5-day guide: Founding a game development studio

As a support for young studios, this series summarizes the essential steps for founding a game development company. The guide is divided into five days – from market analysis to legal obligations. The presentation remains neutral and motivating, without direct address.

Day 1 – Market analysis and the game idea

The German games industry is growing continuously. According to the Federal Ministry for Economic Affairs and Climate Protection, sales rose from 6.5 billion euros in 2019 to almost 9.97 billion euros in 2023. More than 34 million people play games regularly, including an increasing number of older target groups. Despite the growth, a few large studios dominate the market; however, a successful independent game can be a surprise success.

One criterion for success is a clear and original game idea. Analyzing the target group and platform (PC, console, mobile) is the starting point. Industry data shows that while smartphones have the largest user base, consoles are catching up fast. An idea alone is not protected; only the actual development is relevant in terms of copyright: a game must achieve a certain level of individual intellectual creation. The pure game idea or loose rules are not protectable without practical implementation. In order to convince investors, it is advisable to develop a prototype at an early stage, as copyright protection only arises once the prototype has been completed and the game instructions have been written down.

A business plan should include a market analysis, competition, target group and monetization model. A financial plan that takes development, marketing and publication costs into account is essential. If you want to hire employees, calculate personnel costs and social security contributions. Freelance support (graphics, music, programming) must be included; contracts for this will be dealt with on day 4.

Day 2 – Legal form, liability and team

Before the official start, the legal form must be chosen. A studio can be run as a sole proprietorship, a civil law partnership (GbR), an entrepreneurial company (UG haftungsbeschränkt) or a limited liability company (GmbH). The choice depends on liability, capital requirements and team size. While a sole proprietorship or GbR does not require minimum capital, the owner has unlimited liability with their private assets. The UG and the GmbH offer limited liability; the capital contribution forms the company’s share capital. A GmbH requires a minimum of 25,000 euros, while one euro is sufficient for a UG. The capital contribution is paid into a business account before the notary makes the entry in the commercial register. This is followed by entry in the commercial register and business registration.

Team constellation and number of shareholders also influence the legal form. Individual founders can initially start as a sole proprietorship or UG; a GbR, UG or GmbH is suitable for several shareholders. If you want to raise external capital, you should give preference to the UG or GmbH, as investors can acquire exclusive or partial shares. In any case, a partnership agreement that regulates the ownership structure, co-determination rights and exit regulations makes sense.

A frequently discussed question is whether game developers can be self-employed. The Federal Ministry for Economic Affairs and Climate Protection points out that not every development of application software constitutes a freelance activity in accordance with Section 18 (1) no. 1 EStG. In order to be recognized as a freelance professional, the activity must require complex, engineering-like services and must be proven accordingly. Artistic aspects can be taken into account, but the classification remains a case-by-case decision by the tax authorities. In practice, many developers therefore register a business in order to avoid tax uncertainties.

<strong “>Corporate law focus: The choice of legal form and the drafting of the articles of association fall within the core area of corporate law. In particular, the Limited Liability Companies Act (GmbHG) and the German Commercial Code (HGB), which regulate management duties, powers of representation and publicity obligations, apply to corporations. A carefully drafted partnership agreement avoids later disputes about voting rights, contributions and profit distribution and creates legal certainty.

Day 3 – Financing and funding programs

The development of a game is capital-intensive. In addition to equity and debt capital, there are specific funding programs. The federal government has been providing games funding since 2019. According to the BMWK, prototypes and productions are funded; start-ups and small companies can receive up to 50% of the eligible costs as a grant The funding is non-repayable and is paid out according to the progress of the project. A bonus increases the funding rate for start-ups (up to three years old); large companies receive a maximum of 25%. Since July 2025, more than 640 projects have been funded with a total of over 220 million euros. Applications must pass a cultural test and must not contain any content that is harmful to young people; projects involving gambling or glorification of violence are excluded. The minimum project size is 300,000 euros.

In addition to federal funding, there are also state subsidies (e.g. in Bavaria, North Rhine-Westphalia and Berlin-Brandenburg), which often support prototypes or smaller productions. Cumulation with federal funding is not permitted under the current guidelines. Other financing channels include crowdfunding, venture capital, media funds or income from early access sales. Development banks such as KfW offer loans with reduced interest rates. The business plan should include the chosen financing strategy and milestones; investors expect realistic sales forecasts and monetization models (premium, free-to-play, subscription, DLC).

Day 4 – Contracts and rights

The legal bases for games are diverse. Copyright protection only arises when the game becomes a personal intellectual creation and a prototype has been completed. The game idea alone is not eligible for protection. The German Copyright Act (UrhG) classifies computer games as computer programs as linguistic works. Individual graphics, figures and logos may also be protectable if they reach the required level of creation. If you want to permanently protect the trademark of your game, you can register a trademark with the German Patent and Trademark Office (DPMA) or as a European Union trademark; title protection for the game title is also available.

Classification under media law: In addition to copyright and trademark law, media law also plays an important role. Games are classified as interactive audiovisual media; media law regulations apply to the use of music, film sequences or streams, and licensing obligations may arise from the Interstate Broadcasting Treaty. When producing advertising or trailer content, care must be taken to ensure that the rights of actresses and dubbing actors are protected. The legal framework of copyright law, media law and trademark law thus forms the foundation of a clean IP strategy.

