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Do software and video game firms share location patterns across cities? Evidence from Barcelona, Lyon and Hamburg

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Abstract

The aim of this paper is to analyse common location patterns of software and video game (SVE) industry and the related agglomeration processes with other creative industries in Barcelona, Lyon and Hamburg. SVE is a key industry in developed countries and one which, due to a search for agglomeration economies, skilled labour and a range of spillover effects, is mainly located at the core of larger metropolitan areas. The cities used in our empirical application share some common features in terms of size, manufacturing tradition and, especially, economic strategies, as they have managed to promote high-tech neighbourhoods through ambitious urban renewal policies aimed at attracting the SVE industry. When analysing location patterns of firms in the industry, although our results highlight the predominant role of the urban cores of these three cities, they also indicate important specificities in terms of core–periphery distribution of SVE firms and the already mentioned urban renewal projects.

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Notes

  1. According to PWC (2018), over the period 2017–2022, the video games industry is expected to grow at an average annual rate of 20.6%.

  2. A detailed approach to the transformations of these cities can be found at Viladecans-Marsal and Arauzo-Carod (2012) (Barcelona), Moriset (2003) (Lyon) and Sepe (2014) (Hamburg).

  3. See Pablo and Arauzo-Carod (2012) for an analysis of inter-industry linkages and spatial proximity amongst firms.

  4. Xbox360 (Microsoft), PlayStation3 (Sony) and Nintendo Wii (Nintendo).

  5. The term ‘Techno Neighbourhood’ refers to an area inside a city that has become attractive for digital economy activities (e.g. SVEs) that are carried out in workspaces that have been refurbished for this purpose.

  6. See Feldman et al. (2005) for a theoretical approach.

  7. See maps showing the urban transformation project and the CBD of each city in “Annex” (Fig. 9).

  8. Though some of most important firms had moved their headquarters to Paris (Moriset 2003).

  9. Several well-known video game firms are already established in Hamburg, amongst others, Bytro Labs GmbH, Capcom Entertainment Germany GmbH, CrazyBunch UG, Exit Games GmbH, gamecity:Hamburg, gamigo AG, GRAEF Rechtsanwälte, InnoGames GmbH, Lost The Game Studios, Mooneye Studios, MSM Communications GmbH, Osmotic Studios, Pop Rocket Labs GmbH, Quinke Networks GmbH, RetroBrain R&D UG, Rocket Beans Entertainment GmbH, ROCKFISH Games GmbH, Square Enix GmbH, THREAKS GmbH, Tiny Roar UG, Tivola Publishing GmbH, toneworx GmbH, Valve GmbH, Warner Bros—Entertainment GmbH, and XYRALITY GmbH.

  10. HafenCity project is co-financed by private (€8.5 billion) and public investment (€2.4 billion).

  11. We hypothesise that, since the 22@ Project in Barcelona took several years until it was formally launched, potential investors may have had most of relevant information of this Project in advance and, therefore, had anticipated their entry decisions some years before the official announcement.

  12. See Méndez-Ortega and Arauzo-Carod (2019) for Barcelona, Moriset (2003) for Lyon and Plum and Hassink (2014) for Hamburg.

  13. The relatively similar sizes of Barcelona, Hamburg and Lyon make them easily comparable.

  14. Barcelona is the second largest city in Spain and the capital of the region of Catalonia, Lyon is the third largest city in France and the capital of the region of Auvergne-Rhône-Alpes, and Hamburg is the second largest city in Germany and one of the 16 German states.

  15. The Orbis dataset include several characteristics of firms, including year of entry, balance sheets, income, expenditure accounts, number of employees, industry, sales, assets, and georeferenced location (i.e. X–Y coordinates). Orbis collects data from the Mercantile Register of each country, where all limited liability companies and corporations are obliged by law to deposit their balance sheets. This is the most widely used dataset for any country in the world when georeferencing of firms is required and is provided by Bureau van Dijk.

  16. The cities of Barcelona, Lyon and Hamburg are divided in districts (10, 9 and 7 districts in each one, respectively), which are comparable to the rest of municipalities of each MA.

  17. The lower share for Lyon is explained by the smaller surface of its capital in both absolute (48 km2 in front of 101 km2 of Barcelona and 755 km2 of Hamburg) and relative terms. (The capital city represents only the 9% of the surface of the MA, a percentage much lower than that of Barcelona—15% and Hamburg—36%.)

  18. The employment-weighted version of the K-density function is not used because our research question, which focuses on the location and co-location of the software and video games industry inside metropolitan areas, only considers the firm’s location, not its employment size.

  19. The city of Barcelona is bounded by the Mediterranean Sea in the east and by a wooded mountain area (Collserola) in the north–north-west between Barcelona and the north-western municipalities.

  20. All calculations use a 0.05 significance level, using 1000 simulations. The dashed line corresponds to the benchmark scenario, that is, the density of all the economic activity (All Creative firms in our case), and the shaded area is the confidence interval.

  21. As a matter of example, in recent crisis contraction of economic activity started early in Barcelona and its duration has been longer than in Lyon and Hamburg.

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Acknowledgements

Funding was provided by FEDER/Ministerio de Ciencia, Innovación y Universidades (Grant No. ECO2017-88888P) and the research programs from Generalitat de Catalunya SGR (Grant No. 2017-SGR-159) and “Xarxa de Referència d’R+D+I en Economia i Polítiques Públiques”. We are grateful for the support received by R. Boix and A. Moreno and for the comments received at 30th ERSA Summer School, 6th Central European Regional Science Conference, XLIII International Conference on Regional Science, 4th Geography of Innovation Conference and REAL Fall Seminar Series. We also would like to thank two anonymous referees for their valuable comments and the editor for all the support provided during the editorial process.

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  1. Departament d’Economia (CREIP-QURE), Universitat Rovira i Virgili, Av. Universitat, 1, 43204, Reus, Spain

    Carles Méndez-Ortega & Josep-Maria Arauzo-Carod

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  1. Carles Méndez-Ortega
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Correspondence to Carles Méndez-Ortega.

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Appendix

Appendix

See Figs. 9, 10, 11 and 12.

Fig. 9
figure 9

Source: Compiled by the authors

Central business district and urban project location in each city.

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Fig. 10
figure 10

Source: Compiled by authors using Geo-Segregation Analyzer (Apparicio et al. 2014)

Entropy index and number of SVE firms by region in the metropolitan area of Barcelona. Note: Regions are municipalities and Barcelona city districts (10).

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Fig. 11
figure 11

Source: Compiled by authors using Geo-Segregation Analyzer (Apparicio et al. 2014)

Entropy index and number of SVE firms in the metropolitan area of Lyon. Note: Regions are municipalities and Lyon city districts (9).

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Fig. 12
figure 12

Source: Compiled by authors using Geo-Segregation Analyzer (Apparicio et al. 2014)

Entropy index and number of SVE firms in the metropolitan area of Hamburg. Note: Regions are municipalities and Hamburg city districts (7).

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Méndez-Ortega, C., Arauzo-Carod, JM. Do software and video game firms share location patterns across cities? Evidence from Barcelona, Lyon and Hamburg. Ann Reg Sci 64, 641–666 (2020). https://doi.org/10.1007/s00168-019-00917-y

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