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.