Criticized by those who find that it is too expensive or that it mainly benefits foreign multinationals, the Quebec tax credit on multimedia titles is profitable. It also helps Quebec companies, including those located outside Montreal, confirms the first study in almost ten years to focus on the economic impact of Quebec video games.
On the eve of the publication by the Quebec Minister of Finance, Eric Girard, of the provincial budget for fiscal year 2023, the report on the economic benefits of the video game sector in Quebec produced by the firm Aviseo for the benefit of the Guilde video game industry in Quebec is reassuring. It reinforces the idea that the government does not have to review the tax formula that has helped Quebec for 25 years to position itself as one of the world leaders in the production of video games and visual effects.
Based on economic data for the year 2021, the report – the first of its kind since 2014 – concludes that video games have an impact of $1.3 billion on Quebec’s GDP. An impact which, at 55%, takes the form of wages paid to the employees of the 291 companies that made up this sector in 2021.
A “profitable” but inconvenient credit
The tax recovered by the Quebec Treasury on these salaries and on the income of companies in the sector amounted during this fiscal year to 370 million dollars. The federal government, for its part, collected 186 million in tax revenue. By way of comparison, the tax credit paid by Quebec over the same period cost it 311 million.
“Is the tax credit on multimedia titles profitable? Our answer is yes,” concludes the General Manager of the Quebec Video Game Guild, Jean-Jacques Hermans. “The system works. We hear from other industries asking for help, who find that video games don’t need government help as much anymore. »
“What we see, for us, is the start-up of many new studios each year. New studios that innovate and come into being thanks to this aid. »
In recent months, Quebec business people from technology sectors related to video games have invited the Legault government to review its tax strategy. The provincial multimedia titles tax credit covers up to 37.5% of salary expenditures by video game publishers, up to a maximum of $100,000 per worker. It does not include any obligation in terms of reinvestment in Quebec of the sums obtained or in terms of the creation of lasting intellectual property in the province.
The largest recipients of this credit are companies that report their profits outside the country, critics lament. They add that in the midst of a labor shortage, this credit deprives specialized workers of software companies which are not eligible and which, in the absence of significant government assistance, cannot be as generous in their remuneration as competitors. strangers.
A point of view that does not share the Video Game Guild, the main spokesperson for the video game industry in the province. “It’s not so true that video game professionals move easily from one sector to another,” says Jean-Jacques Hermans. They are passionate people who have studied specifically to work in this industry and do not want to do anything else. »
Regionalization still timid
These professionals are not all ready to leave their hometown to work in video games. This has led the industry for several years to regionalize its activities. Result: historically concentrated in Montreal and Quebec, the economic impact of the sector is beginning to spread to regions such as Saguenay and Sherbrooke.
That said, this regionalization is still rather timid. In its report, the Guild calculates that 6% of the economic benefits of video games in 2021 took place outside the metropolitan areas of Montreal and Quebec. In the greater Montreal area, 63% of economic value is created on the island. The southern and northern crowns (including Lanaudière and the Laurentians) account for 17% of the industry’s total spinoffs.
At least this regionalization leads to more creation of local businesses. In 2021, Quebec still had about a third of all Canadian companies established in the game (291 out of 937), a proportion that has changed little since 2013, even if 600 new companies have been created nationally. In Quebec, half (51%) are very small businesses. They have less than 4 employees.
The relatively modest size of a large majority of companies is what makes the Video Game Guild most tick. It now wants to improve marketing and export assistance for independent businesses. “It’s easy for the subsidiaries of foreign companies, but for the hundreds of independent studios, it’s more difficult,” says Jean-Jacques Hermans. “It is now our number one battle horse before the government. »
We will know at the end of the day on Tuesday if Eric Girard has received the message.