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Cze Ch Vide O Game Industr Y CZECH VIDEO GAME INDUSTRY PC, CONSOLE AND MOBILE GAME DEVELOPERS IN CZECH REPUBLIC 2020 CZECH VIDEO GAME INDUSTRY PC, CONSOLE AND MOBILE GAME DEVELOPERS IN CZECH REPUBLIC 2020 The original 2019 version of this Study was prepared by the Institute for Digital Economy (www.digitalniekonomika.cz) in cooperation with the Czech Game Developers Association (www.gda.cz) with the support of Creative Europe Desk Czech Republic – MEDIA (www.kre- ativnievropa.cz). 2020 revision was prepared by the Czech Game Developers Association in cooperation with KROUPAHELÁN Law Office, which was responsible for gathering the data. CZECH GAME DEVELOPERS ASSOCIATION Czech Game Developers Association (GDACZ) brings together studios as well as individuals from game development, supports their interests, communicates with state institutions and helps the games industry in Czech Republic. CREATIVE EUROPE MEDIA The MEDIA sub-programme of Creative Europe supports the EU film and audiovisual industries financially in the development, distribution and promotion of their work. It helps to launch projects with a European dimension and nurtures new technologies; it enables European films and audiovisual works including fea- ture films, television drama, documentaries and new media to find markets beyond national and European borders; it funds training and film development schemes. KROUPAHELÁN KROUPAHELÁN is a law firm, but don‘t look for classic lawyers from the 1990s. Understandable, open, perceptive and little crazy. The authors of the AAA video game, which may or may not be available at www.videogamelaw.cz. They plan to change Czech advocacy. You can find them on LinkedIn. Authors Pavel Barák CHAIRMAN OF CZECH GAME DEVELOPERS ASSOCIATION Jana Adamcová FOUNDER OF INSTITUTE FOR DIGITAL ECONOMY Maria Staszkiewicz DIRECTOR OF CZECH FINTECH ASSOCIATION Jan Klesla DIRECTOR OF INSTITUTE FOR DIGITAL ECONOMY TABLE OF CONTENTS Executive summary 5 1 Study purpose and objectives 7 2 Video games as an industry sector 9 2.1 Video games as part of the digital economy 10 2.2 Video games as part of cultural and creative industries 11 2.3 Video games as a community creator 12 2.4 Video games as an employer 13 2.5 Video games as a pioneer of new technologies 15 2.6 Video games as a subject of regulation 17 2.7 Video games are not gambling 17 3 Video games in Czech Republic 19 3.1 Characteristics of the Czech game industry 19 3.2 Economic benefi ts of the video game sector 21 3.3 Global position of the Czech game industry 22 3.4 Game developers in the Czech Republic 23 3.5 Financing video game development 25 3.6 Export of video games 25 3.7 Structure of Czech development companies 26 3.8 Segmentation of the video game market 28 3.9 Czech video game players 29 3.10 Educational system 29 3.11 Collaboration with research institutions 30 3.12 Government support for the video game sector 31 4 Key factors for further development of video games in the Czech Republic 33 4.1 Education 33 4.2 Promoting business, export and investment 36 4.3 Research, development and innovation support 39 5 Conclusion and key recomendations 42 6 Annex 45 EXECUTIVE SUMMARY • The video games sector is dedicated to development, ma- nufacturing and sales of specialized software that combines technology, art and business and includes products ranging from simple interactive mobile games to extensive audiovisual interactive worlds. There are 110 companies specializing in the development of video games in the Czech Republic. A unique feature of the Czech market is strong presence of domestic companies with only 9% of game development companies being a branch of an international company. • The game industry is now a major driver of the digital eco- nomy with digital distribution accounting for a signifi cantly higher market share than traditional distribution. The total turnover of the Czech game industry in 2019 reached EUR 169.4 million, which is more than trhee times the turnover of Czech fi lm production (fi lm and television); for 2020 the total turnover exceeding EUR 190 million is expected. • Video games are a business area belonging to cultural and creative industries. It shows that art, combined with the latest technology, can generate a high added value for the fi nal pro- ducts. The average yearly growth of this sector reached 29% in the last fi ve years. • In 2019, the number of game developers was 1,750, with more than 60% of game companies looking for more staff. • More than half of game development studios employ at least one foreigner, mainly from the EU Member States; the low pro- portion of foreigners from outside the European Union is due to complicated employment procedures for workers from non-EU countries. • For start-ups, access to investors and capital is of key impor- tance. The primary source of funding for game development is own capital – 48% of companies are 100% self-fi nanced, only 19% have been supported by an