Cyprus targets home-grown video game development and investment

Video game industry could become major part of Cyprus tech economyDeputy Minister of Research, Innovation and Digital Policy Nicodemos Damianou has outlined plans to develop Cyprus into a centre for video game creation and investment, saying the ambition is to build an ecosystem in which more games are developed, financed and expanded from the island. Addressing the Cyprus Games Summit 2026 in Limassol, Damianou said the country had already established a significant presence in the international gaming industry, but that the next step was to ensure more of the value created by the sector originated locally. “Our ambition is not simply to host video game companies. Our goal is to build an ecosystem in which more games are created, financed and developed from Cyprus,” he said. According to the first Cyprus Video Game Industry Report, published by the Cyprus Game Makers Association (CYGMA), Cyprus has more video game companies per capita, higher industry revenues per capita and more mobile game application downloads per capita than any other country in the world. The report records more than 415 companies, over 4,300 professionals and estimated video game revenues of approximately €3.2 billion in 2025. “These figures show that the industry is already an important part of our technology- and innovation-based economy,” Damianou said, adding that Cyprus had demonstrated its ability to attract companies with international operations. He said the next priorities were to encourage the development of more games on the island, establish additional locally based studios, attract greater investment in intellectual property and create more opportunities for people in Cyprus to build international careers in the sector. Tax incentives and European regulation Damianou mentioned that Cyprus offered several advantages for studios looking to develop video games, including its EU membership, strategic position between three regions, established professional services sector, international business community and policy framework supporting innovation. He pointed to a range of existing incentives, including the IP Box tax regime for qualifying intellectual property, enhanced deductions for eligible research and development expenditure, employment income incentives for qualifying professionals and tax incentives for investment in certified innovative companies. Referring to the European Commission’s proposal for a Digital Fairness Act, Damianou said Cyprus would participate constructively in the discussions. He said the country would seek to ensure meaningful protection for users, particularly children, while supporting rules that were clear, fair and workable for video game studios operating in Europe. The deputy minister also stressed the importance of access to specialised development funding, describing it as a central component of any growing industry ecosystem. The Research and Innovation Foundation (RIF) already provides support for innovative companies, including through blended financing programmes, while it has also sought feedback from the market on a proposed initiative called G3 (Games Go Global). The programme is being launched on a pilot basis to help Cyprus-based studios reach international publishers, platforms and players through marketing activities, content adaptation, publishing preparation and business development support. International networks and investment Damianou said international networks were just as important as individual funding programmes, pointing to the next cycle of Plug and Play Cyprus, which is supported by the government and will focus on the video game sector. The initiative is intended to give studios access to international mentors, corporate partners and investors. “This is the practical value we want to achieve through such partnerships. It is not about creating another layer of structures, but about strengthening the links between companies in Cyprus and the markets or capital they need to grow their activities,” he said. The deputy minister also referred to a recent KPMG estimate indicating that Cyprus’ wider technology sector directly employed approximately 48,200 people in 2025. Around 33 per cent of those employed were foreign nationals, while employment in the technology sector had increased by almost 10 per cent annually over the preceding decade. Damianou said Cyprus needed to remain open to international expertise while building a substantially stronger domestic talent pool. “This means investing in STEM fields and digital skills, supporting upskilling and reskilling, and establishing closer links between education and the needs of industry,” he said. Studios urged to work with universities He also highlighted the importance of cooperation between video game studios and universities, arguing that academic programmes needed to evolve alongside the industry. “Students also need practical experience, internships, mentoring, project-based work and opportunities for their first professional employment,” he said. Damianou welcomed CYGMA’s activity in cooperation with the University of Cyprus and the Cyprus University of Technology, urging studios operating on the island to take a more active role in developing future professionals. He called on each studio to offer an internship, mentor a student, collaborate on a university course or give a young creator their first professional opportunity. Gaming industry could support AI ambitions Turning to artificial intelligence, Damianou said Cyprus’ National Artificial Intelligence Strategy focused on practical adoption of the technology and establishing the country as a trusted regional hub for its development and use. He said the video game industry could contribute directly to that objective, pointing to studios’ creativity, international outlook and experience of testing emerging technologies in demanding commercial environments. Their success could demonstrate how advanced digital technologies could be adopted responsibly and transformed into products for the global market, he added. Damianou further stated that the future of video game development in Cyprus would depend on how effectively creative teams, investors, universities, consultants and public bodies worked together. “Our ambition is not simply to host video game companies,” he stressed. “Our goal is to build an ecosystem in which more video games are created, financed and developed from Cyprus, generating lasting value, strengthening skills and providing quality opportunities for our people,” he concluded.