Jointly with Yuani Fragata and Francis Gosselin of Groupe Sage Consulting, our collaborator conducted the study titled First Portrayal of Quebec’s Digital Creativity Industry at the request of Xn Québec—Quebec’s association of digital experience producers. The document is aimed at presenting the profile of this sector which emerged some thirty or so years ago and which has experienced accelerated growth for the past decade.
Here, she presents the study’s most interesting results as well as a few observations and reflections stemming from the writing team’s discussions with some sixty or so digital creators and digital creativity entrepreneurs based in Quebec.
Initially, what was most difficult was to outline the contours of the industry under analysis: there is a close tie between the sector’s growth and the unbridled progress made by digital technologies as well as the bursting of the forms used to produce and distribute its creations. The boundaries are extremely hazy.
It is to take that difficulty into consideration that it was decided to solicit—in addition to members of Xn Québec—companies evolving in the ecosystem of creative, media and cultural industries that are active in all forms of digital expression: the members of the Alliance numérique, which represents video game companies, and of the Coop La Guilde, an organization that groups more than 130 indie video game studios.
Including video game companies was a given: the growth of the digital creativity sector is, particularly in Quebec, attributable mainly to the boom experienced by the video game sector in the past decades, as shown by the increase in the number of studios (48 in 2009, 198 in 2017).
That being said, digital creativity is not expressed only in video games. Jenny Thibault, Xn Québec’s director general, stated to Le Devoir that [TRANSLATION] “works for domes remain fictions or documentaries, it’s just that the screen is not flat”. Digital works are stories staged by creators using technology. The screen is not always flat, sometimes there is no screen at all. Instead, surfaces are borrowed from street furniture or yet again two miniature screens are inserted in a headset that immerses the person wearing it into a virtual reality.
The companies that took part in the study operate in video gaming as well as XR (virtual reality, augmented reality and mixed reality), digital facilities, immersive and interactive environments, podcast and linear content production for online markets, and web portal or mobile app creations. They all have in common that their business activities involve the production of contents and experiences using computer tools and digital technology. That is the definition that was retained to designate the industrial sector in question here.
“works for domes remain fictions or documentaries, it’s just that the screen is not flat”
They also share most of the characteristics of the creative industries as defined by UNESCO: both artistic companies and industrial companies that depend on cutting-edge technology have innovation and creative renewal printed in their DNA. They operate in an environment where, among other factors, the difficulty to predict how the public will react makes potential investors nervous and where the valorization of intellectual property is part of the major issues surrounding its development.
The second difficulty to which we were confronted was the following: given their innovative nature and the fact that they borrow from older sectors of activity, the industry’s operations and actors are not compiled separately in national statistics, but are instead embedded by default in various other sectors and subsectors. That is the conclusion to which the European Commission recently arrived regarding the cultural and creative sectors. The difficulties that these sectors face are aggravated by the absence of data and clear information regarding them. That in turn limits funders’ abilities to recognize their potential, as well as by other legislative barriers such as intellectual property rights, the disparity of tax regimes and issues regarding mobility.
In such conditions, managing to accurately define the breadth of the digital creativity sector and its economic footprint is a particularly complex undertaking.
Nevertheless, despite the fact that the digital creativity sector’s activities and actors are not segregated in the National Economic Accounts (NEA) of the Canadian System of Macroeconomic Accounts, it is possible to assess this economic footprint based on the last three years’ financial results furnished anonymously by the surveyed businesses. It is thus estimated that Quebec’s digital creativity sector contributed at minimum $1.25 billion to Quebec’s economy, with growth totalling close to 50% since 2015.
The digital creativity industry is a young industry that is made up of companies that have been in business for an average of 10 years and 20% of which have existed for less than three years.
It’s an industry made up of very small companies, half of which employ fewer than 10 people and up to 90% of which (among surveyed firms) call upon freelancers. Between 2015 and 2018, the number of freelancers hired by these companies increased by 66% and the average budgets assigned specifically to the hiring of freelancers increased by 20% (compared to a 25% increase in payroll expenses over the same period).
It’s an industry where several companies operate according to a hybrid model somewhere between original productions and service productions. Consequently, close to a third of all businesses were able to self-finance their growth.
It’s a dynamic industry that boasted a net profit margin of more than 10% in 2018 for 42% of respondents (whereas only 20% of the firms attained this level in 2015).
Issues: labour and financing
Labour problems—with respect to recruiting, retention and training—are primarily what preoccupy all of the study’s respondents.
This observation is corroborated by Suzanne Guèvremont, director general of Synthèse Pôle Image, a digital art and creativity hub created by Quebec’s Ministère de l’Éducation et de l’Enseignement supérieur (MEES), who was invited by Infopresse to comment this aspect of the study. In terms of recruiting, as she points out, consideration must also be given to [TRANSLATION] “related industries that recruit from the same pool of talent, such as aerospace, to develop flight simulators, or healthcare, for operative protocols”.
The difficulty to recruit the right people is amplified by the situation involving the training dispensed by educational institutions. Several respondents deplored that specialized institutions were not keeping up with the rapidly changing technology. Suzanne Guèvremont foresees that these institutions will be subject to increasing pressures: [TRANSLATION] “On the one hand, to increase the number of graduates, but also, on the other hand, to improve the quality of the training provided to ensure that it meets companies’ needs.”
In this industry based on creativity, innovation and cutting-edge technology, the leaders who were interviewed often expressed frustration with the misunderstanding displayed by support and financing agencies in general—and banks and investment funds in particular—with respect to their realities and their markets. Also, as a result of the ongoing transformation of technology, markets and business models, financing tools and programs are often poorly adapted to the needs of digital creativity entrepreneurs. That is particularly true in the case of sectors that are still in their development phase, such as virtual reality (it is rarely understood why two or three years are needed to develop a project, as one entrepreneur pointed out). However, it is just as true for a more mature sector such as the video gaming sector which is also experiencing its share of rapid change.
As a result of this lack of understanding and knowledge, potential investors stay away from investment opportunities—which maybe explains why there are very few Canadian-owned medium and large studios and why several of the industry’s companies have been bought out by large foreign groups, including Beenox (purchased by Activision in 2005), Compulsion Games (purchased by Microsoft in 2018) and Behaviour (of which a 20% capital share was transferred to China’s GAEA Interactive Entertainment in 2018).
As one of the study’s participants pointed out, foreign interest for these companies is nevertheless testimony of the potential of Quebec’s digital creativity industry.
It’s an industry that is a victim of its own success: several respondents pointed to the difficulty managing the growth of companies that navigate between cultural/artistic production and industrial/technological imperatives in a context where clients and institutions do not always know how to label them.
Finally, in this sector where innovation is embedded directly in the business fabric, the worst form of competition is not necessarily the one that comes to mind. As pointed out by several respondents, it’s poor quality: “If people associate the technology with poor-quality content, the technology is doomed to fail.”