A small Mediterranean island now ranks among Europe’s top 10 gaming markets by revenue — and third in the world for mobile downloads, behind only China and Vietnam.
Cyprus has developed into a much larger international hub for video game development and publishing than its size would suggest, according to the Cyprus Video Game Industry Report 2025, presented by the Cyprus Game Makers Association (CYGMA).
The report describes an ecosystem of more than 400 companies, generating around €3.2 billion in annual revenue from players worldwide. It represents a significant contribution to the Cypriot economy and an exceptionally strong international presence, particularly in mobile gaming.
The global games industry: A $263.7bn market
The global video games market is estimated at $263.7 billion (€228bn) for 2025, marking year-on-year growth of around 4%, according to the report.
Video games are now the world’s largest entertainment industry. Their revenues exceed those of on-demand video, cinema and recorded music combined, it notes.
The Cypriot industry grew largely on the back of mobile gaming, at precisely the moment the smartphone was turning video games into a mass, global product.
Mobile overtook consoles around 2015 and by 2018 had already surpassed PC and console combined. At the same time, the free-to-play model — free installation, with monetisation built into the game — became dominant.
The report also highlights the growing dominance of Asian, and in particular Chinese, companies in mobile gaming, a shift among some developers back towards premium PC gaming, and an increased focus on profitability following the layoffs and overexpansion seen during the pandemic period.
The European dimension
The report does not give a single figure for the total value of the European video games market in 2025, comparable to the $263.7 billion it gives for the global market.
It does, however, offer extensive data on Europe’s production ecosystem, and on Cyprus’s place within it.
The European industry includes around 6,000 studios and publishers, while Cyprus alone has around 415 confirmed gaming companies.
In terms of company numbers, Cyprus accounts for about 7% of the European total used as a benchmark in the report — an exceptionally high share for a country of roughly 1 million inhabitants.
Growth has been just as striking. Between 2019 and 2024, the number of Cypriot games companies rose from 169 to 393, an increase of 133%, equivalent to average annual growth of around 18%.
CYGMA also ranks Cyprus among the 10 largest countries in Europe’s video games industry by revenue. This is perhaps the most significant element of the country’s European standing: it is not simply a case of high per capita performance, but a substantive place in Europe’s top 10 in absolute terms too.
The Cypriot ‘paradox’: One million people, €3.2bn in revenue
The report’s central argument is that Cyprus should no longer be seen as an “emerging” destination for game development, but as an already established international hub.
In 2025, around 415 video game companies are based in Cyprus, with more than €3.2 billion in total revenues. CYGMA’s database includes 431 companies in total, of which 415 have been cross-checked against the Registrar of Companies.
Crucially, this €3.2 billion does not mainly reflect video game consumption by Cypriot players.
Quite the opposite: almost none of the industry’s output relies on the domestic market. The sector is by nature export-oriented — the report describes games as around 99% exportable — and the small size of the domestic market could never sustain an industry of this scale.
Cyprus is therefore used as a base for the creation, development, publishing, management and monetisation of digital products sold to a global audience.
The report puts revenue per capita at around €3,200, compared with €509 in Finland, €51 in Spain and €32 in Serbia. In terms of gaming companies per million inhabitants, Cyprus reaches 415, compared with 48 in Finland, 17 in Spain and 15 in Serbia.
Mobile gaming: Cyprus’s main strength
The most important pillar is mobile. In 2025, Cypriot companies released 571 new mobile games, which amassed 615 million downloads, while the industry’s total mobile gaming revenues are estimated at around €1.8 billion.
Cyprus ranks third worldwide in mobile game downloads, behind only China and Vietnam, and 11th worldwide in mobile in-app purchase revenue.
In downloads, it is ahead of the US, France, Israel, Turkey, Singapore, India, South Korea and Japan.
PC and consoles: The second pillar
The Cypriot industry is not limited to mobile. Games for PC and consoles generate around €1.4 billion a year.
In 2025, 36 new PC and console games were released, with around 1.5 million copies sold. Of the total €1.4 billion, around €200 million can be tracked
Why Cyprus?
The report attributes the growth of Cyprus’s video games industry both to the global rise of mobile gaming and to advantages specific to the country.
The rapid growth of mobile games created thousands of new companies worldwide, and Cyprus managed to attract many of them, largely thanks to the IP Box, a tax regime offering lower taxation on profits derived from intellectual property such as software, code and other components of a video game.
Under the tax system outlined in the report, from 1 January 2026 profits that qualify for the IP Box can be taxed at an effective rate of around 3%, since only 20% of the relevant profits are subject to tax.
Companies can also benefit from greater tax deductions for research and development spending, such as the creation of new software, technology and games, alongside tax incentives for executives relocating to Cyprus from abroad.
Beyond tax incentives, Cyprus offers other advantages: EU membership, a legal system largely based on English law, tax agreements with many countries, and a strategic location between Europe, the Middle East and Asia.
The report does point to one weakness, however. Unlike countries such as Germany and the UK, Cyprus does not yet have a well-developed system of state grants specifically for the video games industry. While the country remains competitive on tax and company formation, there is still room to offer more direct financial support to games companies and creators.
The biggest challenge: Human capital
Perhaps the biggest obstacle to the next phase of growth is neither taxation nor funding, but the talent pool.
Cyprus has 13 universities and almost 58,000 students, but relatively few study disciplines directly related to video game creation.
According to the report, around 290-385 people are expected to graduate in 2026 from degree programmes usable in the games industry, such as programming and design.
However, only 3-6 graduates are expected to come from degree programmes specifically focused on video games.
The sector could, according to the report’s estimates, absorb around 100-300 new employees a year — leaving a substantial gap between companies’ needs and the number of suitably trained people available in Cyprus.
