12th of March 2025

At the beginning of the year, EGDF organised a call with its members to map the state of the European games industry in 2025. The call focused on overcoming current challenging times and finding ways to take the industry to the next level. Please see below, EGDF president Hendrik Lesser’s conclusions of the discussion.

IT´S HIGH TIME TO BUILD GRIT – THE STATE OF THE EUROPEAN GAMES INDUSTRY IN 2025

2025 is in many ways the new 2024. Unfortunately, the situation of the European industry has not changed much in a year. So the key mantra continues to be to keep calm and survive until 2026 and beyond while preparing for new challenges.

We have to tackle the next level challenges

As the president of EGDF, I foresee new hills to climb and beaches to defend for us Europeans, as the geopolitical order is shifting. Finding a joint European game industry response on the following will not be easy, but that is precisely why organisations like EGDF exist: to lead the debate.

The European game industry faces unprecedented geopolitical tensions, making the global business environment strikingly unpredictable for us. We must be prepared for Trump’s trade wars. We must be prepared for the US to hinder the free flow of data, and the free movement of business travellers. We must be ready for the erosion of the rule of law in the USA and rising exchange rate risks globally. We must be prepared for the financial systems going wild and Technolords using bullying tactics to get their way. And we must be prepared for the likes of Putin´s and others´ new or not so new (hybrid) wars and influence operations in Europe. And last but not least, we must find ways to support our Ukrainian friends and colleagues even more now, as the new American leadership has demonstrated that they cannot be trusted to have a consistent foreign policy.

As a European industry we must defend our values. Trump is not our end boss. We must be prepared to protect our player communities against far-right extremists and other extremists supported by state and non-state actors. We must be ready for whoever is challenging our global commitment to fighting climate change, supporting diversity, and for building on our own European approach to the meaning of freedom of speech, science, and the arts in the game industry and game research.

We must stand up for Europe and team up with its allies. We must boost our competitiveness, support and help each other to strengthen our technological and artistic sovereignty, while working with existing and new allies all around the world who are value compatible. We will not abandon the European idea of cooperating communities.

We still must deal with familiar challenges

In our state of the industry call, EGDF member associations identified a number of key challenges and hard and soft gates that European industry is struggling with at the moment.

Access to funding is still a massive challenge for European studios and publishers. In times of crisis, access to finance is crucial. Unfortunately, access to publisher funding is still challenging, as many small and big publishers are restructuring and reevaluating their activities. At the same time, game developer studios and publishers face hard times in stock markets, accessing venture capital, building bigger with private equity or just getting a loan from a bank. Asking friends, family, and fools could even be deemed irresponsible in these times.

As private capital is no longer there for us in the same scale as before, we must fight more than ever for public support for the games industry. What we have achieved in the last few years is under a threat of eroding away in many European countries, as the treasure troves are getting empty.

Statistics do not tell the whole story of our situation. Some games and studios are doing exceptionally well. Studios with a financial cushion and/or a good player base can grow now as they can access the talent they need, and a market in a less investment-inflated environment. It might even look like markets are slowly growing again.

However, if you consider the inflation, the markets are, at the best, stagnated. Therefore, it is unsurprising that self-publishing revenue is still down. Even big players are pivoting, sometimes overcorrecting, and even closing down studios, to force the right numbers for this quarter. On average, even established small to medium-sized development teams are often struggling and experiencing lower sales as the markets are not getting any better soon.

We are facing an old game problem now. The games players are playing a lot currently are old games and their remakes. This is great for those who created successful IPs years ago, but not for anyone planning to publish a new game. Even new high-profile live-service games are closed only a few weeks after release. Premium AAA is also prone to be critically achieved, but commercially so-so. It is therefore unsurprising that the number of new games released by local studios is decreasing in many countries. However, this is also an opportunity because old game IPs might have more value than before.

And these industry challenges are just part of the bouquet. We are facing more and more competition around the globe. Markets are getting more fragmented, and discoverability is becoming more difficult. Inflation is increasing and climate change is marching forward. Subscription platforms, low/no-code platforms or Web3 games did not fulfil their promises. The big AI revolution has not happened yet for making games. Moreover, it is hard for local junior talent in Europe to enter the industry due to layoffs. This poses a considerable risk that we will face a new talent shortage when growth phases return.

