In recent years, the European video game industry has evolved into a global powerhouse, with substantial contributions from several key markets. While traditionally dominated by countries like Germany, the UK, and France, a new contender is rapidly emerging on the scene: Portugal.
The Portuguese video game industry is experiencing a period of significant growth and innovation, making it an attractive destination for startups and investors. This article delves into the current state of the European video game industry, highlights Portugal’s unique position within it, and explores the reasons why Portugal is becoming a hub for video game startups.
Overview of the European Video Game Industry
The European video game industry is a significant player in the global market, generating substantial revenue and encompassing a diverse range of companies and talent. Europe hosts around 4,600 video game companies, primarily micro or small enterprises with fewer than ten employees. The industry’s revenue is forecasted to exceed $455 billion globally by 2024, with an estimated annual growth rate of 8% until 2029 (via report on the European Game Industry).
The leading countries in the European video game market include:
- Germany: The largest market in Europe, Germany generates around €6 billion annually from video games. It is home to major companies like Crytek and Goodgame Studios and hosts significant events such as Gamescom.
- United Kingdom: With revenues exceeding €4 billion, the UK is a hub for video game development and publishing, with notable companies like Rockstar North, Ninja Theory, and Creative Assembly. The UK government offers substantial tax reliefs to support the industry.
- France: Generating approximately €3 billion annually, France is known for its innovative studios like Ubisoft, Quantic Dream, and Dontnod Entertainment. The French government provides robust support through tax credits and funding for creative projects.
These countries benefit from a mature gaming ecosystem, extensive government support, and a strong presence in both development and publishing sectors.
Portugal’s Video Game Industry: Growth and Trends
According to AICEP Portugal Global, Portugal’s video game industry has seen remarkable growth over the past few years. The market size is expected to reach $258 million by the end of 2024, driven primarily by mobile games, which are projected to generate $56 million. The number of gamers in Portugal, already over a million, is anticipated to grow to 11.7% of the population by 2027.
The turnover of Portuguese video game companies has surged from €5.4 million in 2018 to over €38 million in 2022, reflecting an average annual growth rate of 65.2%. The number of companies in the sector has tripled from 36 in 2018 to 114 in 2022, with the workforce increasing from 91 to over 500 employees. The gross value added (GVA) generated by the industry doubled from €12 million in 2021 to €23 million in 2022 .
Projections indicate that the Portuguese video game market will continue to grow at an annual rate exceeding 11% until 2027 . This growth is supported by the increasing adoption of mobile gaming and the expanding ecosystem of game development companies in the country.
Key Players and Innovations in Portugal
Portugal is home to some innovative gaming startups and established companies. Notable startups include:
- Doppio – Known for developing conversational games for Amazon Alexa and Google Assistant, Doppio was acquired and has received $1.12 million in funding from investors including the Alexa Fund and Portugal Ventures.
- KEK Entertainment – This Braga-based company specializes in mobile games and has secured $11 million in seed funding.
- Infinity Games – Focused on puzzle and simulation games, Infinity Games operates with a bootstrapped model and has garnered over 250 million downloads across its titles.
- Ground Control Studios – This company develops premium games for PCs and consoles and utilizes gaming technologies to create innovative business solutions.
The Lisbon Gaming Hub, launched in December last year, is a significant milestone for the industry, providing a collaborative space for startups, investors, and multinational companies. This hub aims to boost the growth of the video game industry in Portugal and create synergies between local and international players .
Comparison with the Broader European Market
While Portugal’s video game industry is growing rapidly, it remains smaller in scale compared to major European markets such as Germany, France, and the UK. However, Portugal’s growth rate surpasses many of these larger markets, indicating significant potential for future expansion.
Germany, the UK, and France:
- Scale and Revenue: These countries generate billions in revenue and host some of the world’s largest gaming companies and events. Germany’s Gamescom, the UK’s EGX, and France’s Paris Games Week are pivotal industry events.
- Government Support: Substantial tax incentives and funding programs support these markets, fostering innovation and expansion.
- Market Maturity: These markets have a long-established presence in the gaming industry, with robust ecosystems supporting development, publishing, and distribution .
Portugal:
- Rapid Growth: Portugal’s industry is expanding at an impressive rate, with a high average annual growth in company turnover and workforce.
- Innovative Startups: The country boasts a dynamic startup scene with companies developing unique and innovative gaming experiences.
- Supportive Ecosystem: Initiatives like the Lisbon Gaming Hub and the presence of associations such as APVP provide essential support for growth and international collaboration.
Despite being smaller, Portugal’s video game industry shows significant promise, driven by innovation, a supportive ecosystem, and increasing international recognition.
Reasons to Start a Video Game Startup in Portugal
1. Rapid Market Growth: The Portuguese video game market has demonstrated exceptional growth, with a significant increase in revenue and the number of companies and employees. This growth trajectory offers ample opportunities for new startups to thrive.
2. Supportive Ecosystem: Initiatives like the Lisbon Gaming Hub provide essential resources and networking opportunities for startups. The presence of organizations such as the Association of Portuguese Video Game Producers (APVP) also helps unify the industry and attract international investments.
3. Skilled Talent Pool: Portugal boasts a highly qualified workforce with expertise in various aspects of game development, including programming, graphic design, animation, and sound. The presence of several universities and polytechnics offering courses related to game development ensures a steady supply of skilled professionals.
4. Cost-Effective Operations: Compared to other European countries, Portugal offers a relatively lower cost of living and operating expenses. This cost advantage allows startups to allocate more resources to innovation and development rather than overheads.
5. Access to International Markets: Portugal’s strategic location and membership in the European Union provide startups with easy access to the broader European market. Participation in international events and collaborations with global players further enhance market reach and business opportunities.
Conclusion
Portugal’s video game industry is on a promising upward trajectory, marked by rapid growth, innovation, and increasing international recognition. While it still has some way to go to match the scale of more established European markets, the supportive ecosystem, skilled talent pool, and cost-effective operations make it an attractive destination for video game startups. With continued investment and strategic initiatives, Portugal is well-positioned to become a significant player in the global video game industry.