Blogs & Comment

Canada's video game industry: a strong case for foreign ownership

Its structure may be the prescription for what ails Canadian tech businesses.

Ubisoft’s Assassin’s Creed: Revelations gets showcased at E3 2011 (Photo: Valerie Macon/Getty)

I’m off to Vancouver for this weekend’s Canadian Video Game Awards, which I’ll be covering for This year, I was honoured to be one of the judges so I’m not just excited for the nominees, I’m also keen to see if my picks end up winning. It’s almost like a betting pool, although I certainly wouldn’t do something so Pete Rose-ian. That would be wrong.

In any case, I’ll also post some thoughts here next week from what I’m sure will be a fun event.

The awards are meant to honour the best in video game design, as done by Canadians. I wrote up a few preview pieces, which you can check out here and here. I really liked what Victor Lucas—host of The Electric Playground and one of the awards’ organizers—said to me about the event: “We really want to grow the CVAs to be something akin to the Junos or the Geminis. We should be just as proud of the games that are made here as we are of the music, television and films that are made here.” I couldn’t agree more.

You may know by now that Canada is a video game powerhouse—with 16,000 employees, the country’s industry is third biggest in the world, next to Japan and the United States. Moreover, some of the best-known and biggest-selling franchises—Assassin’s Creed, Splinter Cell, Mass Effect, FIFA and so on—have been born and bred in Canada.

Having covered technology for many years, Canada’s video game industry is a breath of fresh air. Our powerhouse status is the result of the overall market’s seemingly unending growth, but also some very smart government tax subsidies. In that way, the whole Canadian sector has been mostly a good news story throughout its history.

That contrasts starkly with other areas of Canadian technology, where periodic ups and frequent downs are par for the course. All too often, it’s a case of triumphant rise, then disgraceful fall (see Corel, Nortel, Research In Motion).

The Canadian video game industry’s structure may just be the prescription for what ails Canadian tech businesses. Many such companies operate in a global marketplace, yet few have the resources to properly attack it, which is why so many stay small or fail.

With video games, the reverse has happened. Attractive provincial tax incentives have convinced big multinational publishers to either set up new studios in Canada or acquire existing ones. In time, these operations have often become the hearts and souls of those big multinationals because of the talented individuals working there.

Nearly half of Paris-based Ubisoft’s employees are in Canada while almost all of the company’s most successful games are made in Montreal. California’s Electronic Arts, the biggest game company in the world, counts EA Canada in Burnaby, B.C. as its biggest studio. That operation is also responsible for some of the biggest games in history.

So while the debate rages about whether Canada should be welcoming foreign ownership of companies or fearing and rejecting it on the grounds that it will “hollow out” the country, the video game industry has cast a giant “who cares?” over the whole argument. Multinationals have come here and experienced virtual reverse takeovers by Canadians, giving the country a source of global pride in at least one industry.

It’s a phenomenon that’s not well understood, but it may indeed be the way forward for Canada in a global economy. There’s something very prideful about wanting to build our own world-beating businesses and not wanting to be a simple branch-plant economy, but in a globalized era there are many roadblocks—such as access to the big bucks needed for expansion—to doing so.

The games industry is proving that the foreign investment and ownership route is not as shameful as many believe. Canadians don’t have to overtly conquer the world; they can instead do so from the inside out. In a way, that’s what this weekend is all about.