But hard times make the best entrepreneurs. It is not surprising that not only a few people in the European game industry are facing mental problems and are exhausted, depressed, and burned out. As a community, we must be there to support them. Many people, who leave the game industry, do so because of uncertainty and lack of faith in the future. We must keep our doors open for them to return. But when things get hard, those with deep-rooted grit, an entrepreneurial, little to lose mindset, build new studios and make risky bets. They are the ones we must celebrate especially. And as the number of new studios keeps increasing, the entrepreneurial spirit is certainly alive in the European game industry. Let´s make sure we support them and each other to increase the chance for luck.

We must embrace new opportunities

Our members also agreed that challenging times come with new opportunities, side paths and secret shortcuts. In times like this, we must try to do the right things to survive.

Go back to basics! Do not raise money to develop a game. Raise money to sell a game. If the game does not make money, kill it. If we want to run a business, we must do more and do things better than our competitors. Even if you want to make art, it is still a business, too.
Go niche! There are increasingly more questions about whether the mass audience really existed in the first place. It might be time to go niche and find a specific target audience big enough for your game.
Get new allies! Find impactful ways to collaborate and develop with studios and partners from emerging regions and countries like Latin America, Canada, Africa, the Middle East, India or South-East Asia. Let´s make it a win/win for all involved, while finding new ways to do things, creating fresh IP and blending costs.
Go to new markets! Chinese markets did open again after a moratorium two years ago. Other aforementioned markets might be just waiting for your game. There are successful publishers, distributors and investors in Japan and South Korea. It is not easy, and one must be careful, but these opportunities exist.
Build & own tech & data! Games have always been forerunners of technological innovations, and that seems to be something risk investors are still interested in. Analytics and data are still big things and one might want to own them. Using open source is one way to minimise service provider risks.
Disrupt other sectors! You might not be a disruptive forerunner in the game industry, but you might be just that in another business sector. Perhaps it will be military simulations for quickly growing global military markets, introducing game industry tools in the film industry or do something completely unheard of.
Go small! New, better game development tools incl. LLM support enables you to make bigger games with fewer resources.
Invent new business models! Tons of other tech and culture industries were inspired by business models first done at scale in gaming. F2P is probably not the end of history.
Go multi/cross-platform! There is an opportunity in Switch 2. PC is one of the few platforms still growing, and we may see more PC games on handhelds, consoles and mobile devices. DMA will open mobile platforms for alternative distribution channels.
Go bro(ish), not broke! Due to general uncertainty, even crypto is back. Maybe even already gone again. So developer discretion is advised in these markets. But joke aside, experimenting and potentially doubling down on new and resurfaced trends, genres and tech can be a path to success.

Develop with an attitude!

If you feel it, go for it. There has never been a more suited time to make games with social and political messaging. You have to overcome certain fears, find the why. Then you could reach a little to nothing left to lose mindset, potentially change the world and go to the moon with THE culture technique of our time.

It is time for us to grind and keep our eyes on the prize with grit.

My conclusion is that things will not be worse than we thought, but they will not go as well as we hope either. But these are the times when small things can make a difference. A well-organised trade mission by an association to the right place can be just what it takes to build successful new partnerships. A good new development partner or a distributor in this enormous market, one knows little about, can improve your commercials. Another deep dive into a development or finance, or marketing challenge, can bring a new solution.

In the end, there is no silver bullet for growth or survival, of course. But the more diversity and pluralism there is in our connected game industry ecosystem, the more different sources of funding and new opportunities we have at our disposal, the better are our chances of finding something that works for each of us. Times are rough, but we are ready, and we have all the means to build a better future for ourselves despite potential challenges.

Uncertainty will continue in 2025. So we have to stand united. This is more important than ever for the European game industry. Some of our studios might be owned by companies outside Europe, but in the end, our cultural heritage is primarily European. When we (hopefully avoidable) must choose a side in global wars and trade wars, we stand with Europe and its partners.

But now is not the time for grand visions overall. Now is the time to focus on the daily hustle and grind. There will be winners, and the rest of us have to keep our shit together to see the light again in the hopefully not so distant future.

Hendrik Lesser – EGDF President

Contact for EGDF:

Jari-Pekka Kaleva, tel: +358 40 716 3640
Managing Director, European Games Developer Federation (EGDF)
Email: jari-pekka.kaleva@egdf.eu