Oh, Canada

T­­­­­­­­­here’s nothing like a cold, hard statistic to reinforce what is already widely known – for while EA Canada has lead the listing in this year’s Develop 100 (included with this issue), it’s clear that the winner isn’t a single publisher but a country: Canada. Seven of the territory’s studios are present on the list, all of them in the top 50 – and, most importantly, their revenues listed in the book accounts for almost a fifth of the value of the entire list.

And in playing host to a number of studios not in the Develop 100 as well (either by virtue of their lack of releases or newness), plus a host of technology companies, it’s clear that Canada’s position at the heart of games development is permanent.

How has this happened? How has this North American country carved a place for itself away from the three countries – Japan, UK and USA – that each have a claim on the history of video games to secure a workforce whose size rivals the UK’s?

There seem to be three key reasons…

1. LOCATION AND ECONOMICS
Geography has a large part to play in Canada’s game story – the bulk of the country’s development activity either occurs in Vancouver, British Columbia on the west coast or in Toronto or Quebec, in the east. They share time zones and easy flight access with LA and New York, respectively, and provide decent access to international territories, too.

But the top-line answer will always be money, the exchange rate and government subsidies (specifically for the Quebecois studios) having fueled a boom that has been apparent over the past five or so years, but really has its roots stretching back over 20 (see A Brief History of Game, right).

The Quebec games subsidy, handled by Invest Quebec, means studios can claim back up to 37.5 per cent of their creative staff’s salaries after a year of business – there’s even a possible 40 per cent tax credit for R&D and other slightly different credits for major employment-generating projects.
Such generous credits have specifically helped drive the growth and number of studios in Montreal and Quebec City, offering a near-irresistible economic security for both local companies and newcomers. Ubisoft Montreal wouldn’t have swollen without it, and Eidos wouldn’t have recently announced its plans to open a studio there if it didn’t exist.

Money has a part to play in Vancouver, too – according to KPMG’s Guide to International Business Costs, it’s still a cheaper place to run a company in North America, beating Dallas, San Diego, Seattle and Boston. And salaries, while much higher than those in Montreal (an estimated US$107,159 in Vancouver for a programming manager versus US$87,335 in Montreal, says the US’ Economic Research Institute), are still lower in Vancouver than they are in places like San Francisco (US$114,105 for the role mentioned above) – good news for employers and employees alike due to the reported lower cost of living in Canada as well.

So overall, Canada is a cheaper place for games development than other comparable territories.

2. TALENT TERRITORY
Yet you can’t just build a studio with a fat cheque book – talent plays a part as well. Interestingly, it’s clear that Canada is a natural home to the creative side of the industry. The three publishers formed there (DreamCatcher, Microids and Hip) have either been acquired or gone bust, but the development and technical workforce booms.

This in part comes from those studios in the region pursuing close ties with education in Canada. Animation school Centre NAD in Montreal has support from a number of studios in the country, while Ubisoft and EA both have initiatives in place that see them regularly court students from universities on both coasts.

Perhaps ironic, however, is that Canada, once the bastion of independents, is now a creative hub for publishers who have bought into the country’s talent – usually via acquisition – to ensure their grip on the region grows year on year. Nevertheless, the likes of EA, Vivendi, Activision, Ubisoft, Rockstar and THQ would not have flourished financially were it not for the creative teams’ flourishing in Canada. The recent quantity and quality of IP, both released and on the way, speaks volumes about this. Need For Speed Underground, Splinter Cell, Company of Heroes, The Outfit, FIFA, Army of Two, Assassin’s Creed, Boogie – the list is huge.

3. MULTINATIONALS RULE THE NATION
But what is a blessing for Canada is also a curse – and arguably a blessing for everyone else. Predominant publisher control of the region means that its decisions are made by multinationals (although a handful of strong indies, such as HB, Humagade, A2M and Digital Extremes, still exist). So the territory is forced to focus on the bigger console and PC titles. In an age where the games market actually means up to ten viable hardware formats – a number that grows bigger when you count casual titles and digital distribution services – it means that the thick wedge of workforce that Canada represents in games doesn’t have all the bases covered.

Compounding the fact is that the company’s output is not territorial – only a fraction of the revenues made by the studios in the region have been made via sales to consumers in Canada. Instead, the studios are exporters of titles that provide returns on huge investments on a global basis. Everything about Canadian game development is to do with scale (almost every studio has a headcount over 50, and at least half have over 250 staff or are heading that way – Eidos wants its new studio to have over 350 by 2010).

Most importantly, while Canada has fattened, and despite some obvious and short-term drains (on both English and French speaking workforces around the world) it hasn’t completely cannibalised the global industry – and has in many respects strengthened it. There are reasons for everyone on the planet in games development to be cheerful about Canada’s success: It’s a key location in the development sector that looks likely to be a major player in terms of workforce for some time to come.