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Full steam ahead for the “large” games funding program at federal level!

Excellent news for games developers in Germany: the EU Commission has now notified games funding at federal level, allowing for projects to be funded with more than EUR 200,000 in the future. A total of EUR 250 million has been made available for the next few years.

One recent source of concern was the issue of whether funds provided by publishers may be credited as own funds. The competent Federal Ministry of Transport had initially taken the position that funds provided by publishers could not be credited as own funds as required by the subsidy guidelines; the adjusted position was now announced and followed by the good news from Brussels.

The issue regarding own funds had the following background: Funding programs are in general set up in a way that applicants have to contribute a certain share of the eligible project budget by means of “own funds,” with the subsidy providing the remaining amount. In both games and film funding, it is common practice for producers to raise this share of own funds through advance payments by publishers for subsequent distribution of the work and through crowdfunding measures.

In general applicants for the games funding at federal level must provide a 50% share of own funds. In certain cases, a lower share of “only” 30% is sufficient. For a large number of productions, it is an essential basis of financial planning that funds provided by publishers or collected through crowdfunding measures can be classified as own funds within the meaning of the subsidy guidelines. It would be impossible for a lot of productions to provide the necessary own funds from the available cash reserves. Consequently, many productions – particularly small productions – saw their existence endangered when the Federal Ministry of Transport made its initial announcement.

After the industry loudly criticized this interpretation, the Federal Ministry of Transport now reacted and corrected this practice. Last week, the Federal Ministry of Transport announced that all “project-related third-party subsidies” would also be considered part of the required own funds and would not be considered third-party funding – as had been announced previously.

Shortly after this positive information, a second “bang” for the games sector followed: the “large” games funding program has received the green light from Brussels.

Prior to issuing the first funding decisions within the scope of large-volume games funding, certain preparatory are still pending. For instance, the call for funding and the subsidy guidelines have to be published. According to voices from the industry, the call for funding could be published in spring. Experience gained from the (“small”) de minimis funding is also supposed to be incorporated into the subsidy guidelines for the large-volume federal games funding program.

The green light for the objective behind federal games funding, the sustainable improvement of the competitiveness of the German games sector, should therefore be back on – another important step for an internationally competitive and strong German games industry. It remains to be seen to what extent the cultural test required for the projects to be funded will be conducive to achieving this objective.

We will report as soon as there is new information on the content of the subsidy guidelines or on the call for funding. Stay tuned.