International Insight: Germany

As the games industry heads to Cologne for Gamescom, Timm Walter, senior manager at local industry body GAME, examines the struggle of Germany’s local market

Germany is huge, and thus the German games market is one of the biggest worldwide.

Germany’s estimated sales revenue in 2015 for games was €3.27 billion (2.31bn) – a rise of 2.3 per cent compared to 2014. Assuming that Germany has a population of approximately 81 million and that barely half are playing digital games, such revenue is impressive. Let’s have a more detailed look at what the numbers are telling us.

PC AND CONSOLE DOMINATE

The German digital games sector is both uniform and versatile.

In Germany, one can divide the digital entertainment sector in four big segments: home entertainment systems such as consoles, PC, mobile devices, and traditional handhelds and tablets.

It will come as no surprise that the console and PC divisions dominate sales revenue, comprising more than two thirds of it. PC revenue has slightly fallen year-on-year, down 2.9 per cent compared to 2014, but unit sales remain stable.

There seems to be the tendency in general of maintaining the status quo between the systems. Even if one particular system is dropping, its successor or nearest relative is on the rise – as one can see when comparing the shrinking of handheld games, down 20.4 per cent year-on-year, with the growth of tablet games, up 20.1 per cent compared to 2014.

Germany’s games market generated €3.27bn (2.31bn) in revenue last year

MARKET GROWTH

The German games market is growing continuously, now representing nearly five per cent of total global video games sales, and there are no indications that this will slow anytime soon.

If you have a closer look you will find an increase of more than 11 per cent in the mobile sector, more than four per cent in the handheld and tablet sector, and almost three per cent in the home entertainment and consoles sector.

Only PC revenue is shrinking, with the minus of 2.9 per cent potentially due to a massive decline in casual, web and browser games. These types of title are just not as attractive as they were a few years ago, and many have since transitioned to mobile platforms. So it’s more a shift between platforms than a decreasing interest in digital games. That’s good news, but it may leave a stale taste all the same.

‘THIS PARTICULAR GERMAN SITUATION’

Germany is world famous for its great achievements in engineering, but we have some really talented and established developers and publishers in the games industry, too.

Companies like Deck13 Interactive, Daedalic Entertainment, Crytek, Yager, Blue Byte and Piranha Bytes are famous beyond Germany’s borders for their high quality triple-A productions. Germany also has a rather active and creative startup and independent scene: Studio Fizbin, Rat King Entertainment, Headup Games, Mimimi Productions, Crazy Bunch and The Good Evil are just a few names on the up-and-up.

As the numbers show, Germany is one of the leading countries when it comes to game sales. There is just one small difference in comparison to other countries, which becomes obvious when you have a look at last year’s best-selling games: not a single game in the Top Ten was made in Germany – this phenomenon becomes more explicit when you leave aside mobile and focus on the core gaming market.

Call of Duty: Ghosts, Minecraft, Far Cry 4, Diablo 3, Watch Dogs, FIFA 14, Call of Duty: Advanced Warfare, GTA V and FIFA 15 – these are all great games, but none of them were produced here. The German games industry should be asking why: why are foreign products so much more successful than our own games? Where does the lack of interest in German games come from? Is it because we don’t produce good triple-A games?

The answer is no, not at all. There are plenty of talented, creative and hardworking game studios in Germany. But they all lack one thing in comparison with their international rivals: proper conditions regarding location. Whilst Canadian and UK based companies get tax breaks, and our Nordic neighbours have some large amounts of subsidies to spend, German games companies do not. It’s a situation that doesn’t respect game creators as part of the creative industry. It’s a situation that won’t consider game production its own industry. It’s a situation that believes that games aren’t a culture – but aren’t a technology industry, either. It’s a situation that forces the industry to battle over small promotion funds – together with the movie and technology industries.

This particular German situation is one that’s far away from delivering ideal conditions for a creative high-tech industry such as game development. But this industry needs comparable conditions to be competitive.The best creative people can’t play at Premier League level if the conditions force them to the Conference.

"The German government won’t consider game production its own industry."

Timm Walter, GAME

THE VERDICT

Germans love to play digital games. Almost half of players are female. Revenue is on a rise. Five per cent of global games sales are made in Germany.

And yet, our own development industry is vanishing. Not because of a lack of talent, but because our government has still not realised the full potential of our most creative and innovative industry.

As long as this remains, Germany will only ever be a sales market. But it doesn’t have to be that way.

PC POWER

Dr. Maximilian Schenk, MD of German games trade body BIU, discusses the country’s love of boxed games and the PC

Concerning console games, physical purchases clearly remain the more popular option for buyers. The steady rise of the digital distribution of games does not mean that physical retail numbers are dropping. Compared to the first half of 2014, their numbers have remained just as strong in the first half of 2015.

However, digital distribution continues to gain ground as more and more titles are purchased as downloads.

This applies especially to the PC market. Downloads for PC and console games accounted for 25 per cent of revenue in the first six months of 2015.

Germany has a great tradition in and a strong gaming fan base for strategy, simulation and adventure games, which are genres closely associated with the PC.

Although consoles have gained a lot of ground since the early 2000s, the PC is still an attractive platform because it can be individually upgraded, offering a lot more options.

Additionally, PC has regained momentum in the last few years with the success of online and browser games, digital distribution pioneers like Steam and new trends like virtual reality. We are even expecting a growth in PC game sales in 2015.

The German games industry also partly reflects the strong German PC gaming base with developers like Ubisoft Blue Byte and companies like Gameforge, Wooga, InnoGames, Upjers, Aeria Games and Goodgame Studios.