, as included in the government coalition agreement, to enable Germany to catch up with the world’s top game development locations. It called for the introduction of tax credits of 30 or 35 per cent for small and medium-sized companies. This would jump-start investment and sharply boost tax revenues and value creation, as underscored by findings of the research and consulting firm Goldmedia on behalf of game. The analysis shows that every euro in tax credits for games in Germany would trigger 4.80 euros in additional investment, yield 3.40 euros in new tax revenue and social security contributions and generate 8.70 euros in gross value added. Long-term implementation of such tax breaks would result in even greater benefits, according to the experts, as it would spur German enterprises to expand production capacity, encourage foreign companies to establish locations in Germany and incentivise the domestic development of major games for the global market. Combining internationally competitive tax breaks with funding aimed especially at young companies helps games companies of all sizes and has proven a successful model in the top international game development locations worldwide.

The budget plans announced by the federal government in late June 2025 bolstered German games companies’ confidence with regard to the near future. They provide for the long-sought increase in the budget for games funding. The draft budget specifies a total of 88 million euros for 2025 and sets an annual funding level of 125 million euros from 2026 onwards. This is in line with game’s calculations of the financing that is required until the implementation of additional tax breaks in line with global standards, as called for in the coalition agreement.

Which federal states are pursuing good game development policy from the perspective of German companies can be seen in the results of game’s industry barometer. They show Bavaria to be the best location for game production in Germany. The battle for first place nonetheless remains a head-to-head race. North Rhine-Westphalia, which finished first in the previous rankings in 2023, holds second place in the current rankings. Berlin takes third place, just ahead of Hamburg, after the two shared the second-place spot two years ago. Movement was also seen at the bottom of the rankings. Hesse, which ranked tenth out of twelve in 2023, brings up the rear this time, behind Saxony-Anhalt in 14th and Mecklenburg-West Pomerania in 15th place.

There has been positive news recently from several federal states. Baden-Württemberg, Bavaria, Hamburg and Hesse have all slightly increased their budgets for games funding. Bavaria, Berlin together with Brandenburg, and North Rhine-Westphalia continue to be the federal states with the most extensive programs to support game development. Although Berlin and Brandenburg are now below the record funding amount of 2023 at 3.6 million euros, the Berlin Senate is supporting the establishment of the House of Games Berlin with 4.6 million euros.. And North Rhine-Westphalia has announced an additional 500,000 euros in funds to fund games that specifically counter disinformation and radicalisation. In the first round of this funding, 277,000 euros were distributed in July 2025.

The Mitteldeutsche Medienförderung (MDM), which is responsible for Saxony, Saxony-Anhalt and Thuringia, saw a slight decline in funding commitments in 2024. At the same time, however, a flagship project was launched in Leipzig: the R42 accelerator programme, which receives 900,000 euros in assistance from the state of Saxony. From 2025, this will enable additional start-up funding of 30,000 euros to be awarded to the 12 studios receiving support.

In 2024, Schleswig-Holstein awarded around 630,000 euros to game projects for the first time. These resources, from the European Regional Development Fund (ERDF), were announced in 2023 but delayed until 2024. Hesse, which placed last in game’s industry barometer, is also making progress in its support of the games industry. There, both WIBank and Hessen Film & Medien increased their funding for games in 2024, paying out a total of 410,000 euros.

Despite positive political signals and a planned budget of 300,000 euros, no games funding was distributed in Saarland. Saarland’s Ministry for Economic Affairs, which has only recently become responsible for this policy area, is working with the industry in the state to finalise the new funding guidelines. There is good news from Bremen, however, where games funding is being introduced from 2025. The initial budget of 150,000 euros will be allocated through the regional funding program institution Nordmedia.