Rotterdam, 28 April 2011 - Digital channels are increasingly being used to distribute games. This offers opportunities for Dutch game developers. Moreover, the Dutch are active gamers: in 2010 they spent EUR 626 million on games and related hardware. But a study of the Dutch game industry carried out by Deloitte shows that not all this net spending flows to the Dutch game industry: Dutch game developers and publishers reached joint sales figures of EUR 125 to 150 million.
Games are becoming increasingly popular, also in the Netherlands. Consumer spending on games in the Netherlands is expect to reach EUR 668 million in 2012, particularly due to increased spending on social, mobile, portal and MMO (massively multiplayer online) games. Consumer spending might even grow to EUR 805 million in 2013 with the launch of the new generation consoles. “The popularity of social and online games has a tremendous impact on the industry. The surge of mobile devices, higher internet speeds and new generation consoles continuously increases digital distribution within this sector. New players hence emerged within the industry with new sales flows and alternative business models, creating opportunities for Dutch companies” says Roel van Rijsewijk, responsible for the Deloitte Online Business Innovation Program.
The Dutch game industry is relatively young and is growing rapidly. A total of 160 companies is active in this industry in the Netherlands. “The Netherlands has great potential for these companies due to the widespread use of broadband and smartphones, and through the broad offer of about 45 training programmes relevant for the game industry, thus guaranteeing abundant availability of well-trained professionals. On top of this, the Dutch government has implemented specific tax laws to encourage innovation investments,” says Daan Witteveen, Managing Partner of Technology, Media and Telecom at Deloitte.
But the figures show that the Dutch game industry does yet fully leverage the potential of the Dutch consumer market and the advent of digital distribution. The industry is currently facing multiple challenges, amongst which the limited number of venture capital companies in Europe willing to invest in game developers.
This limits the access to venture capital. If companies want to raise the interest of these venture capitalists, they will have to further professionalise their business models. Witteveen: “The sector mainly consists of small game developers and a limited number of publishers. Many of the developers seek to create a good game, but they do not have innovative strategies for realising sales or optimising their margins.”
Moreover, the Dutch companies lack the economies of scale to take audacious steps. “Game developers all devise their own solutions and lack the volume to be able to use outsourcing. Their limited size also limits the possibilities for negotiating with major publishers,” says Van Rijsewijk. In addition, the companies are spread all over the country. “Too many cities have pursue local initiatives to support the sector, thus fragmenting the industry. The sector will have to step up cooperation to achieve economies of scale, increase its attraction to venture capitalists, and to invigorate negotiations with publishers.”
The “Dutch games industry” study maps out international trends in the video game industry, and the opportunities for the Dutch companies in this industry. The study was ordered by Deloitte Online Business Innovation Group, which analyses the impact of digital channels on corporate business models, and is based on interviews with major players in the Dutch market, public source information, and the expertise and experience of Deloitte professionals.