Special Report: Crossing borders, part two

Considering the significant benefits to companies making games in Canada, many have set up a studio or base there. EA, Ubisoft, Koei, Capcom, and most recently, Eidos, have all opened a Canadian studio.

Capcom International president Midori Yuasa admits that the R&D tax credits were one of the primary reasons for choosing the Greater Toronto Area for its new development studio outside of Japan. The company opened its Canadian arm in June 2006, and is currently working on mobile games, with plans to expand to other platforms. Yuasa said, "Toronto gives us access to a seemingly endless supply of young, talented, entertainment-savvy people, thanks to its colleges and universities. Ontario also offers relatively low business costs, exceptional R&D tax credits that you can't find anywhere else in the world, and helpful economic-development people to facilitate all aspects of a business startup."

Koei Canada set up shop in central Toronto in 2001, expanded in 2005, and plans to expand even further. Koei Canada's senior vice president, Hidenori Taniguichi, says the company chose the location because costs are reasonable, and because, "The fact that it's so multicultural is also an advantage, when, like us, you're developing games for the world market."

Even more companies are considering opening offices in Canada, or even moving lock, stock, and barrel over there. David Braben, chairman of UK-based Frontier Developments, admits that he is seriously considering a move, which is hardly surprising given his praise of the Canadian model. He told GameSpot, "We'd be foolish not to consider it."

Although Blitz Games is not considering a move to Canada, due to practical reasons--"many of our staff have put down roots here"--the company is outsourcing more and more. Philip Oliver, the company's CEO, told GameSpot, "It would be far too difficult and impractical to move abroad. However, we are already slowing UK recruitment and increasing outsourcing to other countries. Effectively, we are going to be creating jobs in other countries that could have been here."

Darius Basarab, senior business consultant for Ontario's Ministry of Economic Development and Trade, thinks this would be a shame. He said, "There's a lot of creativity in Britain. You see it in music. You see it in movies. You see it in the sheer volume of documentaries the BBC puts out--there's so much creative material there. And I think it would be a shame if that creativity was not applied to something like video games, and it sort of got lost in the shuffle." He added that he believed this was currently a "real danger" in Britain.

GIVING GAMES A POSITIVE SPIN

Basarab believes that in Canada, the games industry has achieved a level of recognition and respect that it is not currently afforded in other countries. He explained that having big multinational companies such as EA set up shop in the country has helped achieve recognition by providing jobs, boosting the industry's profile, and feeding into the economy. He said, "It's more acceptable here than it is anywhere else. But it took us 10 years to get this far."

Basarab believes that the games industry in countries like the UK needs to promote itself better. He said, "I don't see many self-promotion papers or anything that says it's the fastest-growing industry and it's a clean industry. I mean, video games are very, very clean, it's not like you're brewing chemicals or blowing things up." He continued, "There are games for the elderly. There are simulation games. There are children's games. There is all this good stuff, which is actually a larger percentage than the violent stuff, but all you hear about is the violent stuff." He concluded that in some ways, it was up to the games industry itself to put a different spin on the popular view of games, and applauded Nintendo for being one of the companies already taking a proactive stand in doing this.

Fred Hasson, CEO of Tiga, a UK trade association that represents the businesses and commercial interests of game developers, agrees. He said, "One problem, and this is not the government's fault, is that the games industry is still perceived as, for lack of a better word, 'dodgy,' so that the Daily Mail and all its propensity to paint games as all violent and depraved entertainment puts the government off from doing anything visible."

UNIVERSITY CHALLENGED

It's not all about the money. A big part of the Canadian success story is the way that the industry and universities maintain a continuous dialogue. Basarab believes this communication is essential, especially in such a fast-paced working environment as video games, where the technology and console formats are constantly changing. He said, "The feedback mechanism in Ontario is extremely strong. There is a dedicated group of people in the Ministry of Education that get up in the morning and all they do is collect feedback from the industry and try to make a connection with universities to make sure that whatever the universities are teaching is actually applicable."

Furthermore, private-sector companies can also get in touch with universities directly and meet to discuss particular needs, new courses that would be useful to them, and skills needed in their marketplace. He said, "That discussion is welcomed and it's encouraged. It's an open discussion and if there's enough people asking for the same skill, schools will change on a dime. They will actually implement those programs."

Braben believes that, unfortunately, the opposite is the case currently in the UK, where he thinks the majority of games courses are hideously out of date. "One of the things that is very worrying is there are over 80 games courses in Britain, and the sad thing is they aren't really teaching what we need for games at the moment. They are teaching where we were five or 10 years ago... The reality is that it is not a fast track to a career in games."

Hasson agrees. He said, "There is an acute problem in the supply of suitably skilled personnel, and a recent government-funded report showed that only 25-30 percent of 'games' graduates actually get jobs in the industry."

Basarab also believes that the Canadian university system helps get graduate students in the first place by providing a more realistic fee model than in other countries. He says, "It's very generous. The great majority of tuition is basically subsidised by the government. I think you're paying CA$3,000 to CA$4,000 ($3,000 to $4,000) a year in total. It's definitely not like in the US where you have to pay $40,000 to $50,000."

WHEN I HEAR THE WORD CULTURE, I REACH FOR MY GUN

Currently, France is awaiting a European Commission judgment to see if a gaming-industry tax-credits system--already approved by the French government--can be implemented in France, or whether it goes against the same EU rules that limit state aid. These tax credits would be based on a "cultural test," which will mean that tax credits can be given for any game deemed to have cultural significance to France, to be quintessentially French. In the UK, a similar system currently exists for the film industry.

However, the UK's ELSPA has rejected this approach. When contacted by GameSpot, ELSPA confirmed this, but declined to comment on the reasons behind the plan's rejection.

Andy Eades, development director of Relentless Software, is one person who is not impressed by the intended "cultural" restraints. He says, "What makes a game British? Lara Croft is British. The Getaway is set in London. Apple's product designer is British. It seems that the government can't figure out what being British is, so how are we supposed to get that one right? If it means 'niche,' and 'won't sell globally,' then it's an obvious nonstarter."

Instead, some developers think that the tax-credits system should be made EU-wide, and the cultural element removed. Philip Oliver from Blitz says, "Cultural grants would be a way of helping the UK compete in a fast-changing world, but not in isolation." Developers are also keen to point out that the industry is one that has huge investment potential, rather than one that needs help, and that tax credits are needed to grow the industry, not to help it survive.

WHERE DO WE GO FROM HERE?

It's obvious that Canada's cunning plan to entice the games industry onto its shores is working, and that other countries need to act if they want to keep up. Aside from the monetary perks given to game companies in Canada, there are a variety of other benefits that are offered to them. They are taken seriously as an industry, they are given help setting up shop and settling in, and dialogue is encouraged between them and universities, which ensures that students are learning things that are actually relevant to working in the industry.

Switzerland, which is not a full member of the EU, has been heralded by some as another country that might embrace tax breaks and a progressive view of the gaming industry. Electronic Arts has set up an office, its international publishing headquarters, in Geneva, and other companies are expected to follow suit.

Despite the good efforts of trade bodies such as Tiga and the Game Developer's Association of Australia, and the substantial contributions to the economies that the games industry makes, the governments in Australia and Britain seem to consider nurturing their games industries as a low priority. This shows that games obviously have a way to go to overcome the perception problem they have, even though the contribution the industry makes to the economy is at least now being acknowledged. The question is--by the time politicians in countries outside of Canada start looking to the future and taking new industries like gaming seriously, will it be too late for them to compete?