Why Canada’s video game industry is a model for the rest of our tech sector

Multinationals have come here and experienced virtual reverse takeovers by Canadians

A screenshot from the video game Assassin's Creed Revelations. (HO-Ubisoft/CP)

I’m off to Vancouver for this weekend’s Canadian Video Game Awards. This year, I was honoured to be one of the judges so I’m not just excited for the nominees, I’m also keen to see if my picks end up winning. It’s almost like a betting pool, although I certainly wouldn’t do something so Pete Rose-ian. That would be wrong.

The awards are meant to honour the best in video game design, as done by Canadians. I wrote up a few preview pieces, which you can check out here and here. I really liked what Victor Lucas–host of The Electric Playground and one of the awards’ organizers–said to me about the event: “We really want to grow the CVAs to be something akin to the Junos or the Geminis. We should be just as proud of the games that are made here as we are of the music, television and films that are made here.” I couldn’t agree more.

You may know by now that Canada is a video game powerhouse–with 16,000 employees, the country’s industry is the third biggest in the world, after Japan and the U.S. Moreover, some of the best-known and biggest-selling franchises–Assassin’s Creed, Splinter Cell, Mass Effect, FIFA and so on–have been born and bred in Canada.

Having covered technology for many years, looking at Canada’s video game industry is a breath of fresh air. Our powerhouse status is the result of the overall market’s seemingly unending growth, but also some very smart government tax subsidies. That way, the whole Canadian sector has been mostly a good news story throughout its history.

That contrasts starkly with other areas of Canadian technology, where periodic ups and frequent downs are par for the course. All too often, it’s a case of triumphant rise, then disgraceful fall (see Corel, Nortel, Research In Motion).

The Canadian video game industry’s structure may just be the prescription for what ails Canadian tech businesses. Many such companies operate in a global marketplace, yet few have the resources to properly attack it, which is why so many stay small or fail.

With video games, the reverse has happened. Attractive provincial tax incentives have, over the years, convinced big multinational publishers to either set up new studios in Canada, or acquire existing ones. In time, these operations have often become the hearts and souls of those big multinationals because of the talented individuals working there.

Nearly half of Paris-based Ubisoft’s employees are in Canada while almost all of the company’s most successful games are made in Montreal. California’s Electronic Arts, the biggest game company in the world, counts EA Canada in Burnaby, B.C. as its biggest studio. That operation is also responsible for some of the biggest games in history.

So while the debate rages about whether Canada should welcome foreign ownership of companies or reject it on the grounds that it will “hollow out” the country, the video game industry has cast a giant “who cares?” statement over the whole argument. Multinationals have come here and experienced virtual reverse takeovers by Canadians, giving the country a source of global pride in at least one industry.

It’s a phenomenon that’s not well understood, but it may indeed be the way forward for Canada in a global economy. The games industry is proving that the foreign investment and ownership route is not as shameful as many believe. Canadians don’t have to overtly conquer the world; they can instead do so from the inside out.




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Why Canada’s video game industry is a model for the rest of our tech sector

  1. Part of the knowledge economy….and we’re in on the virtual ground floor.

  2. The downside: technically, this means the ending of Mass Effect 3 is our fault. There may be UN sanctions.

    • I agree, how can a game be so good and then just tank in the last 5 minutes. 

  3. The subsidies for some of these jobs amount to more than they pay.  Quebec and Ontario hand Ubisoft tens of millions of dollars a year.  We could have all sorts of industries in Canada if the government is willing to pay most of the costs while companies land most of the profits.

    • The companies may keep the profits but the economic benefits to Canada, as in jobs, GDP contribution, etc., has been calculated at $1.6 billion a year and growing. The subsidies get repaid many times over every year.

      • That’s misleading. Without subsidies, the same brilliant people working in those industries would work elsewhere. The question is not whether the video game industry generates money (it does, duh), it is whether it generates more economic activity than would the counterfactual of no subsidies. I see no reason to believe that governments are better at picking winners than capital markets.

        If we are going to subsidize an industry, surely it should be one with positive externalities that wouldn’t enter into the calculations of capital markets.

        •  Quoi?

        • “Without subsidies, the same brilliant people working in those industries would work elsewhere.”
          You may be right. But considering that they’re video game designers/programers/etc., that would probably be in another country’s video game industry. Most of the people who do that job do it because they love games – they’re not just going to take IT jobs in some other industry that they don’t care about.

          Generally speaking, talent and high-paying jobs going abroad is not good for our economy.

          • A. Sure, some video game programmers might have gone abroad sans subsidies. But if we used the same money employed in subsidizing the video game industry for something else (infrastructure or education spending, tax reductions, or subsidization of an industry with positive externalities, eg. green energy) we would have nurtured other sectors, and attracted other people.

            B. Yes, some people are passionate about video games and would pursue their passion at all costs. However the majority of people employed in the industry have more general skills (programming and graphic design) that could be employed in a number of other industries.

            By the way, I think the Canadian video game industry could survive without subsidies. We have a well-educated workforce, we have the highest spending on video games per capita, native English speakers, and we are well situated to make games that will fly in the US and internationally.

  4. Paranoid about piracy… No we shouldn’t all be like them. However, if all game developing companies were like Valve is right now, we would have slow releases, but the best games and best companies in the world.

    • And from far left field…  It’s El Escobero!

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