Saturday, February 06, 2016

BPN 1723: Monitor Dutch Games Industry

The Games Monitor is a collaboration between Dutch Game GardenDutch Games AssociationControl MagazineEconomic Board Utrecht, and research partners TNO and NEO Observatory. 

The Games Monitor 2015 presents an overview of the economic development of the Dutch games industry between 2011 and 2015.A questionnaire was sent to more than 400 companies and returned by 130 companies. Following the presentation of the preliminary results, several industry round table discussions were held to further verify and analyze the findings. 

The games industry includes all companies whose core activities include at least one of the following processes in the value chain: the development, production, publication, facilitation and/or electronic distribution of electronic games. The Games Monitor further discerns two domains in the games industry: entertainment games and applied games. Entertainment games entail all electronic games that have entertainment as their primary goal. Applied games, also referred to as serious games, aim to inform, educate or train end-users. Applied games are developed and distributed across sectors, including education, health, transport, marketing, and defense. 

The findings show a rapid growth in the number of companies, from 320 in 2011 to 455 in 2015, an increase of 42%. The same period also saw a large number of companies close for business (110), which makes the overall growth even more impressive. 


Whether these new companies will actually succeed in creating a sustainable business, or make the difficult transition from a start-up to a scale-up, remains one of the biggest challenges for the Dutch (and European) games ecosystem. The number of professionals working in the Dutch games industry has grown as well, albeit much slower than the number of companies: from 2730 in 2011 to 3030 in 2015. The annual job growth of 2.6% is above the national average of -0.4% in 2011-2015. Companies are young (more than half are less than 5 years old) and relatively small (average number of employees is 7). 

The positive worldwide trends are, to some extent, reflected in the developments of the Dutch games ecosystem. The analysis reveals that over 60% of Dutch game companies saw a growth in revenues, with an aggregated turnover of €155-225 million. However, most profits are modest (up to €100,000). 

Another striking development is the distribution of growth between entertainment and applied games. Whereas applied games still have a strong foothold in the Dutch games industry, the last couple of years saw a surge in the number of companies focused on entertainment games. 

Applied games 
Applied games remain an important pillar of the Dutch games industry. The total number of companies involved in applied games grew by 28% to 158 companies. During the 2011–2015 period, most applied game studios indicated a sharp decline in clients in 2013 and particularly in 2014. The magnitude of this decline was so severe that the continuity of some dedicated applied games studios was threatened. Some of these companies scaled down, leading to layoffs. In 2015 the number of tender requests began rising sharply. Some companies chose not to increase their workforce but opted instead to consolidate and minimize risks rather than increase profits (and risk).
A striking trend the past years is an increase in partnerships in aspects such as marketing and promotion, strategic alliances and funding. Game companies have joined forces to maintain a sustainable business and scale up internationalization. There is almost no specialization in the type of sectors and clients applied game companies work for. The educational and healthcare sectors are slightly larger than other domains of application. Currently, most of the projects completed by applied game studios are driven by client demands. To scale up the applied games market, a more product- based approach, where companies develop games that are applicable and salable to many clients, is necessary. This provides a need to move away from producing ‘one- o’ solutions for individual clients. Dealing with issues related with operating in an innovative field and validation of applied games remain challenges for all applied game companies. 

Entertainment games 
Comparing the data from the 2012 Games Monitor to 2015, two findings are notable. First, there was a considerable growth in the number of entertainment game development studios, almost doubling from 83 to 160. Second, the increase in game development studios was not mirrored by a similar increase in the number of professionals working in entertainment. The number of jobs remained more or less the same (approx. 860 fte). In order to be successful and keep up with the demands of the users and publishers, larger teams are necessary. Over the past few years, successful studios are relatively large (11 to 25 people) and have more than five years’ experience. Success in not guaranteed in an ever-changing industry with a myriad of business models, increasing numbers of platforms and tech engines and shifting user demands. Competition remains fierce, making it even more difficult for talented, young, small studios to find their niche in the market and continue to grow after their initial launch. Dutch entertainment game studios are moderately successful at the moment. Specifically, new studios lack a dedicated business and/or marketing expertise that can help successfully identify market demands and launch a product in that segment. 

The number of full-time game programs has increased by 25% from 35 in 2012 to 44 in 2015. Next to dedicated programs, many knowledge institutions also offer a range of game minors and single courses to their students. This has resulted in a significant increase of the total number of game-related minors and courses from 9 in 2012 to 22 in 2015. The annual outflow of all game students has grown to approximately 1600 for full time and part time courses combined. A mismatch between industry needs and educational levels has been ascertained. 


Most experts agree that a business-oriented course should be added to game majors/masters. More knowledge on entrepreneurship is needed. 

Similarities between the Dutch and other European game industries are the small size of companies and a growth of new studios. The Dutch games industry has a heavy focus on applied games and a significantly smaller turnover per employee due to the lack of large and successful studios. 

Eight recommendations are provided based on the results of the Games Monitor 2015 and the round table discussions with the industry:
- Foster an entrepreneurial mind-set in the educational setting and in start-ups.
- Manage expectations and create a healthy sense of realism concerning the chances to become a highly successful studio.
- Promote matchmaking between creatives & business.
- Be aware of business models and the shifts in the market.
- Scale up via partnerships, mergers and pooling resources to increase the chance of growth.
- Capitalize on IP to increase the chance of growth.
- Focus on a more product-based approach rather than a single game.
- Increase awareness in the financial sector of the added value of games and vice versa. 

Games Monitor: the full report 


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