Europe is undoubtedly a global player in the international games market not despite but because of its diversity. The Baltic Sea region in particular shows high potentials, being the birthplace of highly successful game and game engine producers such as SuperCell, King, CD Project Red, Unity Technologies, CryTech, Rovio Entertainment and countless more.

This map along with its information and data provides a picture of the current status of the video game industry in the Baltic Sea region as a whole and nine of its hotspot regions. It is the result of an assessment made within the Interreg BSR project Baltic Game Industry (2017-2020), led by BGZ Berlin International Cooperation Agency GmbH.

We combined data that informs on how well the game industry is established and prospering in each region, with input from game industry experts and local or regional authorities. The collection of data and other type of information was done through desk research and interviews.

The analysis does not intend to be comprehensive or accurate in all details. The results demonstrate how difficult comparisons between different regions are due to inconsistencies or a lack of data. Still, with the help of the SWOT data, strategies can be developed on how to enhance the appeal of the Baltic Sea region’s game industry beyond the region itself. Regular updates will help follow the impact along the progress of the improvement measures.

Game Industry Profiles

The game industry profiles give a brief overview of the game industry in each of our focus regions. The size of an industry can be measured by different indicators like revenue, number of companies or employees. The number of interest / lobby associations and incubators provides at least an idea how the industry is represented and if targeted support is available. In several regions, dedicated game incubators have recently been established. However, these indicators do not necessarily allow to draw conclusions on the success of the industry or political ambitions to promote the industry.

An accurate quantification of the size of the game industry in the Baltic Sea region is difficult due to varying practices of counting companies at the national level. According to data provided by the BGI project partners, roughly 1,600 game industry companies exist in the region which generate revenues of about 13 billion (bn) € altogether. In comparison, the game industry in China, which is the largest one globally, generated 23 bn € in 2017 and the one in the US, which ranks second, around 21 bn €.

In absolute terms, Poland and Sweden have the highest amount of companies belonging to the game industry. When viewed relatively against country size (in terms of inhabitants), Denmark has the biggest game industry. Big cities attract more game enterprises than rural areas and harbour the majority of the larger companies. This is noticeable when comparing Stockholm and the rest of Sweden, or Helsinki and the rest of Finland. The absolute number of employees working in the game industry is by far the highest in Poland. In relative terms (per inhabitant), the game industries in Estonia and Hamburg have the biggest employment shares.

The game industry in Finland is generating the highest revenue summing up to 2.1 bn € (which is almost half of the Baltic Sea region’s total), followed by Sweden with 1.87 bn €. The other regions only reach a few hundred million (m) €. Also, in Finland and Sweden more revenue is being generated per company and per employee. Both countries have established specialised incubators, purely focusing on games.

The game industries of Poland and Denmark seem comparably successful, while the young game industries of the three Baltic States are still in their initial phase. Hamburg and Berlin form a special case, as they are metropolitan regions. The German game industry as a whole could be classified as rather well developed, but not as advanced as in Finland or Sweden.

Incubation & Start-ups

Incubation expert interviews

25 interviews with incubation experts have been conducted in order to shed light on the current incubation situation.

Most of the interview partners came from tech or media incubators. Only 9 out of 20 incubators offer targeted support, dedicated to game start-ups. These specific game incubators are located in Denmark, Estonia, Finland, Germany, Poland and Sweden. The majority of the examined incubators has been founded within the past 6 years, meaning there exists only little long-term experience of incubation support. Most of the incubators in the investigation sample are publicly funded. In general, they are of rather small size with up to 10 employees.

The most common support offered by incubators is the organisation of events. If specific game start-up support exists it usually includes co-working spaces, mentoring programmes as well as financing and specialised pitches. Interestingly, many incubation experts stated that the amount of game start-ups making use of the support schemes has increased during the past five years, indicating a growing interest in incubation support by the game industry.

According to the experts, key problems of game start-ups are related to funding and to a lack of business and marketing knowledge (perspective of incubation experts). Experts from Denmark, Germany and Latvia mentioned a need for improving the economic climate for game start-ups in order to facilitate their access to financing.

Key areas of improvement are the availability and access to funding or business angels. Specific characteristics of the game industry, e.g. long development phases, have to be taken into account.

The incubation experts named the Game Incubator Sweden, Game Hub Denmark, Game Insight Estonia and the Finnish Oulu Lab as good practice cases for specialised game incubation within the Baltic Sea region.

Interviews with Start-ups

In total 34 game start-ups founded were interviewed in the partner regions. The interviews were supposed to cover start-ups at the age of 5 years or younger (founded from 2012 onwards). However, due to availability issues, in five cases the interviewed start-ups were older (6-8 years). The majority of the considered start-ups were founded in 2015. Most of the interview partners are currently in their start-up phase, which means about to finalise the development of a marketable product.

The size of the start-ups within the sample shows a large variation, ranging from 0 to 420 employees. Finland is the region with most of the recent company formations.

The majority of start-ups was founded by teams (at least two people). The majority of founders hold a university degree (IT or related field). Around 50 % of the founders had previous founding experiences. Most of the start-ups mentioned the supply of qualified employees as most important selection criteria for choosing their current location, followed by networks and an existing video game culture. The interviewed start-ups focus on a wide range of different types of games (mobile games, virtual or augmented reality and different genres of games like adventure, educational or multiplayer games).

The predominant financial source when starting up was own money, followed by public subsidies and bootstrapping. Some start-ups stated that the complexity of grants and bureaucratic obstacles prevented them from applying for public funding.

The interviewed game start-ups are facing major problems related to marketing issues, such as specific market knowledge (how to sell a game) and general market issues (referring to problems in gathering market visibility, building up a recognisable brand).

Regarding incubation support, the start-ups were especially benefiting from networking possibilities and the organisation of targeted events.

Start-ups in Estonia, Germany, Lithuania and Poland criticised a low availability of specific support measures. The ideal incubation support for start-ups would include mentoring, financial advice and support in general business aspects like marketing, sales, strategic planning.