Episode 8: Gaming in Germany

Think Germany, and you probably don’t think fun and games. But you should. Where else is gaming a special part of the Economics Ministry? Germans are absolutely fanatics for games and represent Europe’s biggest electronic gaming market, with some 49 million active players. To get the latest on this dynamic sector, we talk to one of Europe’s leading games developers and the head of the German Association for the Games Industry.

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Our guests

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Benedikt Grindel

Benedikt Grindel is managing director of Ubisoft Blue Byte and also heads Ubisoft Düsseldorf. Grindel studied mathematics with a minor in business administration at the University of Münster. He joined Ubisoft in 1998 and worked for three years in the marketing and business development department. He then moved to the game development studio Blue Byte after it was acquired by Ubisoft. As a producer, he was responsible for the "The Settlers" brand, and in 2010 he launched the live operation unit at Ubisoft Blue Byte. In 2014, he took on the role of managing director.
 

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Felix Falk

Felix Falk has been managing director of game since February 1, 2018. From 2009 to 2016, he was managing director of the Entertainment Software Self-Regulation Body (USK). As vice chairman of the International Age Rating Coalition (IARC), he helped develop the global labeling standard for online games and apps during this time. From 2004 to 2009, he headed the office of Monika Griefahn, chair of the Committee for Culture and Media in the German Bundestag. In this capacity, he was responsible for the computer games and, among other things, helped create the the German Computer Game Prize, which was awarded for the first time in 2009.

Transcript of this episode

Presenter:

Hello and welcome to “Into Germany.” The German business podcast brought to you by Germany Trade & Invest, GTAI, the German government’s international business promotion agency. I’m Kelly O’Brian

Today we start way back in time … in the heyday of conquerers, explorers and pirates…

Trailer von Anno 1600:

Courage, an adventurous spirit … drove my ancestors to set sail to discover foreign shores 400 years ago… using sword and flame… now its my turn to carry on their legacy.”

Presenter:

No worries, this isn’t history class – and there will NOT be a test at the end. What you just heard is the trailer of “Anno”. It’s a video game series in which players found colonies on fictitious islands. The setting can be the Renaissance or the Industrial Revolution or even the future.

It's one of the most popular computer games in Germany. Ten million copies have been sold worldwide. And it was also developed in Germany.

Still, Germany has yet to fully put itself on the global gaming map.
Felix Falk: We have been quite weak for many years compared to other hubs like Canada, the U.S., England, Great Britain or France, for example.

Benedikt Grindel: There is definitely still a lot to catch up in Germany, absolutely.

Presenter:

But Europe’s largest economy is also its biggest gaming market. It’s got some 49 million active players. And the government is putting big money into the sector. That’s a perfect recipe for growth.

Felix Falk: There's a great boost going on in Germany right now. We are in quite good shape to be one of the fastest growing markets and one of the most interesting markets for games in the future.

Presenter:

That’s Felix Falk from the industry association GAME. We’ll talk to him later,

But first, who better to discuss how the new funding programs fuel the sector than Benedikt Grindel. He’s managing director of the German Ubisoft studios. Ubisoft was set up in 1986 in France, and today it’s one of the biggest games companies in the world. It’s behind international hits such as Assassin’s Creed, Prince of Persia, Tom Clancy’s, Watch Dogs – and also the German franchises The Settlers and Anno.

So, hello Benedikt. Tell us a bit about yourself please.

I'm with Ubisoft now for actually more than 25 years. I have joined the games industry in the late nineties, which is really several eras ago if you think of what happened all the time in between. My background is mathematics. I started in marketing, I worked a bit in business development and then in 2001, when Ubisoft acquired Blue Byte, I joined Blue Bite the studio. I was the first person from Ubisoft to join the studio.

Presenter:

So you studied maths…?

I'm a mathematician by training a long time ago. I don't understand my diploma thesis paper anymore myself, that's for sure. But I can help my daughter now. She did quadratic curves, and I was able to help her.

Presenter:

What drew you to the games industry then?

