The Polish Games Industry:
A General Overview

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General Industry Trends (early 2008)

Note: this article was written back in early 2008, long before the effects of the global financial crisis became visible in the games industry. I have not yet had time to write an updated version.

There are six basic trends that, in my opinion, currently determine the shape of the Polish games industry:

  • Rising Development Costs 
  • Expansion Into Mobile & Casual Gaming
  • Local And International Consolidation
  • Shift From International To Local Financing
  • Russia Rising
  • Brain Drain

We will now take a look at each of these trends in detail.

1. Rising Development Costs

All over the world, the new generation of consoles appearing from 2005 onwards has had a devastating effect on small developers. Although costs of development in games had been rising steadily for more than a decade, the next-gen consoles, with their dramatic increase in graphic capabilities, have forced a huge jump in development costs.

In the early 1990s, it was possible to develop a new game on a shoestring budget - a few thousands of dollars. By the end of the 1990s, hit games were being developed for hundreds of thousands of dollars, but it was still possible to develop a reasonable-quality budget title for tens of thousands. This is no longer even remotely possible for mainstream console and PC games - there is no way to develop a decent PC game from scratch for less than $100,000. On consoles (with the exception of the Nintendo Wii, and hand-held consoles), the cost is much, much higher - closer to $1,000,000.

In Poland, this has mainly had the effect of stalling the appearance of new console and PC developers - the boom that had occurred at the turn of the century has slowed down a lot. In addition, because PC games development remains so much cheaper than console development, Polish developers remain primarily PC-oriented. That said, the Nintendo Wii has also become a very popular platform in recent years.

This is THE main trend currently determining the changing shape of the industry - everything else is merely a consequence of the rising costs.

2. Expansion Into Mobile & Casual Gaming

As a consequence of the extremely rapid growth of the mobile gaming and casual (primarily browser-based) gaming markets, there has been huge, huge growth in this area. New mobile & casual gaming developers continue to pop up all over the place.

This trend is accelerated by the rise in costs of development in other parts of the gaming market - mobile & casual gaming is the only part of the industry where it is still possible for one or two people to develop a game from scratch in garage-conditions.

A similar expansion is visible in hand-held console games, which are more expensive to develop than mobile games, but still relatively cheap compared to ordinary console and PC titles.

3. Local And International Consolidation

As the Polish games industry becomes increasingly connected to the global games industry, we're starting to see quite a bit of consolidation taking place.

Foreign companies are setting up Polish studios (particularly in the mobile gaming industry - Micazook, Gamelion), but are also purchasing existing studios (Epic Games, Mobile Entertainment Europe, Zuxxez Entertainment).

Consolidation is also taking place at a local level. the biggest fish in the Polish games industry - companies like City Interactive, CD Projekt, Frontline Studios, and Nicolas Games - are expanding either by setting up subsidiaries, or purchasing existing developers.

Again, this is a consequence of the rise in costs of development - developers that would otherwise try to remain independent, now have less choice than ever. They can either deal with bigger companies, or they can, at best, switch to mobile & casual gaming.

4. Shift From International To Local Financing

As the Polish games industry continues to grow, we're starting to see Polish publishers big enough to risk going public on the Warsaw stock exchange. The first two to make this step were City Interactive and Nicolas Games (although the latter has entered the smaller NewConnect exchange, rather than the main stock exchange). CD Projekt is also expected to make this step soon.

All three of the above companies have played a significant role in financing games development, either by setting up new development branches in various cities, or by signing agreements with existing studios. Another important contributor is Techland, who frequently outsources games development to smaller companies.

There is also a less frequent type of situation, where a Polish company unrelated to gaming decides to enter games development, thus creating additional funding possibilities. Two examples of this are Implix and Carrywater Consulting.

Thus, in general, the Polish industry has become self-supporting to a significant degree - where in the 1990s, a small developer in need of funding would have to talk to foreign companies, today it is possible to obtain funding locally.

It has to be noted, however, that even the biggest Polish developers and publishers are still to some degree dependent on the rest of the world - and inevitably always will be, because Poland will never be, by itself, a sufficiently big market to justify the costs of developing a full-scale triple-A title. The only company that has been consistently trying to build up a totally independent, world-wide distribution network is City Interactive - everyone else relies on external publishers to help finance development.

5. Russia Rising

Another new source of financing, as well as an increasingly important market, is Russia.

In the 1990s, Russia had virtually nothing to do with games - as a consequence of the financial crisis, people in Russia could generally only afford pirated software. This is now changing, and rapidly. A sizeable games development industry has sprung up in Russia, producing world-class titles at far below world-class costs. With a population of 140 million, it's hard to ignore Russia as a market, too.

For Polish companies, this has meant increasing competition from the east. Polish developers are no longer the cheapest means of outsourcing games development, and Polish publishers are no longer the only ones trying to capture the Polish market. In 2005, the Russian publisher 1C entered the Polish market simply by purchasing one of the top five local publishers, Cenega (this was especially surprising, given that Cenega was already a large multinational company, with branches in Poland, Slovakia, Hungary and the Czech Republic). Where previously, titles developed by Russian companies were a rarity, Cenega under 1C has been literally flooding the market with Russian games, marketed at significantly lower prices than Western titles normally are (outside, of course, of the 'value' segment).

However, Russia is also a huge new opportunity. Russian companies often pick up and publish budget titles that would not be looked at elsewhere. One example of this is Openoko Entertainment, who appears to be getting off the ground primarily thanks to the Russian market (though of course, this company is much too new to guess whether they'll survive or not). These new opportunities are especially important, given that Polish developers are still reliant on overseas markets - it is impossible to make a profit on a PC game while selling it exclusively in Poland.

6. Brain Drain

General economic growth, combined with rapid migration into the UK and Ireland (the latter being a consequence of Poland's entry into the European Union) has significantly boosted wages all across the economy. One of the paradoxes of Poland's current economic situation within the European Union is that it is often better financially for someone with a university degree to work washing dishes in a British pub than to work in his area of expertise in Poland.

In the games industry, this paradox primarily affects design positions, where skilled experts still remain severely underpaid compared to industry standards. Wages are less of a problem for graphics artists and especially programmers, who tend to be very well paid. Nonetheless, it is still possible for a Polish programmer to get significantly better financial conditions in the UK or US. Given the amount of opportunities available overseas, only emotional attachment to people and places prevents a devastating general exodus in many companies.

As the rise in costs of development prevents most Polish developers from making the transition from PC to console games, overseas opportunities are often just plain more interesting, too. Who wouldn't want to work on a triple-A console title instead of a budget PC title, especially when the former promises to pay better, too? Consequently, it's getting tougher to find talent in Poland, particularly for programmers and designers.

In the meantime, the continuing existence of dozens upon dozens of tiny companies also means there is a significant shortage of management staff, forcing the biggest companies to look for producers and project managers from outside of the industry.

Copyright 2008 Jakub Majewski