2024-03-23 06:07:00
Faced with the crisis affecting the sector, public aid allows studios to remain competitive. But for how long?
8,000 jobs lost since January 1 in the video game sector, difficulties in raising funds, soaring production costs… After the prosperous years of Covid, the global gaming industry is showing its first signs of shortness of breath.
“The difficulties began in the middle of 2023. But the layoffs are only the tip of the iceberg,” notes Stéphane Rappeneau, President of the Indie Plaza studio. Between the freeze on investments, the overabundance of games on the market and the poor performance of certain major players in the sector, 2024 doesn’t look much better. “The risk is to see certain studios close their doors due to lack of financing.”
In this difficult context, the sector is relying on a range of public aid to remain competitive. Among the most important, the video game tax credit (CIJV) created in 2007. It allows companies based in France to benefit from a 30% tax credit on eligible expenses for a new game, up to 6 million euros.
A third of the sector’s budgets
Added to this are regional aid, as well as aid financed by the cultural sector such as that of the National Cinema Center (CNC) with the Video game aid fund (FAJV), mainly aimed at independent studios. We also find aid that is not specific to the sector, such as Research tax credit (CIR).
“These schemes are among the most generous in the world,” emphasizes Stéphane Rappeneau. “They have revitalized the sector and allowed this French industry to shine internationally.”
Just take a look at the Pégases ceremony, which rewards the best French productions. All of the award-winning video games benefited from the support of the public service.
The 2024 Pegasus ceremony took place on Thursday March 7, 2024. – SNJV
In total, public aid represents almost a third of the budgets of companies in the sector. In detail, the video game tax credit corresponds on average to 14.1% of financing schemes according to the 2023 annual barometer of video games in France published by the National Video Game Union (SNJV).
Regional aid represents more than bank financing, with 12.3% of budgets allocated to production. And on the production side alone, the video game aid fund accounts for 7.3% of these budgets.
“The business model is not centered on aid”
So, is the video game industry receiving public aid? All the players interviewed are unanimous: the business model of the video game sector is not centered on aid.
“The industry is not intended to exist via public systems. When a studio develops a game, it does not do it to obtain aid, but to attract an international market”, defends Anne Dévouassoux, president of the union of SNJV.
“Investors, signing a contract with a publisher, and the sale of video games remain the main sources of financing for studios,” she continues. Government measures therefore support other sources of income.
“There is a powerful leverage effect from public aid,” adds François Cubaynes, general delegate of Push Start, the association of professionals and future video game professionals in Occitanie. Because, who says obtaining aid, says reassured investors and therefore, an increase in external financing.
Towards a reduction in amounts?
But for how long? The government plans to scale back the measures for the sector. “Regional aid is in the government’s sights. Regions like Île-de-France, which represents 50% of video game companies, or Occitanie, are considering reducing their aid fund, due to lack of budget” , alerts Anne Dévouassoux.
“A potential catastrophe”, according to François Cubaynes. “This would amount to sending the wrong signal to the entire ecosystem and, ultimately, to complicate the installation and development of French players on the international scene.”
An observation shared by Stéphane Rappeneau. “The weakening of public policies means the risk of seeing French studios turn to foreign financing and losing our talents.” Indeed, France is in competition with other countries, such as Quebec, which offers a particularly advantageous tax credit.
Another major risk is the reduction in the number of French studios. “Public aid, and in particular regional mechanisms, is necessary for the emergence of new players,” continues Anne Dévouassoux. Because, when a studio launches, it cannot count on the sales of a video game to finance itself. With the risk therefore, of losing the small company which will perhaps become the Ubisoft of tomorrow.
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