I never considered to work in the games industry. I just didn't know anybody who works in the games industry. And then I saw this advertisement from Ubisoft. They were looking for an assistant to international product Management, and I thought like: Wow, you can even work in the games industry. And why not? So I did apply and got the job and, well, I'm still here, so I never regretted it, but it was pure luck.

Presenter:

Germans are mad for traditional board games. And one of the world’s most beloved – the Settlers of Catan – was invented there. But that historically hasn’t translated into video games. Not until Blue Byte entered the market. Back then it was a small German gaming company in Düsseldorf. What was it that caught the attention of the French?

Blue Bite was very well known for some of the pieces that they've created over the years, most notably The Settlers. And I think that is what Ubisoft was mostly interested in. So, then I joined the team as a producer for The Settlers. So I've produced quite a few Settlers games in the early 2000. So that was a big opportunity, obviously. And Ubisoft as a whole, of course, exists for a much longer. It was created in 1986 by five brothers, one of whom is still the CEO of the company, you know, 37 years later. So that's quite a story, I think. And it started in a very small village in Comptoir, in Brittany, in the north western corner of France. And we are still based in France, obviously, and now in Paris or close to Paris. But we are one of the biggest developers, actually the biggest developer in terms of people with 20,000 employees worldwide.

Presenter:

Gaming is huge. Bigger than movies and sports combined in terms of revenues. So what’s the size of Ubisoft?

So the last fiscal year, our total revenue was €1.8 billion euros.Ubisoft has more than 30 studios all around the globe. We have a big footprint, obviously, in Europe, where we come from. Lots of studios in France, three studios in Germany and Dusseldorf, Mainz and Berlin, studios in Scandinavia and Eastern Europe and Southern Europe in the U.K. And then we have a big footprint also in Canada, specifically in Quebec, but also in some other states like Ontario or Winnipeg. Some studios also in the U.S., in China and in other Asian countries. So we're really present around the globe because we see ourselves as a global company.

Presenter:

How important is Germany in all this?

As a market for consumers, it's super, super critical. I think from a industry perspective, when you look at development, we need to catch up a lot because the entertainment industry as a whole is growing. The games industry is still the fastest growing part of the entertainment industry. So there is a lot of new market share to really take. And we want to grab more of that market share in the future.

Presenter:

Gaming has seen a big growth spurt during Corona. Now the curve is flattening, sales even going down a bit.

As you said, the corona situation created a bit of a boom for the global games industry and also for the German games industry because people were at home and and obviously games are a very good pastime, also a good way to stay connected and all that. I think all in all, taking into account of where we were before Corona and where we were now, it's going well generally speaking, but also of course, the whole thing did not change that. We are still a lot behind the international games industry as it comes to development.

Presenter:

Why are countries such as Canada, the USA, France, UK or Scandinavia ahead of Germany? Is it cultural?

We just started too late and maybe we didn't look at the international market early enough. I think there is no real reason beyond that. So we now need to really invest and create a great environment to be able to catch up.

Presenter:

Can you give us a bit of an understanding for the German gaming landscape?

Germany, I think is quite specific. If we look at the other countries in Europe where we have largest video networks, France or the UK, you typically have everything very concentrated in one big city. And in Germany we really have different centers, different metropolis regions. So I think in Germany it's quite nice to be in three of the of the five bigger gaming hubs in Germany, but they all come with their specific environment. Berlin is a much more artsy startup kind of scene, very dynamic, very, very international. Dusseldorf is well, obviously in the in the Rhine area, so an old industrial area. And then you have Mainz, which has a bit of the the smaller cozy city, and people who join us in each of those studios, they always say like, Wow, this is really a nice setup, but the flavor is also a little bit different.

Presenter:

What games are you developing in Germany?

I already did mention Anno. So we launched Anno 1800, which is definitely probably one of the biggest German game productions that was ever done. We've collaborated on games like Far Cry, which was amazing, from Berlin.We also work on big co-dev games. Co-Devs are sort of stands for co-development. It's something that we do a lot at Ubisoft that we have really huge games and we have teams around the globe collaborating on this, typically with a lead studio, but then support studios.

