By Jason Magder, The Gazette September 15, 2011 4:03 PM
MONTREAL – Although Montreal boasts one of the world’s largest video game development industries, it’s one that has for the most part been transplanted from the U.S., Asia and Europe.
A year ago, 90 per cent those employed in the industry worked for foreign-owned companies, according to a report issued by the Social Sciences and Humanities Research Council of Canada.
That’s why Thursday’s announcement of a $5 million investment in the local social and mobile gaming studio Gamerizon was seen as good news by local gaming observers.
Gamerizon – founded by Montreal game developers in 2008 – announced it would hire 100 people in the next two years to grow its company. With a current staff of just 15 employees, the company has had remarkable success with its Chop Chop franchise of games with more than 15 million downloads from Apple’s app store.
“It’s about time,” said Chris Arsenault, managing partner of iNovia Capital, which was the secondary investor along with Vanedge Capital. “In the gaming industry, it seems like (independent studios) are just waking up.”
Arsenault said he believes Gamerizon has the potential to earn $100 million in annual revenue and to grow to the size of San Francisco’s Zynga, maker of the popular Facebook games Farmville and Mafia Wars.
While Vancouver and Toronto have grown mostly organically, Montreal’s industry has grown primarily by luring larger gaming studios, like Ubisoft and Electronic Arts, to set up satellite offices here, mostly by offering tax breaks that cover up to 37.5 per cent of salaries.
There is some danger in relying too much on foreign companies, points out longtime industry observer Jason Della Rocca.
“The vast majority of value generated by this talent leaves the country (i.e., profits, brands, IP),” Della Rocca wrote on the gaming industry website Gamasutra last month. “Even the talent itself, sometimes transient foreign workers, is at risk of leaving. All of which limits innovation and the generation of long-term wealth.”
Alex Sakis, the CEO of Gamerizon said he believes the emergence of so many large companies was an obstacle to developing homegrown companies.
“The fact you had all these international companies coming here, opening large offices, hiring people, took a lot of oomph out of the capacity of small companies to grow,” he said. “We were able to do that because we picked a field early on – mobile gaming which at the time was not a crowded one.”
Foreign-owned companies still dominate Montreal’s gaming industry, and those companies are still growing with nearly 1,000 jobs expected to be created at Electronic Arts, Funcom, THQ, and Warner Bros. in the next few years.
Arsenault believes, however, the tide is about to change. He said Montreal is about to see a boom in local studios setting up shop. He said there has already been some good developments on that front this year, with last May’s announcement of the new gaming studio Sava Transmedia – with plans to hire 200 people within five years.
Alain Tascan, the CEO of Sava Transmedia, said the time is right for independent gaming companies to thrive. He said that’s because most of those companies concentrate on social and mobile games – the industry’s largest growing segment.
“There’s a new generation of independent gaming companies coming to Montreal,” said Tascan, founder of the Montreal studios of Paris-based Ubisoft and Redwood, Calif.’s Electronic Arts. “This shows the new maturity of the industry.”
He said social and mobile games – played either on Facebook or on devices like the iPhone and iPad – have low startup costs, so there are tremendous opportunities in the field. And with so much talent in the established companies, it could be just a matter of time before there are more spinoffs.
Sakis pointed out that so far this year, there have been 6 billion downloads from application stores, and half of those were games, so there is a huge demand for good mobile games.
Despite the good news, the government can still do more to support local independent companies, Della Rocca said, by encouraging incubators that invest in companies that are at the earliest stages of development.
“Building an environment that allows small independent Canadian studios to thrive is more challenging and time-consuming than luring a single large company into an area through direct tax incentives,” Della Rocca wrote. “Not to mention that a ribbon-cutting ceremony for a new major studio of an international publisher is much more politically attractive than sustaining dozens of indie failures to reach every Doom-like success.”
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