Czech gaming industry tanks through pandemic, reports record growth in 2021

While other economic sectors struggle through the pandemic years in 2020 and 2021, the Czech Republic's gaming industry saw record growth last year, according to figures shared by the Association of Czech Game Developers during a press conference at the Game Developers Session in Prague on Friday.

Annual turnover for the Czech video game sector was up 33 percent to 7.1 billion crowns in 2021. Profit rose by 14 percent to 2.1 billion crowns. Further growth is expected in 2022, with preliminary data suggesting annual turnover will reach 7.5 billion crowns.

The figures greatly exceeded estimates from industry analysts and individual studios, who expected to see growth in line with previous years and at around six billion crowns for 2021.

With more people staying at home and potentially playing more games, the pandemic is theorized to have helped the gaming sector worldwide. New trends in 2022 including soaring energy prices may slow that growth, however.

"Development deadlines are lengthening, which will have an impact on performance," says Slavomír Pavlíček from Prague-based Bohemia Interactive, one of the Czech Republic's largest studios. "Inflation, the rise in energy prices, and the rising cost of human labor are all against us."

Pavlíček references the "crunch" that game studios experienced in order to release games on time. Backlash surrounding the release of Cyberpunk 2077 from Polish studio CD Projekt Red, and other releases, has shown that fans are willing to wait longer to get a more polished game. But longer development time will eat into studio profits.

Bohemia Interactive is responsible for the popular ARMA series and its spinoff DayZ, but the studio hasn't put out a major title since 2019. Competition from other studios is also increasing. There were 135 gaming studios in the Czech Republic last year, up from 14 in 2020.

"Last year, twice as many game studios were created as in 2020," says Pavel Barák, chairman of the Association of Czech Game Developers.

A total of 2,329 people worked in the gaming industry in the Czech Republic in 2021, about 12 percent higher than the previous year. Due to a lack of local talent, foreigners represent a huge percentage of employees in the Czech gaming sector compared to other industries.

In 2021, the employment of foreigners in the Czech gaming industry rose by 5.5 percent; 38.5 percent of the industry is now foreign-born. Employees from Slovakia, Ukraine, Poland, the USA, Canada, and other countries have all been recruited to work in the Czech Republic.

"The digital game market in the Czech Republic still lacks a large number of developers. Companies could use roughly a thousand new workers here," says Gabriela Teissing, director of corporate venture builder Creative Dock.

"At the same time, domestic demand in this industry grows by at least 25 percent every year. It is also similar in the EU markets. Interest on the part of consumers is growing exponentially, companies do not have enough domestic workers, so they welcome qualified experts from abroad, but there are still not enough of them."

Barák adds that the vast majority of Czech-produced games are made for the global marketplace, bringing greater revenue into the country compared to other sectors. Yet the industry has not received significant support from the state, despite generatign hundreds of millions of crowns in taxes; an estimated 395 million crowns were paid in 2021.

"The vast majority of games are sold abroad; the industry itself is strongly pro-export and more than 95% of Czech game production is directed to the world market, which benefits the Czech economy," says Barák. "At the same time, studios pay considerable taxes to the state."