The European video game industry and its dependence on digital infrastructure

For dec­ades, com­pan­ies’ stra­tegic ana­lys­is has been based on a few fun­da­ment­al prin­ciples: the abil­ity to con­trol dis­tinct­ive resources, anti­cip­a­tion of the com­pet­it­ive envir­on­ment, and medi­um-term pro­jec­tion. Tra­di­tion­al the­or­et­ic­al frame­works, from the value chain to resource-based approaches, worked in a con­text where the bound­ar­ies between the com­pany and its envir­on­ment remained rel­at­ively stable, and where sec­tor­al devel­op­ments remained predictable.

In many con­tem­por­ary digit­al sec­tors, these con­di­tions no longer apply. The com­pany is no longer an autonom­ous stra­tegic unit: it is part of tech­nic­al net­works that determ­ine an increas­ing share of its oper­a­tion­al choices. Digit­al infra­struc­tures, such as soft­ware engines, dis­tri­bu­tion plat­forms, cloud ser­vices, and pro­pri­et­ary stand­ards, have become determ­in­ing factors in per­form­ance. These infra­struc­tures evolve at a pace that far exceeds the abil­ity of user organ­isa­tions to adapt¹.

European video game stu­di­os, for example, have recog­nised skills and proven cre­at­ive abil­ity. How­ever, they oper­ate in a tech­nic­al envir­on­ment whose essen­tial para­met­ers they no longer con­trol. Dis­tri­bu­tion plat­forms, graph­ics engines, cloud infra­struc­tures: more than 90% of the sector’s crit­ic­al digit­al resources are con­trolled by non-European com­pan­ies. This struc­tur­al depend­ence reveals a pro­found trans­form­a­tion of the digit­al eco­nomy that tra­di­tion­al ana­lyt­ic­al frame­works struggle to grasp.

The European video game industry is a par­tic­u­larly reveal­ing case study for this recon­fig­ur­a­tion. The sec­tor data is sig­ni­fic­ant: over 90% of digit­al sales in Europe go through non-European plat­forms (Steam, Epic Games Store, App Store, Google Play). Between 75% and 80% of stu­di­os use two Amer­ic­an graph­ics engines (Unity and Unreal Engine). More than 70% of serv­er infra­struc­ture for online games relies on non-European clouds (AWS, Azure, Google Cloud). Nearly two-thirds of medi­um-sized stu­di­os depend on for­eign capital.

A change in the con­di­tions of access to the App Store or in the archi­tec­ture of Unreal Engine can affect the eco­nom­ic viab­il­ity of a European pro­ject in a mat­ter of weeks

These indic­at­ors do not simply reflect a decline in com­pet­it­ive­ness. They char­ac­ter­ise a sys­tem in which a company’s tra­ject­ory depends on tech­nic­al ele­ments that it can­not con­trol. A European stu­dio devel­ops a game over a peri­od of four to five years. Dur­ing this cycle, a soft­ware engine mod­i­fies crit­ic­al com­pon­ents every three to six months, a mobile plat­form revises its com­mer­cial terms two to three times a year, and a PC platform’s recom­mend­a­tion algorithms adjust on a daily basis. This dif­fer­ence in pace between infra­struc­tures and organ­isa­tions cre­ates a struc­tur­al gap. Tra­di­tion­al stra­tegic ana­lys­is tools assume a rel­at­ively stable envir­on­ment over the time frame of major decisions. How­ever, a change in the con­di­tions of access to the App Store or in the archi­tec­ture of Unreal Engine can affect the eco­nom­ic viab­il­ity of a European pro­ject in a mat­ter of weeks.

