Criticism of funding practice

German video games industry vies for subsidies

Screenshot from "Crysis" by German developer Crytek

(Bild: Crytek)

There is growing concern in Germany's computer games industry that the gap to foreign competitors is widening due to a lack of state aid. After the German Games Association criticized the Federal Ministry of Economics' funding policy, political representatives from the federal states also made their unease clear.

The Berlin proposal for new funding rules would be "no tailwind for the industry", said Bavaria's Digital Minister Fabian Mehring (Free Voters). "I miss the serious will and full commitment to make Germany internationally competitive as a games location." NRW Media Minister Nathanael Liminski (CDU) complained that the rules would not solve the problem of a lack of planning security. Hamburg's media senator Carsten Brosda (SPD) also voiced criticism.

The computer and video games industry is growing in the digital age. According to a market survey, Germans spent almost 5.8 billion euros on games last year, an increase of six percent. However, German games only play a minor role - according to an older estimate, games developed in Germany account for less than five percent of industry sales. Since 2020, there has been funding from the Federal Ministry of Economics. In 2023, 70 million euros flowed into the industry, with 50 million euros earmarked for 2024. How much it will be in 2025 is unclear. Since May 2023, companies have not been able to submit new applications because the money is only sufficient to pay for applications that have already been approved - the funding is paid out gradually year by year.

Industry begs for more support
According to a study commissioned by the Federal Ministry of Economics, German games companies only receive just under a quarter of the usual funding in other countries. The head of the games industry association, Felix Falk, is calling for more support. "Without internationally comparable funding conditions, we have no chance of turning Germany into a leading market for games." But that is precisely the aim of the federal government, says the industry representative.

Without internationally comparable funding conditions, we have no chance of making Germany a leading market for games.

Felix Falk, Branchenverband Game

The Federal Ministry of Economics recently presented key points for the future funding guidelines - this paper is the subject of the criticism. Among other things, it is about leaving the funding of small studios to the federal states and reserving federal funds for larger projects. In addition, subsidized studios will no longer be reimbursed at least 25 percent of their costs, but only 20 percent. This figure can be increased to the previous level via funding bonuses - for example, if a game has additional functions that help people with disabilities. In Falk's view, the bonus rules make it unnecessarily complicated, whereas in other countries it is simpler. The proposal for funding rules does not offer the planning security that studios need.

Funding only for major projects?
The Federal Ministry of Economics wants to say goodbye to funding for small game developments - only projects that cost at least 400,000 euros are to be subsidized by the ministry's program. "That would be a bitter blow for small studios," says game boss Falk. They would only be entitled to separate games funding from the federal states. This amounts to a total of around 17 million euros per year, which is much less than the federal budget.

The amount of funding varies from state to state: Hesse hardly does anything, Bavaria and NRW do more - but their funding programs are not really big. Bavaria had a funding budget of 4.4 million euros in 2023. The Federal Ministry now sees it as the states' duty to provide more money. Criticism comes from them. The 400,000 euro limit would be "problematic for start-ups and independent entrepreneurs", says Hamburg's media senator Brosda (SPD). "Since the start of federal funding for computer games, they have proven many times over that innovations and successful projects on the market can also be created with less start-up funding." Hamburg currently provides just under 500,000 euros per year for games funding.

Tug-of-war over "rather arbitrary" limit
NRW Media Minister Liminski considers the 400,000 euro limit to be "rather arbitrary". NRW supports games companies with 3.5 million euros per year. FDP member of parliament Nicole Bauer also thinks little of the 400,000 euro limit. "Good ideas don't have to have an expensive price tag," says the Liberal. A spokesperson for Berlin's Senator for Economic Affairs Franziska Giffey (SPD) emphasizes that Germany needs to catch up in terms of games funding in order to avoid being at a competitive disadvantage when it comes to international relocations. "To achieve this, the federal government must quickly fulfill its responsibility for Germany as a games location."

In addition to funding, tax breaks would also be helpful for games companies. These have not yet been available here. The State Secretary in the Federal Ministry of Economics, Michael Kellner (Greens), wants to advocate a "tax credit system" - companies would then be able to claim certain costs against tax and would be financially relieved. Bavaria's Digital Minister Mehring sees such support for the industry as positive. However, this should not be at the financial expense of the federal states, he says. NRW Minister Liminski accuses the federal government of not having sought a discussion with the federal states on the subject of games tax relief.