Video game executives seek stimulus in B.C. budget

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      Scores of Vancouver video-game developers have found themselves out of work in the past month. Electronic Arts and Disney’s Propaganda Games laid off employees, and Nexon Publishing North America shut down its Humanature Studio. Jared Shaw, founder of 31337 Recruiters, estimates that 800 people are looking for work as a result of the turmoil in the industry.

      While it remains unclear if the downsizing is a result of the global economic slowdown, Vancouver’s video-game industry is looking to the B.C. government for support.

      “The video-game industry in Vancouver has grown by leaps and bounds,” said Colin Macrae, director of communications for Electronic Arts. “But these are challenging times, and the fundamentals of the industry are being looked at in a different light. The conversation has to swing towards what kind of support and infrastructure are behind the industry.”

      On Tuesday (February 17), Finance Minister Colin Hansen will deliver the provincial budget in Victoria. Hansen’s staff didn’t make him available for an interview, but Ida Chong, minister of small business, technology, and economic development, told the Georgia Straight she is concerned about the loss of jobs in the sector.

      In a phone interview, Chong said that tax credits already support digital media through the province’s New Media Venture Capital Program. That program offers investors tax credits equal to 30 percent of their investment in an eligible company, but its total budget is capped at $5 million annually.

      Chong said the provincial government is continually assessing how B.C.’s taxation climate compares with those of other jurisdictions, but would not say whether or not the upcoming budget will offer any additional support for the video-game industry. “A labour tax credit may need to be applied in a variety of areas, and that may include new media,” she said.

      Vancouver’s game industry exploded early in the new millennium partly because a favourable exchange rate made the city one of the most cost-effective places in the world to develop games. That advantage no longer exists.

      Kenton Low, president of New Media B.C., an industry association, said he is very concerned that B.C. is losing its competitive edge.

      “We’ve talked to Minister Hansen on a few occasions,” Low told the Straight by phone. “He has heard our concerns, and we are hopeful that the B.C. government implements some policies that will help B.C. be more competitive with other jurisdictions in the digital-media space.”

      In November, the legislature’s select standing committee on finance and government services recommended that the government consider extending to the games sector the visual-effects tax credit, worth 15 percent of labour costs, currently available to the film and television industry.

      “Vancouver is in a very real danger of not just losing its lead but becoming a nonentity,” Alex Garden said in an interview prior to the January 27 closure of Humanature Studio, of which he was CEO.

      Garden maintains that the B.C. government ignores the video-game sector at its peril. “The game industry at the moment contributes more than two percent of the GNP [gross national product] of B.C.,” Garden said. “It’s going to go from two percent to zero,” if the government doesn’t offer additional support, he added.

      Tarrnie Williams Jr., general manager of Relic Entertainment, said, “It’s a shining star of an industry. We make some of the best games in the world, we’ve got tons of developers here, it’s a very green industry that attracts top-level creative talent, and they continue to spin off and create new things and create jobs. I think they [the B.C. government] should be doing more to support it.”

      UBC professor Trevor Barnes told the Straight that large publishers and developers have no loyalty to Vancouver, and will move operations elsewhere if it makes financial sense for their company. Barnes, an economic geographer who is studying the Vancouver video-game sector, said he has spoken with an executive at a large multinational corporation who is responsible for securing sites of production.

      “They’re looking at Eastern Europe, the Czech Republic in particular; China; India,” Barnes said. “Singapore seems to be the favourite at the moment.”

      He added, “I think this cost differential is important in the industry, and it’s going to be increasingly important as we move into a recession.”

      The main threat to the prominence of Vancouver’s game-development industry comes not from Bangalore or Budapest, but from Montreal. While Manitoba, Nova Scotia, Ontario, and Prince Edward Island all offer incentives to new-media companies, the Quebec government supports the production of “multimedia titles” with a tax credit of up to 37.5 percent of labour costs.

      Cédric Orvoine, director of communications for Ubisoft Montreal, acknowledged that his studio is actively recruiting workers from Vancouver. The Straight spoke with Orvoine on February 3, the day that the Paris-based Ubisoft announced its acquisition of Vancouver developer Action Pants. Orvoine said the company plans to increase its Montreal staff from 2,000 to 3,000 employees by 2013, while keeping Action Pants in Vancouver.

      Quebec, he said, is working hard to attract video-game companies to Montreal. “The government has made it a priority to develop this industry,” Orvoine said.




      Feb 14, 2009 at 2:19pm

      Another great examples of how business owners really don't like free markets. As soon as times get tough, they want subsidies from taxpayers.

      "But these are challenging times, and the fundamentals of the industry are being looked at in a different light. "

      Let me get this straight, prior to the 'downturn', your business managers never really grasped the fundamentals of your business?

      We already exempted high tech developers from any sort of employment standards legislation, and now we are supposed to hand over money confiscated from productive people (ie: taxpayers) to subsidize poorly run businesses? Give me a break. If Vancouver has such great talent, then let it compete with other jurisdictions on that basis.


      Feb 16, 2009 at 6:41pm

      As the owner of a new start up company in this sector (Genius Factor Games Inc), I completely agree with the critical need for support from the provincial and federal government maintaining a strong presence for this industry in BC.

      Developing games is a capital intensive business, and requires a significant upfront investment in order to setup and maintain profitable operating businesses here in BC.

      Quebec, PEI, New Brunswick and Ontario have seen the light to encourage this type of business development; I feel quite very strongly that BC should do everything possible to encourage existing and already profitable businesses to keep their foothold (thousands of jobs, and millions if not billions of dollars) in BC.

      Ted Nugent
      Genius Factor Games Inc.


      Mar 6, 2009 at 12:34pm

      Who said anything about subsidies, jbwilson24?
      A tax break isn't the same as "handing over money". The net provincial tax revenue resulting from these businesses operating in BC would still be far higher than if they closed up shop and/or moved away.

      Did you even read the whole article? It's not talking about helping businesses that aren't run properly, but rather giving incentives to a strong industry to ensure BC remains an attractive place for them to operate. The big developers aren't going out of business, they're just cutting back. And where's the first place to cut? Easy - the least cost-effective places. Small local developers, meanwhile, have lots of great talent to pull from, but may need to operate in the red for years. Do you really think that's an attractive proposition?

      I agree that using the economic situation as an excuse or crutch is overdone, but that doesn't change the reality of this industry -- no matter how great the local talent is, business is business. If it's millions of dollars cheaper to operate in a different jurisdiction, companies will go there -- and take the best talent with them.

      I'd much rather support a growing industry like software development than a dying one, yet that seems to be what we focus on. We seem to be happy to give billions to support forestry, mining, shipbuilding, agriculture, fisheries, and so on.

      BC's tech industry will continue to survive and grow, regardless of government support. But it has an opportunity to prosper significantly with a little help to level the playing field vs. Quebec, India, eastern Europe, etc. Why pass up this opportunity?

      Peter S

      Dec 14, 2009 at 4:11am

      The game industry was laying people off while at the same to showing record profits now the executive have taken the money as huge bonuses they want tax payers to pay.

      They along with other companies are make profits while claiming a loss because they didn’t make their projected earnings; this is not a true lose it is also the same thing as the Enron scam.