Confidentiality and developer contracts

In the run-up to development, non-disclosure agreements (NDAs) protect confidential information. They regulate which information is to be kept secret and whether contractual penalties are agreed. For international projects, the applicable law and the place of jurisdiction should be clearly agreed; an English contract language can trigger additional translation costs in Germany in accordance with Section 142 (3) ZPO.

The development contract often divides the project into planning, development and maintenance phases. The service description, schedule and milestones are defined in the planning phase. The development phase represents a work performance according to §§ 631 ff. BGB, while maintenance or update services can be qualified as services according to §§ 611 ff. BGB can be qualified. A letter of intent can be legally binding if it already contains all essential contractual points.

Publishing contracts and rights of use

Publishing agreements regulate the marketing of the game. They transfer rights of use to the game to the publisher; the scope should be precisely defined in terms of content, time and territory. In contrast to the US concept of “work made for hire”, German copyright law always recognizes the author as a natural person. A transfer of copyright is not possible; instead, an exclusive right of use is granted. Developers may only grant rights that they themselves own. If individual components such as music or the game engine are only licensed, these rights must be excluded from the contract in order to avoid the risk of damages. A reversion clause ensures that unused rights can revert to the developer.

The remuneration can be linked to milestones so that rights of use are transferred step by step with payment. Time or geographical restrictions enable subsequent remarketing in certain regions. In addition to publishing contracts, license agreements for music, graphics and engines as well as contracts with external service providers (composers, translators) are required. In all cases, rights of use, remuneration and liability issues should be clearly regulated.

Contract law information: The drafting of all games contracts is part of classic contract law. Developer, license and publishing contracts are subject to the general provisions of Sections 311 et seq. BGB. Content such as service description, remuneration, liability and transfer of rights should be regulated as precisely as possible in order to avoid later disputes over interpretation.

Day 5 – Operational start, youth protection and data protection

Once the company formation and contracts have been concluded, operations begin. This includes registering the business with the local trade office, registering with the tax office (tax registration questionnaire) and becoming a member of the Chamber of Industry and Commerce (IHK). Beware of fake commercial register invoices: Official registration fees amount to around 300 euros.

Protection of minors and age ratings

Anyone who publishes games on physical data carriers must comply with the provisions of the Youth Protection Act. Since April 1, 2003, Art. 12 ff. JuSchG stipulates that games must be age-rated. A USK approval is required for sale to minors; violations can be punished with fines of up to 50,000 euros. The USK differentiates between the levels “from 0”, “from 6”, “from 12”, “from 16” and “from 18”. Online titles without a data carrier can be classified using the international IARC system. Additional tests (PEGI, ESRB) must be observed for international releases.

<h3″>Data protection and GDPR

Game studios regularly process personal data (e.g. user accounts, payment information, chat data). The General Data Protection Regulation (GDPR) sets out seven basic principles: Lawfulness, fairness and transparency, purpose limitation, data minimization, accuracy, storage limitation, integrity/confidentiality and accountability. The territorial scope of application also covers providers not based in the EU if they process data or offer services to persons living in the EU.

For game developers, this means that a data protection plan should already be available in the concept phase. The German Society for Data Protection recommends privacy-by-design and data protection impact assessments to minimize risks. Data may only be collected for clearly defined purposes; permissible reasons may include contract fulfillment, fraud prevention or anti-cheat measures. Technical and organizational measures must ensure that unauthorized persons do not gain access and that data is only stored for as long as the purpose requires.

IT law supplement: In addition to the GDPR, national laws such as the German Federal Data Protection Act (BDSG), which contain supplementary rules on information obligations and order processing, must be observed. When using cloud services and game servers outside the EU, it must be checked whether an adequacy decision exists or standard contractual clauses must be agreed.

Conclusion

Founding a game development studio combines creative work with complex legal and economic requirements. A structured approach is required, from the idea to the choice of the right legal form to contracts, financing, protection of minors and data protection. Anyone who informs themselves and uses professional advice in IT law, company law, media law and contract law creates the basis for sustainable success in a growing and dynamic industry.

Author: Marian Härtel

Marian Härtel ist Rechtsanwalt und Fachanwalt für IT-Recht mit einer über 25-jährigen Erfahrung als Unternehmer und Berater in den Bereichen Games, E-Sport, Blockchain, SaaS und Künstliche Intelligenz. Seine Beratungsschwerpunkte umfassen neben dem IT-Recht insbesondere das Urheberrecht, Medienrecht sowie Wettbewerbsrecht. Er betreut schwerpunktmäßig Start-ups, Agenturen und Influencer, die er in strategischen Fragen, komplexen Vertragsangelegenheiten sowie bei Investitionsprojekten begleitet. Dabei zeichnet sich seine Beratung durch einen interdisziplinären Ansatz aus, der juristische Expertise und langjährige unternehmerische Erfahrung miteinander verbindet. Ziel seiner Tätigkeit ist stets, Mandanten praxisorientierte Lösungen anzubieten und rechtlich fundierte Unterstützung bei der Umsetzung innovativer Geschäftsmodelle zu gewährleisten.