The Czech gaming scene is in unprecedented shape. In the past year, domestic companies recorded a total turnover of more than seven billion crowns, which is an increase of one third and significantly exceeding the original assumptions. The results were presented by the Association of Czech Game Developers at a press conference held today as part of the Game Developers Session event in Prague.
The Game Developers Association, which collects data on the domestic gaming scene, expected a slight increase in 2021 compared to the year before. At that time, domestic video game companies generated sales of 5.33 billion crowns. The estimated turnover for last year was thus around six billion. Reality? An increase of 33 percent to a record 7.11 billion.
The profit of game studios also grew somewhat less rapidly, but still in double-digit percentages. It earned 2.08 billion crowns last year, 14 percent more than in 2020. “Those numbers and profitability are really above standard compared to other industries. And it also follows that companies are transferring interesting finances to the state treasury and showing that they are beneficial to society,” Pavel Barák, chairman of the Association of Czech Game Developers (GDACZ), commented on the results.
Gaming companies thus paid almost 400 million crowns in income tax. “They are businesses with huge added value. Those companies create a product that goes to world markets. And if they break through there, it means they can generate big returns for relatively little cost. This is hugely attractive money for the Czech economy, because it comes from exports,” reminded Barák.
According to conservative GDACZ estimates, exports make up at least 95 percent of sales. “And the koruna earned from exports is not equal to the koruna earned within the Czech market, which makes it all the more valuable. Companies at the developer conference here are an important part of the state’s pro-export policy,” commented on the situation Marek Svoboda, who participated in the Game Developers Session on behalf of the Department of Economic Diplomacy of the Ministry of Foreign Affairs.
Of the overwhelming majority, the record turnover was indeed arranged by Czech companies, only a tenth of the total of 135 studios are branches of foreign companies. The number of game creators also saw the largest increase in four years, with 14 new companies appearing last year. In total, they employ over 2,300 people, approximately 250 more than the year before. Over half of them are in Prague, a quarter are based in Brno. The vast majority are small startup companies with fewer than ten employees.
The turnover growth estimate for 2022 is only around six percent.
While in the figures for the year 2020 the biggest driver of Czech game companies was the established studio Bohemia Interactive, in last year’s data it was skipped by the creators of the most successful virtual reality game in the world from Beat Games. You thanks to your hit Beat Saber they earned 2.3 billion crowns. For comparison, the aforementioned “Bohemian” accounted for roughly a fifth of the domestic industry’s sales the year before, when it announced a turnover of around a billion crowns, which it practically repeated last year as well.
And although the one-third growth of Czech games last year was a pleasant surprise, industry representatives are already warning of the effects of the current crisis, which will surely be reflected in the next report on the state of the domestic market. “The estimated turnover growth for 2022 is only about six percent to 7.5 billion crowns,” Barak said. And he added other topics in which he sees potential pitfalls or at least the possibility of improving the situation.
There is a lack of people and more fundamental support
“The growth in the number of workers and the number of companies is not the same as in the case of turnover. Companies would like to recruit, but there is a lack of qualified people. Or it is difficult to get them from abroad, although Czech companies are able to attract them,” Barák brought to light the burning problem not only of the video game industry. The head of Warhorse Studios, Martin Frývaldský, also commented on the need to liberalize working conditions for foreign talent.
“And also in the field of startups, we have the potential to grow much more, not only by fourteen new companies, but at least twenty-five,” added Barák. “But that requires an ecosystem and more support. In that respect, the situation is improving, for example in the framework of economic diplomacy, which helps Czech companies to present themselves abroad. We are also discussing support with Prague. However, this is a long run, not one or two years,” the GDA chairman mentioned.
Energy, inflation, cost of labor. Everything goes against us continuing to be similarly profitable.
Another conference participant, Mayor Zdeněk Hřib, spoke about involvement. He recalled the city’s history as a creative center and stated that he would like to continue this tradition in modern fields, among which the video game industry has a prominent position in the Czech Republic. As a concrete example of what possible support from the capital for gaming companies could look like, he mentioned technology companies operating in the field of smart technologies used in cities. Prague helps such startups, for example, with presentations abroad.
However, apparently no amount of support from states or municipalities will reverse the impending slowdown of the market. While the pandemic initially meant a favorable period for game studios worldwide, when people were forced to find entertainment at home, its consequences and above all the ongoing economic crisis are already affecting video games as well.
“In terms of sales, covid and people at home have helped the industry, but it also has negative effects. The home office did not help creative work, projects are being extended and this will probably show in the coming months. We see it in other studios as well, especially startup ones. In addition, energy prices, inflation, the price of labor, everything goes against us continuing to be similarly profitable.” Slavomír Pavlíček, co-founder of Bohemia Interactive, presented an ugly vision.