Vancouver Gaming Industry: Digital Warfare

It’s 4 p.m. on a crisp January 15, but inside the Vancity Theatre things are about to heat up. Five panel members are in their seats at the front of the auditorium for the final session of Vancouver’s first-ever Game Design Expo.

It’s an impressive group – including Rory Armes, senior VP and GM of Electronic Arts (Canada) Inc. and Kelly Zmak, president of Radical Entertainment Inc. The hot topic they’re here to discuss is “The Future of Gaming, Cinematics and Storytelling in Games.”

Most of these senior execs are upbeat, and why wouldn’t they be? Canada is the sixth-largest game producer in a $27-billion international industry. And with 44 per cent of the country’s game companies setting up shop here, Vancouver is a key player.

But to one of the panel members, Vancouver’s gaming’s future isn’t so bright. In fact it’s downright bleak. Delivering his pronouncements with an earnest expression and neat, clipped movements, Jay Balakrishnan, former executive game director at Radical Entertainment, thinks the digital sky is falling – at least on the West Coast. “If we don’t do something, we could lose our status as the Hollywood of gaming,” he says to his fellow insiders and a couple hundred spectators. “I would say this: it’s ours to lose.”

Jay Balakrishnan, former executive game director at Radical Entertainment, thinks the digital sky is falling – at least on the West Coast.

What’s his panic about? After leading the country’s game industry for years, Vancouver is in danger of handing over its number-one status to Montreal, where government subsidies and lower operating costs make it an increasingly appealing place to do business. Soon Vancouver – and B.C. – might see jobs and revenues start to trickle, then flow to the east and other parts of the world. Balakrishnan and others believe the animation and film industries could set out for greener digital pastures as well. High-profile events, such as today’s Expo hosted by the Vancouver Film School and the creation of a Centre for Digital Media, are just two ways B.C.’s private sector and government are trying to put the spotlight back on the game industry. But will the attention be too little, too late?

As it turns out, Vancouver’s pre-eminence in Canada’s video-game industry is something of a fluke. In the late 1980s, local company Distinctive Software developed games for big publishers such as Sega. In 1991 it was bought by California-based Electronic Arts Inc. (EA), which is now the largest independent gaming company in the world. (The purchase didn’t take talent south of the border – despite foreign ownership, many EA developers are in Vancouver.) That same year, another local game developer, Radical Entertainment, was launched. Suddenly the city was a hub of digital creativity – and commerce.

It didn’t take long before pioneers with grand ideas for games left established companies and set out for Vancouver too. Its climate, its proximity to Los Angeles, its booming film industry and the infrastructure of schools such as the Emily Carr Institute of Art and Design made it the place to be. Looking back, it was what Rick Mischel, executive producer of the animation and post-production studio Rainmaker Entertainment, calls “a perfect storm.”

Today, 138 game companies in B.C. employ close to 3,000 people and generate $300 million in annual revenues. Lynda Brown, executive director of New Media BC, says her stats show that, per capita, Vancouver is one of the largest video-game-development centres in the world. With locally generated products such as Scarface and EA Sports’ NBA Live selling millions of copies, it does seem there’s nothing to worry about.

Vancouver may have established a history, but is Montreal the future epicentre of gaming? Certain indicators suggest that could be the case. In 2003 EA opened a studio there, with GM Alain Tascan saying, “We settled in Montreal because it’s going to be the place to be 10 years from now.” According to reports, the province’s 40 game developers already employ 2,700 people. And a 2005 study by advisory firm KPMG found Quebec’s operating costs for an advanced software company were, on average, four per cent lower than B.C.’s.

Top-rated U.K. game publisher Eidos Interactive Ltd., which holds the Tomb Raider and Hitman franchises, is readying its first Canadian studio in Montreal, which will create 350 jobs over the next three years. This year the Quebec government confirmed that game publisher Ubisoft Entertainment SA would receive $19 million to facilitate the expansion of its Montreal office and the establishment of a new digital design studio. The company, which already employs 1,000 people, is expected to hire 1,000 more by 2013. Clearly Montreal is not just sitting back waiting for business to grow.


Quebec’s operating costs for an advanced software company were, on average, four per cent lower than B.C.’s.

Montreal’s momentum is what has insiders such as Balakrishnan worried. “This is the tipping point,” he says. “The Trojan horse is here. It’s not just gaming moving to Montreal, but CGI [computer-generated imagery] as well. This is going to slowly impinge on our film industry. You don’t want to be caught sleeping when the next vanguard of filmmaking is also moving.”


But not everyone is quite ready to rush into battle. “That sounds a little alarmist,” says Rainmaker exec Rick Mischel, former CEO of animation studio Mainframe Entertainment Inc. (acquired by Rainmaker) and president of his own company, Reach Games. While he agrees the two cities are competitive, he’s reluctant to paint the situation as a conflict. Citing livability and infrastructure, as well as the upcoming Olympic Games, Mischel says Vancouver is still one of the top international centres for the creation of world-class games.

