This text is taken from the Courrier de l’économie of October 17, 2022. To subscribe, Click here.
Wednesday, October 19 begins the 2022 edition of Megamigs, the Montreal megaconference that attracts both local video game enthusiasts and professionals from all over the world. For the first time in three years, the event will take place face-to-face. This will be an opportunity to talk about trends in the creation of video games and good practices in terms of inclusivity and equality within an industry that has not always been an example in this regard.
This will also be an opportunity to talk about money. Of public money, in particular.
More specifically, representatives of the Quebec video game sector want to review the way the government and institutional investors finance projects put forward by studios with a storefront in Quebec. It could even be a question of the place of French in this heavily Anglicized industry. Unlike other niches in the digital economy, video games operate on cycles and development formulas that often exceed the return horizon desired by these investors and sometimes even exceed the very value of the company that undertakes this project.
In tech, the classic investment model is simple: here are a few million dollars; in return, I want a minority but substantial stake in the ownership of your company. The goal is to see the value of the business exceed that of the investment as soon as possible.
The video game works differently.
From one project to another
For example, a game of category AAA is, as with beef, the piece of choice for connoisseurs. These types of projects often involve more than one company. Ambitious, these games take time to see the light of day and do not generate any income until they are marketed a few years later. They can cost more than the companies involved are worth, individually.
More traditional investors don’t all find their way into this model, because risk and return are calculated differently than typical technology investment projects.
Already spoiled enough by generous provincial tax credits, which some are calling into question, Quebec video games would like their situation to be better understood so that their smaller companies can obtain another type of financing, geared towards their projects rather than their size or their immediate income. Its objective this week will therefore be to explain this situation to investors in order to facilitate the growth of companies other than the big, already well-capitalized players.
Among other things.