BC's screen-based digital media companies are set for a turbulent year ahead, according to industry insiders.
While the recently completed MediaScreen survey might find Vancouver is adding jobs in the social and mobile media game space, if it follows up a year from now, it might also find that Vancouver has lost more console video game studios, like Rockstar Games, to Toronto and Montreal.
"There are several studios that may not exist by the end of this year," predicts Howard Donaldson, president of DigiBC.
"I've estimated that B.C. has lost about 3,800 jobs that went elsewhere. There are another 1,400 jobs that were lost to downsizes and closures."
Vancouver's game developers have been rebounding from the recession, so a spate of hiring by some studios and the arrival of new players on the scene might present a false front for a sector that is suffering from a talent drain. Japanese social and mobile game developers DeNA and GREE have both opened studios in Vancouver recently, and Seattle's Z2Live bought its way into Vancouver through the acquisition of Big Sandwich Games.
While three people in a basement can develop games for social media or smartphones, producing blockbuster console games like Electronic Arts' Battlefield or FIFA Soccer franchises is more on the scale of movie or TV production.
Companies like EA, which employs 1,100 to 1,400 people at any given time, require a deep talent pool, which Vancouver has. But it's a pool that Ontario and Quebec have been siphoning off over the last couple of years by luring talent to companies that are expanding because of generous tax incentives. Rockstar Games' Vancouver studio is moving to Toronto, and Donaldson said EA's Montreal studio has grown by several hundred people at the expense of its Vancouver studio.
"If our tax credits were comparable, EA probably would have hired a lot of those people here because they already had a studio here."
Microsoft Corp. (Nasdaq:MSFT) is also shelving two of its gaming products and laying off staff at its Vancouver studios. The Microsoft Game Studios in Vancouver employed 45 people earlier this year. The company has not confirmed rumours that about 35 of its staff are being let go.
B.C.'s Interactive Digital Media Tax Credit is 17.5% on labour costs. Ontario's digital media tax credit ranges from 35% to 40%. Quebec offers a 30% tax credit on labour costs and 7.5% bonus for French-language versions.
Ida Chong, Minister for Community, Sport, and Cultural Development, said she doubts Ontario and Quebec – which are having trouble balancing their budgets – can sustain the tax credits they now offer.
Matt Toner, founder of Zeros 2 Heroes Media, is using the game drain as a plank to springboard into politics. However, Toner, who is seeking the NDP nomination in Vancouver-False Creek, said, "The problem with the whole competitive tax regime is that it can turn into a race to the bottom."
He said B.C. needs an industrial strategy for screen-based industries. And because access to capital is always a problem for digital media startups, he suggests establishing a government-subsidized fund that would match angel investments in new companies with public dollars to help new companies get off the ground. •
