Israel’s gaming industry is exploding, here’s what it needs to go nuclear

Its rapidly expanding revenue can serve as a springboard to global success, if Israel can get some government incentives in place.

 THE IESF World Championships is comparable to the World Cup of gaming.  (photo credit: IESA)
THE IESF World Championships is comparable to the World Cup of gaming.
(photo credit: IESA)

Israel is making steady progress in its trek to becoming a contender in global video game development. According to a joint analysis of the past five years from the nonprofit organization GameIS and global consulting firm Deloitte, the country’s digital gaming industry is growing and shows no sign of slowing down.

Revenues from this industry in Israel were $8.6 billion in 2021, a far cry from 2016’s revenues of only $1b., representing an average annual growth of 54% and a five-year increase of 760%. Those revenues – $8.6b. out of $175b.  – accounted for 5% of global Israeli industry revenues in 2021.

“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. 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, at 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 Deloitte economic consulting manager Manuel Galrentor.

 Guy Ben-Dov, Volunteer Chairperson of GameIS  (credit: Courtesy) Guy Ben-Dov, Volunteer Chairperson of GameIS (credit: Courtesy)
“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

He 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 a 60%-80% deduction of business expenses. An R&D program from the country’s Tax Authority 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 chair of GameIS, Israel’s current trajectory gives it great potential, however, 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,” Ben-Dov 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. 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. From government-funded programs like the Gamehub incubator, to academic institutions with dedicated game development tracks like Hebrew University, Bezalel Academy and the Shenkar College of Engineering, Design and Art, to private programs such as the Tiltan School of Design and Visual Communications, fledgling Israeli developers seeking education have what to choose from.

One point made by Game Hub head Dani Bacon is that the Israeli game-development industry needs to reframe its approach to games in order to reach its peak potential.

“Israel is a kind of games empire, but if you look at the ecosystem and where Israel is influential, it’s very [geared] to mobile and mobile and casual genres,” Bacon said.

“What we need – what we don’t have much of here – are games that influence; that are cultural and content-based and experience-based,” he noted.