Its rapidly expanding revenue can serve as a springboard to global success, if Israel can get some government incentives in place.
Israel is making steady progress in its trek to becoming a contender in the global video game development arena. According to a joint report from nonprofit organization GameIS and professional service firm Deloitte which analyzed the last five years, the country’s gaming industry is growing, and shows no sign of slowing down.
Revenues from the Israeli digital gaming industry were valued at $8.6 billion in 2021, which is a far cry from 2016’s revenues of only 1 billion, a change which represents an average annual growth of 54%, and growth of 760% over five years. As well, those revenues accounted for 5% of global Israeli industry revenues in 2021: $8.6 billion out of $175 billion.
“What we need – what we don’t have much of here – is games that influence: that are cultural and content-based, and experience-based.”
Dani Bacon, head of GameHub
With the rapid growth of the industry has come a boost in gaming employment. The last year saw 14,000 people employed in the gaming industry within 190 companies, compared to only 4,000 employees in 2017. That’s an increase of 250% in the number of employees, with an average increase of 38% per year.
A large portion of the games created by Israeli developers are in the casual gaming space – a genre typically associated with match-three and casino games on mobile platforms. “Israel is an international leader in the casual gaming market, the performance marketing industry and in advanced monetization techniques” said Manuel Galrentor, the economic consulting manager at Deloitte.
“In the past five years, the branch in Israel is experiencing unprecedented growth and attracts a lot of interest. In order to expand the growth into additional areas in the industry of game development, government support is needed in the form of investment in human capital in general and funding game studios in their early stages in particular,” Galrentor said.
Government incentive programs and university support
Galrentor pointed to government incentive programs in countries such as Poland and Canada. Canada is renowned in the game development community for its government funding program in which game developers are entitled to 60-80% deduction of business expenses, as well as an R&D program from the country’s Tax Authority which grants a tax credit of 45% on expenses such as payrolls, overheads and materials and a variety of other regional programs. In addition, there are 69 relevant training courses at universities across the country.
Polish universities offer 60 industry-relevant courses – no doubt a contributor to Poland’s gaming industry success. The Eastern European nation is responsible for several mainstream successes, such as the Witcher series, and has doubled its revenues over the past four years.
According to Guy Ben-Dov, Volunteer Chairperson of GameIS, Israel’s current trajectory gives it great potential, but it needs to learn from the success of others. “In order to enable the industry to grow and fulfill its potential, it’s important that the regulator and the market understand Israel’s unique bottlenecks […] and learn from the effective incentives and programs used around the world that have propelled local industries forward in a way that will also generate adequate revenues for the country,” he said.
“We suggest the state offer grant programs, promote the Innovation Authority in the field of Digital gaming, enable tax incentives that will encourage more private investment, employment and R&D, and enable loans with affordable interest that will allow game developers to work and focus on quality products,” he said. “Furthermore, the state should encourage the establishment of schools in the field and high-quality, well-funded training programs, to encourage the establishment of accelerators that focus on the field and so too, establish an apprenticeship model that will enable young people to acquire important skills and professional experience – similar to processes used around the world.”
Not starting from scratch
That’s not to say Israel has no dedicated game development programs – indeed it does. The Tiltan School of Design and Visual Communications, Game Hub, and the Shenkar College of Engineering, Design and Art are stand-outs in this regard, offering structure and support to developers as they hone their skills.
One point made by Game Hub’s head, Dani Bacon, is that the Israeli game development industry needs to reframe its approach to games in order to reach the peak of its potential. “Israel is a kind of games empire but if you look at the ecosystem and where Israel is influential, it’s very, to mobile and mobile and casual genres,” he said.
“What we need – what we don’t have much of here – is games that influence: that are cultural and content-based, and experience-based,” he said. There’s a decent chance that with the kind of quality, hardcore games and a little push from the government, coupled with its current massive growth, the industry has the potential to become a global gaming power.