"Do not raise money to develop a game. Raise money to sell a game"

"We are facing more and more competition around the globe. Markets are getting more fragmented and discoverability is becoming more difficult," says EGDF president Hendrik Lesser, commenting on the current state of the European games industry.

"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."

This dour outlook follows a series of tumultuous years for the industry post-pandemic, mired with layoffs, cancelled games and studio closures. And though the "survive to 2025" mantra was shared by many developers last year, Lesser has now suggested that "2025 is in many ways the new 2024".

Survival into 2026 is the new target, he claimed, with some challenges familiar and others new. But he did have some advice to offer developers.

Strategies and suggestions

"Do not raise money to develop a game. Raise money to sell a game. If the game does not make money, kill it," said Lesser. "Even if you want to make art, it is still a business too."

To build new IPs while splitting costs, he advised that developers find "new allies" in the industry, collaborating with other studios and partners outside of Europe - from emerging countries in Latin America, Africa, the Middle East and elsewhere. Entering new markets like China was also advised.

Other suggestions included investing in new business models, going cross-platform with game releases and entering other sectors like film or the military with games industry tools.

"It might be time to go niche and find a specific target audience big enough for your game," he added.

"If you feel it, go for it. There has never been a more suited time to make games with social and political messaging."

Defending the beaches

As for why industry challenges persist, Lesser noted that gamers are choosing to play old games and remakes over brand-new releases, which only benefits those developers who have already created successful IPs years ago.

He stated that a shifting geopolitical order could mean "new hills to climb and beaches to defend", adding that access to funding remains a challenge, private capital is no longer available at its past scale, self-publishing revenue is down and small and medium teams often struggle with sales.

"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.

"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."

There remain reasons to be optimistic about the games industry, though, with even Lesser acknowledging "hard times make the best entrepreneurs".

And in the UK specifically, the mobile games industry returned to growth for its second consecutive year in 2024, hitting a record $1 billion in player spending.