A Plea to Halt Canada’s Digital Wars

Digital animation | BCBusiness
While Vancouver’s digital animation sector has enjoyed a recent boom, other parts of B.C.’s digital media industry are suffering as other provinces lure companies away with tax incentives.

Vancouver’s Mayor Gregor Robertson is asking the provincial and federal governments to stop the subsidy war between Ontario, Quebec and B.C. that’s hollowing out our digital media industry. Nice gesture, but it’s ultimately futile.

Our last post about problems in the creative community, specifically the digital games sector, has generated an outburst of anger in Vancouver.

The issue was sparked by the recent closure of long-time gaming house Radical Entertainment. This was preceded by the move by Rockstar Games to Toronto. And since then, another gaming house, Capcom Game Studio, announced that it was axing seven per cent of its staff (it didn’t say how many that was, however).

These, and several other recent closures over the past three years, convinced industry veteran Matt Toner to take a run at the provincial NDP nomination in Vancouver’s Fairview-False Creek riding in an effort to get some possible (if the NDP win the next election) government backing for his save-the-games industry campaign.

It’s also sparked the City of Vancouver and Mayor Gregor Robertson to write to the provincial and Canadian governments to stop the interprovincial tax credit (subsidy) war that’s hollowing out the industry in B.C.  

But wait a minute. Isn’t the digital effects industry booming in Vancouver? Didn’t we recently see several breathless stories about how every Hollywood studio was coming to Vancouver for their digital special effects and animation?

Well, yes you did. But as the city council’s motion showed, there is much confusion about the industry right now, largely because it includes several different sectors. The latest one, visual effects and animation is doing very well, accounting for more than 1,000 jobs and putting the city behind only London and Los Angeles.

That’s the part of the industry that’s getting all the great press. But  console gaming — the part of the industry that launched the entire sector in this city — has been hijacked by Ontario and Quebec via financial incentives (i.e. tax credits and direct subsidies).

That’s what Toner’s campaign is all about.

So, the mayor is writing to the provincial and federal governments to clean up this mess. A letter to the province suggests exploring options to correct the near doubling of tax incentives that Ontario and Quebec offer to digital media companies. That likely won’t fly — B.C. isn’t real keen on industrial incentives when finances aren’t really up to snuff — but you never know. And, of course, it makes for good electioneering in the upcoming provincial election.

The note to the federal government may have more effect, however, especially if the city can get the provincial government on side. The city is asking the feds to step in and start refereeing this destructive competition for digital industries.

It’s promoting the concept of a national interactive digital media strategy that would strengthen the entire country’s clusters in digital media sectors “as opposed to the current approach which only serves to weaken our global competitiveness.”

In other words, we must all stand together, or we’ll fail in the long run.

Nice concept, but I doubt it will work.

First of all, this federal government is obsessed with the energy industry, most specifically oil, and probably couldn’t care less about such fey industries as digital media. And second, Ontario and Quebec pack a lot of power in the federal government and aren’t likely to allow the feds to interfere in what they see as provincial economic wars.

Because frankly, right now they’re winning.