The European Commission has published its first comprehensive study of the video games sector, setting out a detailed review of its economic, social and cultural impacts. The study begins with a market overview. The sector generated €23.48b of revenue in 2022 (4.3 times higher than digital music and 1.8 times higher than video-on-demand) with revenues expected to grow by 45% by 2027. The EU market share of the video games global market, whilst currently shrinking, is expected to reach 7.3% in 2027. More than half of the European population plays games, with no significant gender differences. 35% of 45–64 year olds play regularly, while 80% of 11-14 years olds are video game players. The sector employs 74,000 people across 5,000 game development and publishing studios.

In addition to a market overview, the study looks at three key areas, the regulatory framework, employment, education and skills and the cultural, social and educational dimensions of video games, and concludes with nine policy recommendations designed to promote the competitiveness and future growth of the sector.

On the regulatory framework, the paper states that complex nature of video games, including content, hardware, software and games as service, means that they are subject to a wide range of regulation including IP, competition and consumer law. This provides the necessary protection for the sector but is hard to navigate particularly for small businesses (the paper highlights that 70% of companies in the EU video games sector employ fewer than 10 people). One of the nine recommendations is that the video game trade associations, together with national and EU governments, should provide clear guidelines for small business in the form of an online resource which should at least cover consumer protection, e-privacy rules, the Digital Services Act and the Digital Markets Act.

The paper does acknowledge that self-regulation is important to the industry (age ratings, parental controls) but also points out that there are still challenges in the form of gaming addiction and online misbehaviour.

On culture, the study acknowledges that games themselves are part of Europe’s cultural heritage but safeguarding the software, hardware, audiovisual content, musical compositions, sound recordings and other copyright-protected subject matter raises IP challenges. The study discusses whether the practices involved in preserving video games for cultural heritage purposes, including migration (converting a disc-based product to a media-neutral storage format which involves copying) and emulation (reverse engineering the operating system which it seeks to replicate which involves decompilation of game code) could come within the exception under the EU Copyright Directive which permits copying by cultural heritage institutions under certain circumstances or within the decompilation right under the EU Software Directive. Existing copyrights and licensing rules raise difficulties for museums to obtain and display older video games for preservation purposes.

The study recommends that the sector, the video games community and cultural heritage institutions should work to preserve games (e.g. source code for older games) and recommends that the European Commission monitors the extent to which the Copyright Directive facilitates video game preservation.

With respect to growing the market, the study points out that the sector does not benefit from state aid exemptions in the way other cultural and creative sectors do, although an increasing number of countries are acknowledging the value of supporting video games such as through tax break schemes, recognising the need to compete with certain non-EU countries which are offering more favourable conditions in the form of tax reliefs. However, there are challenges as games are not covered by the EU General Block Exemption Regulation for State Aid and state aid support for games requires a formal notification procedure. As such, the paper recommends that state aid rules should be reviewed.

Other recommendations include the creation by member states and the Commission of forums to facilitate structured policy dialogue between sector representatives and policymakers, improving access to finance (including the Commission working to maximise access to existing EU funding opportunities), greater collaboration with other industry sectors to maximise innovation and to promote the social benefits of video games, improving data on the sector to enable evidence-based policy interventions (including reviewing existing NACE industrial codes to include the full range of activity connected to the sector), strengthening education and training to support the sector’s future workforce and promoting greater inclusion and diversity in the workforce.

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