Presenter:

When it comes to huge games, is Germany in the role of a support studio or in the lead?

It's one thing that we have really pushed that we said, we want to be able to offer real triple-A game development from Germany. It's also something that's missing here. And of course, the ultimate goal is to become bigger and better and eventually even lead such a big triple-A title from here. So we do two ways. One is a, let's say, smaller title that really owns the genre, but I wouldn't call it a big international blockbuster yet. So we are trying to grow that more and more, which is working nicely, but then also work on the some of the really big titles out there.

Presenter:

What’s the government doing to support you?

A lot has happened. So to today we have a €50 million per year program which has actually for this year even been raised to 70 million because it was so successful that the money run out end of last year. So. So if I had heard that ten years ago, I would have said like: Wow, that's already quite good.

Presenter:

In fact, gaming is the direct responsibility of Germany’s economics ministry. But you still think more needs to be done.

If we want to create a level playing field with the big international hubs for the games industry, we are absolutely not there yet. For that, the funding needs to be reliable and it needs to be simple and that is what is the international standard. Let's take a very concrete example. If I want to do one thing upfront, I think if you develop a smaller game, something that is maybe done in not much longer than a year with a small team, I think you can apply for the funding. You get your feedback relatively fast, and then you can work with it. If I work on a bigger project, like the project that we are typically working on and we want to do even bigger projects from here than there is a lot of preparation and the pre-production takes a long time, the conception phase takes a long time, it has uncertainties and risks and specifically those risky projects are those that the Games funding wants to support. So it takes more time and we can only apply for the funding once we have answered a lot of questions. But if we are there at the wrong moment, maybe the funds are already out.And if I'm too late, it's also not an option to say, okay, so then we wait for the next money to arrive because I have all those people sitting here and waiting. I've built those teams over years. There are 50 to 100 people and I can't say, okay, we only start in six months because what am I going to do in those six months? So I need a certain level of reliability.

Presenter:

Are there models for Germany to follow?

If I look at what happens in France, in the UK or I think best practice is pretty much Quebec. In Canada, they have solved this. It is much simpler to start a project. You can start at any moment. And because it's a tax credit, it's scalable. It is not dependent on a fixed amount of money that the state has to offer.

Presenter:

A tax model – that's what you would like to see in Germany as well?

Yes. And that's being discussed right now. So we hear that on all levels. And we are definitely pushing for that because we know from the international markets that this really is the best practice that this hopefully will come. The fund model is also good, so I would not replace the fund model that we have right now with the tax credit. I would say let's keep the fund model. Maybe you can adjust it a bit, but then add to the tax credit model because that is just the model that works for bigger games. And if we look at the German industry, we see a growing number of smaller companies, we see very few big companies, and we also see not enough companies that are midsize. That's where we really need to catch up. And the tax credit model will help a lot.

Presenter:

So let’s hear your pitch. Why should the German government subsidize a private entertainment industry such as gaming?

Games are an enormous driver for innovation, for digitalization. It's an entertainment product in the best sense. It's about the opportunity to really be part of an interesting industry that that just brings great workers, great programmers and everything into our country and that are very valuable for our society and products that are just fun in the best sense to play.

Presenter:

We should not ignore the negatives sides of gaming here, especially concerning young consumers.

Like every entertainment product, whether you have movies, books or games, not every game is for everyone. I think we have a very good youth youth control system. I have five kids and I know exactly what they're playing. I think that is very important. So we take this very seriously.

Presenter:

You mentioned your five children. Do you set up times? How long they are allowed to play and when?

Yes. And I'm going to say, in theory, sometimes it works better, sometimes it works less good. But absolutely, it's also about the games that they are playing. I'm sometimes stunned by what some kids are playing because there are games for adults and games for kids. I think that is important that people understand that. And so I'm definitely watching what and when my kids are playing. They don't always like it, but they understand it.

Presenter:

The average age of players in Germany is approaching 40 years old. Are you still playing yourself?

Yes, I am. Honestly, I'm a bit more of a retro gamer these days because I don't like the super competitive games. And whenever I play against my son, I stand absolutely no chance. So I just don't even bother. Sometimes I still win in Mario Kart, but that's rare.