Glob­al com­pet­it­ive intens­ity accen­tu­ates this dynam­ic. Plat­forms no longer play a neut­ral inter­me­di­ary role: they define com­mis­sion rates, vis­ib­il­ity mech­an­isms, accep­ted tech­nic­al formats, data col­lec­tion meth­ods and mon­et­isa­tion mod­els. Their influ­ence on the sector’s oper­at­ing con­di­tions is con­sid­er­able. In this con­text, con­ven­tion­al eval­u­ation cri­ter­ia reveal their lim­it­a­tions. The intrins­ic qual­ity of a pro­ject – team skills, tech­nic­al con­sist­ency, tech­no­lo­gic­al matur­ity, mar­ket poten­tial – remains an import­ant factor but is no longer suf­fi­cient to guar­an­tee its suc­cess. These indic­at­ors make it pos­sible to assess the intern­al sound­ness of a pro­ject, but not its abil­ity to adapt to a chan­ging and con­cen­trated tech­nic­al environment.

Pub­lic tech­no­logy invest­ment pro­grammes face a sim­il­ar chal­lenge. Hori­zon Europe, for example, was designed to sup­port stra­tegic sec­tors over the long term, with a budget­ary and pro­gram­mat­ic approach span­ning five to ten years. The digit­al infra­struc­tures into which these sec­tors must integ­rate, how­ever, evolve accord­ing to annu­al or even sub-annu­al cycles. This ten­sion is not cyc­lic­al, it is struc­tur­al. Pub­lic schemes fin­ance tech­no­lo­gies whose viab­il­ity depends on tech­nic­al sys­tems decided by extern­al act­ors, accord­ing to time­frames that exceed insti­tu­tion­al adapt­a­tion capacities.

This phe­nomen­on is doc­u­mented in inter­na­tion­al com­par­at­ive stud­ies, not­ably those con­duc­ted by the OECD, which emphas­ise that in advanced digit­al indus­tries, the per­form­ance of an invest­ment depends as much on the archi­tec­tures in which a tech­no­logy is embed­ded as on its intrins­ic qual­ity. Giv­en this con­fig­ur­a­tion, it is not a ques­tion of repla­cing exist­ing the­or­et­ic­al approaches, but of sup­ple­ment­ing them to make them com­pat­ible with the char­ac­ter­ist­ics of digit­al envir­on­ments. Two dimen­sions must be expli­citly integ­rated: the speed of change in tech­nic­al infra­struc­tures and the res­ult­ing depend­en­cies for busi­nesses and pub­lic policy.

In con­crete terms, this means that it is no longer pos­sible to assess a company’s stra­tegic pos­i­tion­ing without examin­ing the fore­see­able tra­ject­ory of the infra­struc­tures on which it depends. In ana­lys­ing mar­ket struc­tures, it is neces­sary to integ­rate the struc­tur­ing role of plat­forms and engines, whose tech­nic­al decisions have imme­di­ate eco­nom­ic effects. When eval­u­at­ing tech­no­logy pro­jects, wheth­er con­duc­ted by a private investor, a nation­al pro­gramme or an inter­na­tion­al insti­tu­tion, the intern­al qual­ity of a pro­ject can­not be sep­ar­ated from its com­pat­ib­il­ity with archi­tec­tures that are evolving at a faster pace.

The case of the European video game industry shows that a sec­tor can com­bine tech­nic­al expert­ise, cre­at­ive capa­city and sub­stan­tial pub­lic sup­port, while remain­ing struc­tur­ally vul­ner­able when its crit­ic­al infra­struc­ture is extern­al and rap­idly evolving. Stra­tegic ana­lys­is remains rel­ev­ant, but it needs to be refor­mu­lated: the com­pany is no longer the sole determ­in­ant of its trajectory.

This meth­od­o­lo­gic­al adapt­a­tion is neces­sary to con­tin­ue to cor­rectly eval­u­ate pro­jects, sec­tors and pub­lic policies in a con­text where digit­al archi­tec­tures are evolving more rap­idly than the organ­isa­tions that depend on them. Without this con­cep­tu­al adjust­ment, even the best ana­lyt­ic­al tools risk miss­ing the point: the very struc­ture of the com­pet­it­ive envir­on­ment has changed.