And Rory Armes, one of the studio execs on the Game Design Expo panel with Balakrishnan, agrees. What’s good for Montreal is good for the country, says the EA senior VP – and there’s enough gaming action to go around. Commenting on his company’s Montreal studio, Armes cites the interest from the Quebec government; a young, creative workforce; good universities; and a desirable culture as influences on the location. But he doesn’t see one city having an advantage over the other. Provincial governments in both locations, he says, do their part, if in different ways: Quebec focuses on helping companies grow, while B.C. emphasizes building and attracting a capable workforce through personal tax credits and education.

“I can see great growth in Montreal, and I can see great growth in Vancouver,” says Armes. “I believe what you’re going to see is more and more original IP [intellectual property] in this country. You’re going to see some of the big titles in our industry being developed and created by Canadians. Kind of like hockey, I guess.”[pagebreak]Begun in 1998, New Media BC is a not-for-profit agency that advocates for digital animation and electronic games companies, among other new media sectors. As executive director, it’s Lynda Brown’s job to listen to what her member businesses have to say. After soliciting feedback in April, she realized the situation was more critical than she’d thought. Her initiative unearthed a number of concerns: wage subsidies in other provinces, the need for financial support to train employees, a cumbersome and time-consuming immigration process for talent from other countries and insufficient investment incentives that don’t address global business needs. “These aren’t brand-new issues, but they are definitely heating up,” says Brown. “The gaming companies are having a heck of a time trying to attract the right people for their studios to remain competitive.”


“We’re faced with increased competition on a global scale…I have real concerns about our ability to expand our business in B.C. and to maintain our leadership position in this province” — Douglas Tronsgard


Despite the cheerleading for Vancouver’s educational infrastructure, companies find it difficult to keep talent. Training programs produce exceptional but inexperienced graduates. Companies have to invest two to three years to get new staff up to speed – then they go somewhere else.

Brown agrees with Balakrishnan that Vancouver, if not Canada, is in danger of being left behind in the race for gaming supremacy. As Douglas Tronsgard, CEO of Next Level Games Inc., expressed in a recent New Media BC press release, mid-sized companies are struggling to expand. “As we look to continue to grow, we’re faced with increased competition on a global scale in an industry that has no boundaries,” he said. “I have real concerns about our ability to expand our business in B.C. and to maintain our leadership position in this province.” Companies such as Disney Interactive Studios Inc. (formerly Buena Vista Games Inc.) and Radical Entertainment are experiencing the same challenges.

Radical’s Kelly Zmak, who has 22 years of industry experience, says expansion is a problem primarily because of the intense competition for talent. “We compete with a wide variety of game companies locally, but we also compete with other media companies in the area,” he explains. “On top of this, the U.S., Europe and Asia are fast-growing markets and senior talent is being pulled all over the globe.”

The desire and opportunity for growth are both in place, but training entry-level staff is expensive. In the long run, it’s more cost effective for Radical to find experienced workers and pay them more. “The costs of our projects have tripled in the last few years,” says Zmak. “Each team is more specialized and each discipline requires unique skills. Junior staff members are usually more of the generalist type who have not yet mastered an area or specialty. This is forcing many of these talented people to look for work outside of B.C.”

That’s where Montreal has an advantage. Companies there are better able to bring on a blend of junior and experienced staff, thanks in part to provincial subsidies. “That gives them the advantage of not just building some great games but capitalizing on rising star talent and grooming them in a financial model that puts us at a competitive disadvantage.”

To fix the draining talent pool, Zmak says Radical is focusing on its co-op program, which draws on students from B.C.’s schools. The company is also looking into changing its development process, rethinking its internal training and striving to create “newbie” positions for the brightest graduates out of the education system.

With proactive thinking and a calendar full of events aimed at raising the industry’s profile, there are reasons to hope B.C.’s gaming industry is shedding its laid-back West Coast attitude. Plans are already underway for next year’s Game Design Expo, and this past May Vancouver hosted an International Game Summit. Following the summit, New Media BC announced the formation of a digital-entertainment task force to investigate key competitive issues and make recommendations for the industry to grow.

Another huge step forward is the creation of B.C.’s Centre for Digital Media – although on an overcast April day it looks less like a training centre for computer interface brainiacs than what it was: a warehouse owned by the heavy-equipment dealer Finning Canada.

Inside the drab 50-year-old two-storey glass-and-cement structure, its white rooms are devoid of people, chairs, desks and computers, while workers outside assemble the facade that will better reflect its direction.

Once renovations are complete, the Great Northern Way Campus building will house the new Masters of Digital Media two-year graduate degree program. Long-term plans for a new state-of-the-art building to house the program await funding confirmation.

Combining technology, creativity, design and art for a degree co-credentialed by UBC, SFU, Emily Carr and the British Columbia Institute of Technology, the program will be the only one of its kind in the country. The program will train students to become the kind of ready-to-go mid-stage talent Vancouver’s video-game and digital-media industry needs.

While Lynda Brown worries the whole initiative was a little late coming, she’s hopeful the province can take advantage of what she calls a closing window of opportunity. “We’ve sort of had a tradition in Canada of backing industries about to fail or that are in crisis mode, as opposed to looking at what we’re really good at and where we can succeed and compete,” she says, noting that the more she travels, the more she sees what’s at risk.

“We’re in this really interesting spot where we could lose it all tomorrow. And that’s what I’m trying to prevent.”