The golem is a fantasy character well known to fans of role-playing games and video games. Powerful and enormous, it is often made of clay or rock and is controlled from a distance by a magician with sometimes uncertain intentions. Above all, he personifies very well the position of Quebec in the global video game: a fragile giant.
Quebec employs more than its fair share of video game professionals. It hosts 22 of the 58 largest publishers in the country, and a new Chinese publisher will soon be added to the list: miHoYo, publisher of the international success Genshin Impact, will open its first North American office next January, on Boulevard René. Lévesque, in Montreal.
And yet, despite its appeal and the sustained growth in video game sales over the past two years, Quebec has seen its lead erode.
This is the conclusion that can be drawn by reading the 2021 edition of the biannual sectoral report of the Canadian Entertainment Software Association (ALD), which speaks on behalf of an industry which currently has no less than 937 companies of coast to coast. This is a number 35% higher than in 2019, the year the previous report was published.
Five years ago, nearly half of the industry was in Quebec. Two years ago, Ontario stole the title of province with the most companies. Across Canada, Quebec’s share of video games continued to decline, reaching 31% in 2021. Its share of the total national workforce also fell from 47% to 41%, from 2019 to 2021. .
More jobs, less value
Canada occupies the same position internationally as Quebec’s nationwide: its industry generates a lot of jobs, but it struggles to attract revenues of the same magnitude. At the start of 2021, Canadian video games employed approximately 55,000 people, or a quarter of the workforce (210,000) found in the American video game industry. For Canada, it is still 17% more than in 2019.
The gap is widening, however, on the revenue side of the two industries. US publishers will pocket a little more than US $ 60 billion this year, according to the NPD Group, an industry-renowned analysis firm.
Canadian publishers: US $ 3.4 billion, which is not much more than 5% of American income. This sum is even more marginal when compared to the total global revenues generated by video games this year, which are estimated at US $ 176 billion. Small consolation: revenues have climbed 20% in Canada in two years, in line with global growth.
The disparity between employment and the relative wealth of the local industry does not bother Jayson Hilchie, president and CEO of ALD. “The ownership of games and studios can change quickly, but during that time jobs stay here,” he says.
According to him, the gap between the high share of jobs and the lower share of income is explained by a recent consolidation in the industry. “Several independent publishers which have seen rapid commercial success in recent times have been acquired by larger foreign publishers. “
More than credits
The secret of Quebec’s success in video games is simple: it is based on tax credits that cover the equivalent of 37.5% of the salaries paid by publishers to their employees. Video games are not the only industry where you can find such credits. But their level is particularly high.
As Jayson Hilchie observes, the formula works well. It has also been copied by Italy, Germany and American states. This international competition reinforces the relevance of current credits, he says.
But this is no longer enough. Not only for video games, but also for the digital economy more generally, he underlines the lack of public investment in teaching computer science in schools, especially before the end of secondary school.
“Building digital skills at school would be a good way to ensure sustained growth in our industry. It would also contribute to the development of the entire Canadian digital economy. Digital skills are a natural resource that Canada should develop more abundantly. “
Worms of the game at will
This “natural resource” is called upon to be increasingly sought after. Video games are seeing their expansion boosted again these days by the arrival of on-demand streaming giants Amazon and Netflix.
Their all-you-can-eat formula in exchange for a monthly payment is a very mainstream version of what Google and Microsoft offer with Stadia and Xbox Game Pass, which target more serious players. Netflix, above all, could have an effect on video games comparable to that it has on TV and in cinema, believes Matthieu Dupont, who heads the Montreal studio of Gameloft. The French publisher is also launching this month a first game exclusive to Apple’s subscription platform, called Apple Arcade.
Gameloft has seen the transition of gaming from consoles to mobiles, then to these so-called multiplatform subscription services, since it can be accessed from a PC as well as from a console or a telephone. He welcomes Netflix with enthusiasm. “We see Netflix as a partner who will want to have its own studios, like for films and TV series, but who will also distribute our games. “
Canadian and Quebec television and film producers find the treatment of local content by these platforms unfair. Is the same likely to happen on the video game side? This worries neither Matthieu Dupont nor Jayson Hilchie.
Netflix may pocket the profits, but a lot of the work will be done with local publishers, they say.