Look out Toronto, Montreal and Vancouver. Edmonton is becoming an attractive market for those in the video game industry because of a new tax credit, reduced business costs due to the drop in oil prices, a good-sized talent pool and an industry leader already established in the city for more than 20 years. That’s what may entice video game companies looking to set up shop in Edmonton.
But how and why did the video game production market emerge in the city referred to as the Gateway to the North? Representatives of the Entertainment Software Association of Canada (ESAC) among others say that Edmonton’s BioWare studio sparked the development of the industry in Alberta’s capital when the company’s game Shattered Steel was released in 1996. The game was immensely popular and it put Edmonton on the video game production map.
From there, other video game studios came onto the market and began producing content that would be sold around the world, according to video game industry advocacy group GameCamp Edmonton in a 2015 report.
Most recently, the British video game startup Improbable chose to set up its first Canadian office in Edmonton, adding another company to the city’s existing industry roster. The game technology company is known for its SpatialOS platform which “allows for rapid iteration and the ability to develop beyond a single server to create highly innovative games.”
The company’s first untitled project is currently under development at the newly launched Edmonton studio, which already employs around 50 people in art, game design, programming and tool development, according to the company’s press release.
ESAC president and CEO Jayson Hilchie says that companies like Improbable that decide to set up shop in Edmonton result from having what he calls an “anchor company” having established roots in a city. In Edmonton’s case, he says, that would be BioWare. “What you see with an anchor company, a behemoth that sets up, everyone goes to work for them. At some point after learning valuable skills, they get transferred to other companies or people get their own company and they splinter off. That’s what creates the cluster effect,” Hilchie explains. “I think that is a truly important part of how an industry works. With the Improbable announcement, you already see that [cluster effect] happening [in Edmonton].”
Hilchie says Edmonton is now tied for fourth place, with Winnipeg, among the cities with the most video game companies. Edmonton and Winnipeg follow much larger industries established in Toronto, Montreal and Vancouver, he adds.
Many have welcomed the growth of the video game industry in Alberta’s capital with companies of various sizes found in the city. “From my perspective, there are both large players like BioWare and smaller studios like BeamDog. It’s really healthy for us as a province and as a city because it increases our intellectual production,” says Vadim Bulitko, a professor with the Department of Computing Science at the University of Alberta.
According to the Alberta Game Development Industry report, the province was home to 28 studios in 2015, 24 of which were located in the Edmonton area. Trent Oster, CEO of Edmonton-based BeamDog and formerly of BioWare, says that Edmonton’s video game market continues to grow as the video game industry overall becomes more competitive.
“When we [at BioWare] started out, there were maybe 40 games [around the world] being made per month. Now, there are 500 games added to Apple’s App Store each and every day,” says Oster. He says Edmonton is attractive to many video game companies looking for a good-sized talent pool to draw from and reasonable operational costs.
A growing sector
The affordability of operating a video game company in Edmonton compared to larger urban centres in Quebec, Ontario and British Columbia has also made Edmonton more attractive. According to Nordicity’s analysis of the video game industry, in 2017, the costs of running a company, per full-time equivalent, can be 24 per cent lower on average outside of major development centres like Toronto, Montreal and Vancouver.
The growth registered by Edmonton’s video game production industry is part of a national trend. More than 40,000 people were employed on a full-time basis in the video game industry in 2017, up 11 per cent from 2015, according to Nordicity’s report. That growth has attracted the attention of both the federal and provincial governments. In 2017, video game companies contributed more than $2 billion to Canada’s GDP, according to the Nordicity report.
To help incubate that continued growth, Alberta’s provincial government introduced the Interactive Digital Media Tax Credit in 2018. Companies can benefit from a 25 per cent tax credit for paying their employees in salaries and bonuses. It’s a rate of return that has helped make Alberta attractive to video game industry leaders and has put the western province on par with other provinces in terms of rates. In neighbouring British Columbia, a credit of 17.5 per cent is offered to companies. Consequently, following Alberta’s tax credit announcement, British Columbia is less attractive to companies, according to DigiBC.
Hilchie says Alberta’s recently introduced tax credit has helped create “momentum” in the city that was once known as the City of Champions. “I don’t think we’ve seen this much momentum in Alberta than we’ve seen in the last six months and I think a lot of that has to do with the tax incentive,” he says.
Leveraging emerging talent: working closely with universities
Edmonton’s talent pool has also helped make the city more attractive to creative developers. Oster says companies like BeamDog work closely with many of the schools in Edmonton and elsewhere in Alberta to hire the next generation of game developers, illustrators and other essential workers. He adds that Edmonton is a great place for students to hone their skills compared to bigger markets like Toronto or San Francisco. “There’s more opportunity for the talent pool to work on games [in Edmonton],” Oster says.
Industry demand has trickled down to the post-secondary level. At the University of Alberta in Edmonton, there was initially only one course related to the video game industry. Now, it has grown into a certificate program that is offered in addition to a bachelor’s degree for students seeking to establish video game development skills.
It has helped to develop relationships between students and industry leaders, says Butliko. One example is through studio internships, he adds. The professor also works with BioWare to help students create their own video games as part of one class. Students get to ask the experts about important elements like programming and pitching their game. Also, students at the University of Alberta get to go on BioWare studio tours and attend special talks to hear from former students who now work at the large studio. “Without them, I don’t think the program would have the same impact. We can talk about things academically but it really balances the academic discussion to have that exposure,” says Bulitko.
For his part, Oster says it benefits companies like his own to work closely with schools like the University of Alberta and the Edmonton Digital Arts College to recruit talent in Edmonton. Luckily, Oster says, there’s less competition in Alberta amongst companies when it comes to hiring compared to other North American cities. “There’s less competition for the local talent pool,” he says. He adds that BeamDog and others search for the next generation of programmers and designers locally because they workers they hire are more willing to stay with the company because of the lower living costs, family ties and more.
Hilchie says Canada overall attracts a lot of international talent because of the games produced by companies such as BioWare and Vancouver-based Electronic Arts. “Once they move to Canada, they often want to stay because of the lifestyle the country offers and that’s a key draw for Canada,” he says.
With the recent addition of Improbable and the relatively new tax credit for companies, experts say Alberta in general and Edmonton in particular have a chance to flourish in the video game industry. “Over the years, it was struggle for video game companies to grow in Alberta and Edmonton. The oil boom drove up labour costs and real-estate costs, and lack of government tax incentive certainly created a higher cost environment in Edmonton and the rest of Alberta,” Hilchie says.
But that’s not the case anymore, according to the ESAC’s president. “Now in Alberta, you’ve got a government that sees the economy as shifting and has decided that to try and diversify the economy. The tax incentive, implemented about a year ago now, is creating a momentum that’s needed for companies like BioWare to invest in long-term projects, for companies like Improbable to setup. We’re seeing momentum that I don’t think we’ve ever seen before.”