Revenues

There are no reliable statistics on the Canadian based video and computer game industry. It is not listed as a distinct sector by government agencies such as Industry Canada or Statistics Canada, which rolls it into broader categories such as “multimedia.” We have arrived at figures based on a combination of published figures, interviews, and informed estimates. These figures should be treated with caution, because the estimates are just that—estimates, and also because of the complex structure of the industry, the high component of foreign ownership and also the very volatile nature of the industry, which can produce large annual alterations in sale.

The annual revenues for Canadian-based developers and publishers are currently around between $1.5 and $2 billion. This is compares to a 2001 total operating revenues for the Canadian software publishing industry estimated at $5.9 billion in 2001 by Industry Canada, and of a multimedia sector valued by the same source at $2-3 billion.

At least half of this amount is accounted for by a single company, the Vancouver-based Electronic Arts Canada, a subsidiary of the US owned Electronic Arts (EA). EA is the largest game developer in the world, and EA Canada its largest development studio, EA regularly has annual revenues over $1.5 (US) billion, and a number of reports ascribe 40% or more of this to the productions of the Vancouver studio.

A cluster of 12 or so publishers and developers account for most of the remaining revenues (Hip Interactive Radical Entertainment, Bioware, Strategy First, Digital Extremes, Relic Entertainment, New KidCo, Silicon Knights, Microids UbiSoft, Digital Illusions, Rockstar/Take two).

About $100m or less revenues is split amongst some 50 companies. There are many small developers making low or no revenue.


Strengths and Weaknesses of the Canadian Industry

The Canadian video and computer games industry has a number of notable strengths:

1. Canada is wealthy, wired and well-educated. There is a good skilled labour pool (particularly in the field of graphic design and animation), and widespread familiarity with digital technology and game-play.

2. Proximity to the US. Canada attracts investment by US publishers looking for low-cost production site, and from European game companies looking for base to break into N. American market (this has been important in attracting French game corporations to Quebec).

3. A supportive policy environment. In some provinces (Quebec), government policies are strongly supportive of the gane business, thru tax breaks, etc.. More generally, the Canadian policy and legal environment presents few major problems—from the point of view of game publisher sand developers-- around issues such as IP legislation and enforcement.

4. Although many people in the game business complain about high tax rates, the industry benefits from aspects of the Canadian welfare state such as a good education system and relatively pleasant, safe cities.

Despite its success, however, the Canadian games industry does have some problem areas:

1. Proximity to US. Canadian developers face a constant “brain-drain” threat arising from the higher wages, lower taxes and intense reputation of the US game business. This is clearly the flip-side to point 2) above.

2. Lack of control. As we’ve noted, there are few Canadian publishers The decision-making heights of the business--the site of the largest market base, of the largest game enterprises--are in markets and in companies outside of Canada. Many Canadian companies do not own IP rights to games they develop. Much of the revenue accrues overseas. Independent Canadian developers are being bought up. There is a risk of Canadian game development tending towards a “service industry” for overseas publishers.

3. Global mobility. Following from 2) above, publishers who see Canada as low cost development site may eventually globally relocate this work. Therefore, the Canadian government might consider policy level supports for independent, original domestic development by Canadian companies, similar to programs initiated in other countries, such as France or Korea.

 

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