The German games industry has its eyes set on development because of elevated funding from the federal government.
The businesses in the sector are receiving funding from a €125 million annual pot, efficient January 2026; for context, the industry acquired €50 million in 2024 and €88 million in 2025.
Germany’s government first launched funding for the games industry in 2020 following a pilot program the earlier yr. This monetary assist has, in line with the MD of the nation’s video games commerce physique, Recreation, Felix Falk, has barely diminished the impression of the world macroeconomic scenario of the previous few years on the German games industry.
This most up-to-date enhance to €125 million in funding has, in half, been pushed by German’s new federal government – described as “formidable” by Falk – which got here into workplace in mid-2025.
Germany is the No.1 nation in Europe in the case of shopper spending on games and the fifth largest round the world.
“We’re an enormous market. There’s an awesome scenario for junior workers and coaching up new expertise,” Falk explains. “There’s so much to be optimistic about in Germany. Our funding framework is now extra akin to different main hubs worldwide, making a degree enjoying discipline. We will develop the market right here a lot quicker than in different locations in the world.”
One person who Falk calls out as being instrumental in the elevated assist for the German games industry is Dorothee Bär, long-time politician and the present Minister for Analysis, Know-how and Area.
“She has been near games and our industry for greater than 20 years. I’ve identified her for twenty years when she was an actual teenager in the parliament,” Falk says. “She at all times knew about the potential and the power of games and at all times supported the industry and tried to deliver it ahead and now, to have her as the accountable minister, is nice for the industry.”
Whereas Falk and Recreation are grateful for the substantial enhance in funding that the industry has acquired in 2026, the commerce physique’s managing director says that this monetary assist might want to develop additional in the long run.
“The potential development in Germany is a lot larger than this funding funds would permit,” he explains.
“However that is a query now we have already raised with politicians, they usually already know our ambitions and that the funding funds has to maintain observe with our ambitions to be one in every of the prime sport improvement hubs in the coming years.”
Recreation’s pitch to the German government is easy: the nation’s games industry has an enormous quantity of potential and might contribute to the nation being a “worldwide related participant”.
“Financial system, tradition and innovation are the core of our pitch,” Falk explains.
“The political events and plenty of areas of society and the financial system know far more about the potential or benefits of games in these areas.”
One other component of the pitch to the German government has been the real-world examples of nations which have enormously benefited from political assist, reminiscent of Canada, the UK and France.
For its half, the UK has had Video Games Tax Aid (VGTR) since 2014, an initiative which is set to shut in 2027.Video Recreation Expenditure Credit score (VGEC) was launched in 2024 and can in the end change VGTR. That is on prime of different schemes, reminiscent of the the £30 million (£10 million per yr over three years) Games Development Bundle initiative, in addition to the UK Games Fund.
“Saudi Arabia is offering billions to play an enormous position in this future industry,w e should not look forward to others to be even additional in the lead”
“We’re additionally in a scenario the place Saudi Arabia is offering billions to play an enormous position in this future industry,” Falk observes. “We should not look forward to others to be even additional in the lead; Germany and Europe must be aggressive in this area.”
One other card up Recreation’s sleeve is analysis indicating the financial impression of funding on the games industry. For each €1 in government assist, an extra €4.80 in further funding is triggered, on common. That is on prime of €3.40 in tax income and social contributions, and €8.70 in gross worth added.
“These are numbers that are vital; it is simpler to ask for cash should you say you get an enormous return and set off very optimistic results which can consequence in higher monetary outcomes for Germany, too,” Falk says.
In the long run, the commerce physique desires its games industry to be supported by tax breaks in addition to the present funding mannequin.
Whereas tax breaks are widespread for games industries round the world, they’re unusual in Germany’s monetary laws; the solely actual instance of a sector being supported by tax breaks is analysis. For what it is value, that has gone nicely, and Falk says that he is hopeful that the games industry could possibly be the second space to obtain a tax break mannequin – and the new government has mentioned that it is one thing it want to do in the coming years.
“We have now been telling politicians for some years now that tax breaks are the customary worldwide”
“We have now been telling politicians for some years now that tax breaks are the customary worldwide,” Falk explains. “They provide corporations extra reliability, which is what counts in the case of opening up studios. It isn’t solely about natural development from present corporations, but in addition about corporations from different components of the world establishing studios in Germany. For that to occur, we want a dependable and well-known construction.”
In the direction of the finish of 2025, Recreation revealed analysis exhibiting that 29% of its members have been anticipating 2026 to be extra optimistic than the earlier yr. That is beneath a 3rd, however nonetheless virtually double the 17% of corporations that voted this fashion concerning 2025. Over half (53%) of respondents additionally mentioned they felt their companies would carry out higher in 2026.
“Not every part is brilliant, it is nonetheless robust, however I feel it is vital to see that the temper is good and there is an expectation that the future will probably be optimistic once more,” Falk says. “I feel that is due to optimistic indicators we’re seeing from the government. We have now some stop-and-go in the final government. Now it is easy.”