Tech Blog

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Well GDC 2010 is a wrap and now it's time to digest all the exciting news that came from the international gaming event.  For me, one of the more interesting news items came from the Ontario Technology Corridor (OTC), a team that travels the world presenting investment opportunities in the province, who attended GDC 2010 to make a case for game developers from around the world to set-up shop in what they argue as "the best location in North America."

As I'm sure most of you who read the Tech Blog regularly are aware, I've been following the games industry in Canada closely for several years now.  Sure there are a lot of great international gaming stories out there, but sites like IGN , Joystiq , and Kotaku cover broad-based general news just fine.  I like to give readers here something new, stories that have a distinct Canadian flavour to them, stories you won't find anywhere else.

That's why when I heard about the OTC attending the Games Developers Conference it immediately piqued my interest.  It's a well known secret in the gaming world that Canada's games industry is red-hot at the moment, and it's only getting bigger.  According to Game Developer's Industry Census 2009 , employment in the Canadian games industry saw a rise from 9,500 employees in 2008 to 12,480 in 2009 -- representing a 30% growth in one year.  Canada is now the third largest centre for video game development in world, says the Entertainment Software Association of Canada (ESAC), after recently surpassed the United Kingdom.  I hate to beat a point into the ground but our national games industry is simply massive , and the whole world is paying attention.  Funny thing is, not many people are talking about it.

The other well known secret in the video game industry is that three Canadian provinces are vying for developers' attention, and each are attempting to woo them in unique ways.  The three provinces are, in order of the size of their respective industry, British Columbia, Quebec and Ontario.  Last year, ESAC issued a report entitled Canada's Entertainment Software Industry: The Opportunities and Challenges of a Growing Industry (note: it's a PDF link) that pegged Ontario's game industry employment at 14% of the total industry employment in Canada.  While far behind B.C. (44%) and Quebec (37%) the interesting aspect about Ontario is that it contains the most amount of firms -- 36% of the national total compared to 28% for B.C. and 21% for Quebec.

With those stats in mind, I had an opportunity to speak with Larry MacKinnon, whom, if you also follow my work on NextGen Player, you might remember from my posts on DIG London .  As the Director of Business Development, Technology at the London Economic Development Corporation, it's MacKinnon's responsibility to attract new investment and encourage growth in the southern Ontario city's IT industry.  London's gaming industry has really been picking up in recent years and is now home to notable developers such as Digital Extremes (Bioshock 2 multiplayer, Unreal Tournament), Antic Entertainment (Junk Battles), and Big Blue Bubble (Fighting Fantasy).

When asked "why Ontario?" MacKinnon had three key points worth noting; the province offers a deep talent pool, a strong and stable economy, and targeted incentives.  We explored each of them in detail.

For starters, MacKinnon pointed out that Ontario offers a highly educated workforce, with 55% of Ontario residents aged 25 to 64 possessing advanced education certificates, diplomas or degrees -- compared to 51% for Canada as a whole and 39% for the U.S.  Ontario has also an ethnically diverse, loyal and motivated workforce, clustered around numerous technology hubs ranging from Toronto, London, Ottawa, Waterloo and the Niagara Region.  Each hub has a unique make-up, ranging from large metropolitan to mid-size to smaller communities, giving developers wishing to settle in Ontario plenty of variety to suit their particular business interests.

Furthermore, during our chat MacKinnon discussed Ontario economic prowess stating that the province's fast-growing entertainment and creative cluster produces $15 billion in revenue and over 200,000 jobs, contributing $12.7 billion to the province's GDP.  Ontario Technology Corridor companies also have the advantage of operating in a highly transparent, low-risk business environment and can take advantage of Canada's world-class banking system.

Finally, as mentioned on NextGen Player early last year , Ontario recently announced generous tax incentives for game developers who produce games in the province.  Ontario's Media Development Corporation (OMDC) is the central catalyst for the province's interactive entertainment cluster, and offers the following targeted tax incentives for game developers:

- Ontario Intellectual Property Development Fund - refunds 30% of eligible early stage development costs to bring screen-based content properties closer to production;

- Ontario Interactive Digital Media Tax Credit - refunds 35-40% of production costs;

- Ontario Computer Animation and Special Effects Tax Credit - 20% of labor costs;

- OMDC Interactive Digital Media Fund - up to $150,000 in project production funding. (So far in 2010, the OMDC has announced $2.9 million in funding support.)

"Our job now is to add to our tremendous home-grown crop of companies. 35 Ontario gaming companies are at GDC 2010 to showcase their world-class creations, make business connections, and help demonstrate that Ontario is a prime destination in North America for gaming investments," said MacKinnon.

The generous R&D tax credits have not gone unnoticed and are the envy of other countries (U.K. has been particularly vocal about their envy of Canada's robust tax incentives).  Last July, Ubisoft announced plans to open up a new development studio in Toronto which will create 800 net new jobs in the province over the next decade.  The government of Ontario made a significant contribution to Ubisoft, offering $263 million over ten years into addition to the over half a billion dollars Ubisoft itself is footing.

The B.C. games industry has recognized that more incentives are needed in their province if they are to compete with Quebec and Ontario, two provinces were the tax breaks are much larger.  Finally after months of lobbying, the B.C. government has bowed to pressure, announcing last month that new tax breaks are set to come into effect later this year.  In Quebec, generous tax incentives have been around for many years now and the Alliance numerique, the province's video game industry trade group, have openly expressed how economical it is to invest in the province.  In a recent study released prior to their Montreal International Game Summit, the Alliance numerique said that developing AAA costs 30% less in Montreal than it does in California.

With all three provinces bolstering their gaming industries and courting developers one thing in certain -- Canada, and the games industry as a whole, will reap the benefits.