investment and 14% have used non-fi nancial support (participation in trade fairs or incu- bation programmes). • Czech game studios keep pace with global leaders and Czech games are becoming a strong export commodity of the Czech economy. The average share of exports for Czech companies is 95%. GEEWA – SMASHING5 FOUR • Despite the lack of government support in this sector, video games have made the Czech Republic famous. The main export countries or countries where games are downloaded or pur- chased through distribution platforms include: USA, Germany, United Kingdom, and Russia, and China. • In 2019, 65 games were created in the Czech Republic. De- velopment of games for PCs and consoles (67%) continue to dominate over development for mobile platforms, which are the focus of more than a half of the studios today (41%). • Education in the field of video games is still developing; we have identifiedonly a few study programmes focused specifi- cally on this area. • Systematic support for development of video games is nee- ded and the state should adopt a comprehensive package of measures and tools reflecting the specific needs of the sector. In particular, such package should include visa programmes, direct and indirect support for start-ups, and long-term sup- port for specialized education. 6 1 STUDY PURPOSE AND OBJECTIVES • The Czech video games industry is experiencing its best period ever. There have never been so many strong Czech companies such as Bohemia Interactive or SCS Software on the market, which is thanks to the lasting and progressively growing success of their game titles – Arma, DayZ, or Euro Truck Simulator. In addition, new players like Warhorse Studios, Beat Games, Gee- wa, and Madfinger Games have emerged, achieving outright worldwide fame. At the same time, a number of smaller studios such as Wube Software, Grip Digital, Amanita Design or About Fun have matured to the size of mid-sized businesses. Foreign players such as Wargaming or Giants have also entered the Czech market and international companies such as Ubisoft are actively interested in our country as a target for further expansion. • All these undisputable achievements symbolized by titles such as Kingdom Come or Beat Saber show that the development of video games is now a full-fledged industry in the Czech Republic, which is based on what we all want for our economy – well-paid, highly qualified experts, a combination of the latest technology with art and cultural heritage, and a product with high ad- ded value and strong export potential that spreads the reputation of the Czech Republic abroad and helps to promote other industries and the whole country and its economy. • The Czech game industry has more than half a billion users abroad, which is probably the highest number of all domestic industries. At the same time, this is achieved with relatively modest resources which could be increased at relatively low costs and with potentially huge positive impact on the Czech economy as a whole. • Therefore, also the state began to pay more attention to the game sector and, in order to ensure better communication and alignment of goals, it established the Czech Game Developers Asso- ciation (GDACZ) and supported also this study. BOHEMIA INTERACTIVE – VIGOR7 The primary goal of this study is to comprehensively map the video games industry for the first time and to describe its economic substance, importance, specifics, and benefits for the economy and the society (Chapter 2). The study is based on own questionnaire survey conducted among game companies and it presents unique data (Chapter 3). In particular, according to the findings from the survey, a number of recent major successes could be followed by even more success in the future if barriers are removed and the necessary public support is provided. Thus, the study describes the sector’s needs and the key factors for its further development at a point in time that is truly ground-breaking for the industry (Chapter 4). It should clarify the needs of Czech video game developers, recommend measures for further development of this sector, and also contribute to its further consolidation. Video games share many common features with, for example, the film industry, but games generate turnover that is three times as high although the support they receive is significantly lower. This study also presents final recommendations summarizing the key findings, which will be updated on an ongoing basis (Chapter 5). 8 WARHORSE STUDIOS – KINGDOM COME: DELIVERANCE 2 VIDEO GAMES AS AN IN- DUSTRY SECTOR The video game development industry encompasses the development, production and sale of video games, which combine various technologies (in particular software development, virtual reality and artificial intelli- gence), art (fine art, music, animation, screenwriting, but also game design, which is unique to this industry) and marketing (marketing strategies, sales models).
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