The Computer and Video Gaming Market in Germany booms

The digital games market booms. Games are the most important growth driver of the entertainment branch: According to PricewaterhouseCoopers [PwC], an estimated 1,7 billion euro of revenues was generated with digital games in 2006, which is equal to a jump of 13,7 percent in comparison to the year before. For 2007, growth figures of 17,3 percent are expected, boosting revenues to two billion euro.

The History of Computer and Video Gaming

The very first computer game is considered to be Tennis for two, developed by the U.S. citizen William Higinbotham in 1958. The development was indeed dependent on the technical progress of the computer technology at that time. Had the development proceeded on large-capacity computers of universities for other purposes, such as the development of Spacewar in 1961, the combination of simple and – by now - cheap logic chips with an already existing technology for television made it possible to play games on electronic gaming machines in the public. Pong by Nolan Bushnell, for instance, was quite popular. Companies like Atari or Magnavox made it possible to play computer games on video gaming consoles and thus satisfied customers at their homes. It was the birth of a fast-paced mass market.

The introduction of home and personal computers (PCs) in the 1980s induced two independently developing kinds of computer games: The video game (back then known as telegame) based on special gaming consoles and the computer game designed for the home computer and later on for the PC. In 1983 the market for video gaming collapsed due to a swamping oversupply of bad video games and the technical advantages of home computers in comparison to the gaming consoles at that time. In Japan, where home computers were not that successful, Nintendo ushered in a new era of video games in 1983 and conquered North America as well as Europe two years later.

Since the mid-1990ies, the fields of gaming consoles and PCs have increasingly been merged because of marketing issues. Thus, standardized data mediums (such as CD-ROM or DVD) and compatible hardware make it possible to simultaneously develop games for different kinds of consoles and PCs, making production cheaper and designing games to a broader mass market.

The current technics

In the field of consoles, Nintendo, Sony and Microsoft introduced their latest hardware for online gaming in 2005/06. Whereas Microsoft (Xbox 360) and Sony (Playstation3) went for computer performance and high-definition graphics, Nintendo decided to do it another way: The new console Wii stands for easy and intuitive handling and concepts that are both easy to learn for novices and to attract new target groups.

In the field of PCs the technical progress is reflected in the increased performance of graphic cards and multiple core processors. Here, too, the development of new games puts emphasis on high definition.

Games have achieved acceptance as a part of daily life

Computer and video games have developed from a niche product to a mass phenomenon. The German federal association for information industry, telecommunication and new media [BITKOM] estimates that gamers account for one third of the total population and for even two thirds amongst 14 to 29 year olds. According to the German federal association for interactive entertainment software e.V. [BIU], more than 50 percent of gamers in Germany are over 20 years old, one in four players is female. According to a study of TNS Infratest by order of SevenOne Media, women even account for 32 percent of all computer and video players and the proportion is still increasing.

Phenomenon eSports

As a part of the mass leisure activity gaming, eSports (“Electronic Sports”) has developed to a phenomenon without which spare time – particularly that of the youth and adolescents – would be unthinkable. Competitive single or multiplayer gaming in Germany is already played regularly by some 1,5 million players who are part of about 40.000 so-called clans (eSport teams). The German eSports Association e.V. (ESB) is based in Berlin and considers its task to represent eSports toward politics and the public with the aim of establishing this youth culture.

The gaming branch in Germany

According to the German federal association for interactive entertainment software e.V. [BIU], Germany is the second most important market for entertainment software in Europe when it comes to sales. Given this, in 2007 revenues in Germany amounted to 1,3 billion Euro, increasing total sales by some 21% in comparison to the year before. 49,9 million single items were sold. The most popular platform is the gaming console with 40%, followed up by the PC with 34%. Handhelds account for 26%. Due to a fall in popularity of the PC (-7%) in comparison to handhelds (+6%) and consoles (+1%), however, a trend introducing change is to be expected soon.

Publisher and Developer

The gaming branch is traditionally subdivided into publishers and developers.

The key tasks of publishers are the financing, the marketing and the sales of games. Usually, games are produced by developer studios for publishers. Major publishers, however, sometimes have their own development departments that solely work for their company. When the game is finished, it is released under the name of the publisher or an own label. About three dozen publishers are based in Germany.

Developers are companies or persons that produce a game from the concept phase to a salable product. Projects are mostly financed by publishers; modalities such as deadlines, the so-called cornerstones, are determined on a publishing contract. According to G.A.M.E (G.A.M.E. German federal association of computer gaming developers e.V.) there are approximately 200 developer studios in Germany with around 3.000 employees.

Education within/for the gaming branch

Several private schools as well as some universities offer studies and courses that focus particularly on the gaming branch and qualify students for occupations as game developers, producers and programmers but also as game or graphic designers. An overview of the courses, most of them require a charge, is to be found on: www.biu-online.de

The location of Berlin

Berlin managed to establish itself as one of the most important locations for gaming in Germany. The mixture of a creative potential and the close proximity to political decision makers build the basis for the growth of an innovative branch and its lobbyists. Besides one of Germany's largest developers, Radon Labs, Berlin is the domicile of the three associations G.A.M.E, BIU and ESB. With the Games Academy, the very first professional school for computer and video game production has its base in Berlin. And if you are interested in the history of computer games, you will find the world's first permanent exhibition on digital interactive entertainment in the computer game museum that has opened in 1997.

Future

There is no end of the boom in sight. PwC estimated a 2,6 billion Euro rise in sales for digital games until 2010. According to "Media Report Gaming" from SevenOne Media, there are three trends in particular that will have an impact on the market within the next years: Attracting new target groups, connecting players online and the increasing popularity of mobile games.

Growth through new target groups

Young men still make out the largest part of gamers. Change, though, that will bring the market new momentum is on its way. Already, 37 percent of gamers are older than 30 years and in comparison to 2004, plenty of women are now playing on the computer. A glimpse to the USA shows that this trend will not stop: According to the association of publishers ISFE, the overseas gaming community consists of some 43 percent women.

Furthermore, the gaming branch has entered the market of casual gamers. There is an increasing number of companies offering games which are easy to control and appeal to all all ages and sexes: Be it karaoke, Sudoku, playing the guitar, drums, tennis or boxing - on the new consoles, gaming will become a generation-spanning activity for the whole family.

Connecting players with online games

Because gamers want to stay in touch with like-minded persons and play with or against them, the market for online games is experiencing a vast growth. The increasing availability of broadband internet in German households strengthens this trend. For the German market, PwC estimates a sharp growth in sales of 55 percent to some 400 million euro in 2007. In 2010 the branch will pull 672 million euro in sales with online games.

Mobile Gaming

Along with mobile games, too, the market will continue to grow. This fact is indicated by the increasing acceptance of handy and handheld games. Besides mobile phones, actually all of them support games by now, mobile consoles - so-called handhelds - are pushing the market. The Nintendo DS and Nintendo Game Boy as well as the Playstation Portable from Sony are the most popular gadgets. Be it a mobile phone or handheld: Their common ground is the possibility to offer mobile gaming fun and accompany its user anywhere.

According to the BIU, handhelds account for 19 percent of the sales volume of computer and video games. With 59 million euro in 2006, the sales with game downloads for mobile phones has been relatively little, but change is due to come soon: For 2007, PwC estimated an increase in sales of 50 percent and growth until 2010 up to a volume of 222 million euros.