Presenter:

Thanks, Benedikt. And good luck for your next race.

Lesson one today – don’t play videos games with your kids. You’ll get slaughtered! But before we ponder the implications of that, it’s time for our monthly briefing on some other top business news from Germany.

New Network 

Germany’s governing cabinet has approved plans to establish a core network to distribute hydrogen as an energy carrier throughout the country. The plans will see operators of natural gas networks draw up models for the new hydrogen infrastructure in the coming months. Germany’s Federal Network Agency will be responsible for its final form. The proposed legislation is part of Germany’s ambitious strategy to become CO2-neutral. 

Salad Days for Solar 

Photovoltaics are continuing their comeback in Europe’s largest economy. Germany now has more than three million solar power panel systems, according to industry association BSW Solar. Capacity exceeds 70 gigawatts, and single-day output is at record levels. Germany is currently capable of covering ten percent of its electricity needs using the sun. And well over double the number of PV panels were installed in private homes in the first quarter of 2023 as in the same period last year.  

Green Investment  

Venture capital investments around the world have cooled off of late, but there are notable exceptions. “Green” startups in Germany are one of them. Germany’s economic development bank, the KfW, says that investment in fledgling cleantech firms amounted to 1.6 billion euros in 2022. That’s the second-highest level ever after 2021. For comparison, VC investment in German cleantech in 2009 was a mere EUR 59 million. 

Startup Rankings 

Germany’s largest metropolis and the capital of Bavaria have moved up in the annual Startup Blink List of the world’s top cities for fledgling companies. Berlin rose one spot to number eleven while Munich climbed five to reach thirty-fourth place. In the national rankings, Germany dropped a spot to number seven but remains very close to numbers five and six, Sweden and Singapore. Germany is also the top country in the Eurozone, in front of eighth-placed France. 

And finally

Asteroids Anyone?…

The northern German city of Hanover has a new attraction: a 1000 square meter video arcade-meets-museum called Hi-Score. Located in a former shopping center, it features games from five decades, from Pac-Man and Mario Kart to the present day. It also has 100 historic video consoles, some collectors’ items. Hi Score also aspires to become a meeting place for the local gaming scene and a home for games developers. The regional state of Lower Saxony is putting 168,000 euros into the project.

Presenter:

Okay, back to the present and Felix Falk. He’s the managing director of Game, the German Association for the Games industry.

Hi Felix, so first question: are you a gamer yourself?

I am. Not as often as I would like to, but of course, I love games, I love music, I love all sorts of arts, but especially games. I love family games, so I had a blast with my family, for example, playing Takes2 for quite a long time. So that was that was fun. And I'm also like a shooter from time to time. Seeing different games and experiencing different games which come from our members or which are big in the moment. But I come back to family games most of the time on the weekends.

Presenter:

How would you describe where gaming is at in Germany?

We have on the one hand a very positive situation, having Germany as number one in Europe when it comes to revenue and number five worldwide when it comes to revenues. So it's €10 billion revenue per year almost. And that's due to the fact that we had a very strong development in the two core COVID 19 years. So in 2020 we had more than 30% plus and in ‘21 we had another 17% plus and, and now it stabilizes. So we had just a growth by 1% in ‘22.

Six out of ten people in Germany are playing games, half of them being female, the other half male, very young, very old people. So it's a very diverse and broad phenomenon in Germany. And the average age of video game players is almost 38 years old. So it's a very broad phenomenon in this society.

Presenter:

So, Germany is a nation of gamers. But not yet of game producers. Why is that?

There we have been quite weak for many years compared to other hubs like Canada, the U.S., England, Great Britain or France, for example. But this has changed in the last years because the government has introduced a funding model. And that was really important for us because it gave us a level playing field compared to other hubs. And since then we have seen great growth. Also, when you look on into the field, how many companies are set up? So we have 26% more companies in Germany and also growth of 12% over in two years when it comes to talent and how many people work in the government at German industry. So there's a great boost going on in Germany right now. And I think that's really great news. I think we are in quite good shape to be one of the fastest and one of growing markets and one of the most interesting markets for games in the future.

