EGDF response on the Review of the Communication on the Framework for State aid for research and development and innovation
Game developer studios are the forerunners of the Digital Era. State aid for R&D plays a crucial role in helping the industry to introduce novel technologies, business models and game designs to consumer markets.
Quite often, these novel solutions are so risk-taking that European risk-avoiding private investors are not ready to invest in them. Or the big enough consumer base with good enough network infrastructure to run them only exits in densely populated Asian megacities. The EU state aid system must move the focal point of the current system, which focuses on minimising competition between member countries, towards improving the global competitiveness of the Union. The Union needs a state aid system optimised to enable the success of European companies on the worldwide market.
The European R&D&I state aid framework should:
- acknowledge the importance of business and content innovation: Games are at the crossroads of novel technologies, cutting edge business models, and artistic content. During the 2010s, the importance of business and content innovation rose rapidly. If Europe wants to secure its leading position in global digital markets, the scope of the European state aid for R&D&I must also cover business model innovation. And often it is content that is the driver of technological and business innovations, not vice versa. Thus, it is crucial that beyond technological and business innovations, the state aid framework for R&D&I acknowledges the importance of content innovation.
- acknowledge test marketing as an important part of experimental development: The creators of digital content and services rely more and more on their fan communities in getting feedback about their content and services. Consequently, the focus of innovation models is increasingly moving towards co-innovation with consumers. Currently, marketing activities are often left outside the scope of the R&D&I state aid instruments. This creates significant problems in the R&D&I processes of European companies, as collecting real market data with a prototype or demo version of a game might not be allowed. Consequently, the definition of experimental development should be widened to cover also test marketing.
- provide guidance on the implementation of the R&D&I instruments: The funding guidelines should encourage member states to invest more in securing the competence of their experts running the R&D&I programmes.
- increase the aid intensity levels for SMEs: It is crucial to encourage European SMEs to invest in their own technology development by increasing all SME aid intensity thresholds to at least 60%. This is, in particular, important for experimental development. Any lower aid intensity threshold easily leads to a situation where European state aid guidelines force European SMEs to accept risk capital with poor company evaluation to fulfil the self-funding requirement.
The full position paper can be accessed here: https://www.egdf.eu/wp-content/uploads/2020/01/202106-EGDF-response-on-the-Review-of-the-Communication-on-the-Framework-for-State-aid-for-research-and-development-and-innovation-3.pdf
EGDF approach on state aid framework be accessed here: https://www.egdf.eu/documentation/3-enabling-digital-growth-with-public-funding/national-state-aid-instruments/better-state-aid-framework/