Presenter:

Are international business players getting involved?
 

We've seen many of those cases where investors from abroad, from all over the world are investing in German companies in the past years. Well, the most recent one is, for example, Nuclear. We have seen a very good development in the e-sports business when it comes to ESL, for example, these are some cases where large investments have been done in the past years.

Presenter:

Benedikt Grindel from Ubisoft says international companies are still hesitant to invest big in Germany.
 

I think we need more stability in the funding because it was just set up by the government and the government is really into it. They even put out a strategy for games from the government. And one main aim of this strategy is to become one of the leading markets in the world. But we've seen that our funding model needs more work and needs more stability because right now so many companies are growing and setting up and starting projects with bigger budgets that we need to be more agile in the funding model. So that's something we talk about with our government and that's something they want to improve as well. So I guess that's something we've seen in other markets, starting with a serious funding model. And on the other hand, I think we can improve in being louder because when it comes to marketing of Germany as a games hub, we are too quiet right now. Not many people know how great it is to develop and to publish games within Germany, and that's something we need to tell the people.

Presenter:

Can you give us some more details on the German funding program?
 

The volume is 70 million right now per year. And this is only the money from the central government. But there's another couple of millions on the regional level from the states. So you can apply for different funding schemes, you can apply for funding in North Rhine-Westphalia, Berlin or Munich, and also get the federal governmental funding. It's not only focused into the capital, not only focused in Berlin, as you might have other cities like Paris or London or Stockholm, where it's very concentrated and very focused on the capital. In Germany, it's very broad. So you have Hamburg, you have North Rhine-Westphalia, around Cologne, you have Frankfurt, you have Bavaria, with Munich, you have Berlin. So that's, I think, good news because it can spread out the can German games industry and also you have different focuses in different areas and hubs in Germany. So, for example, in the north of Germany, in Schleswig-Holstein, they put a light on e-sports, for example, and try to do a lot around e-sports and creating an B2B event. On the other hand, you have Cologne with Gamescom as the world's biggest event, largest event for four games. You have Bavaria and they fund a lot of indie studios for example, and Berlin of course, the capital, they are funding and trying to set up an event like A Maze, which is an experimental art event. So I think there are different spots in all of those hubs, and that's a good competition, I would say, between those hubs. And this makes it interesting for people joining the German games industry because they can decide where they want to be and where they might find the best conditions to set up a company.

Presenter:

Any specific fields or trends you see at the moment?

I think there's no single trends when it comes to content because it's just too broad and just too diverse as we have, you know, hundreds of companies and millions of players only in Germany. But as you know, gaming is a phenomenon worldwide. It's a worldwide market. I couldn't I wouldn't be able to break it down to say it's on the adventures or simulation games or something. It's very broad in Germany. And the most important trend right now is the growth and the number of new companies and new startups being built in Germany and being opened in Germany.

Presenter:

Well thank you, Felix. And for me it’s time for a round of PAC-MAN 256 now! But before it’s playtime, we’d like to tell you a bit about HOW GERMANY WORKS.

The organization Felix Falk represents – GAME – is what is known in Germany as a Verband or association. There are more than 15,000 of them, and roughly half are devoted to business and labour. They lobby politicians and try to sway public opinion in favor of a huge variety of business sectors. Everything from garbage disposal to insurance to… video games. There’s even a German Society for the Management of Associations. So if you set up a business in Germany, you won’t be going it alone.

And that’s HOW GERMANY WORKS.

Ok that’s it for this episode. Do you think you could become a player in Germany’s future as a gaming hub? Germany Trade & Invest provides tactical support you and your business to score maximum points in Germany. At no cost because we’re a government agency.

Get in touch at gtai.com.

We’re also keen on your opinions, suggestions and questions. Please leave a comment in your favorite podcast app or drop us a line. You’ll find all the details in our show notes.  

And now it’s game over. Till next month, thanks for listening, “Auf Wiederhören” and remember: Germany means business.