:
I call the meeting to order.
Good afternoon, everybody. We'll get started.
Our committee welcomes the guests we have here as witnesses.
We have Denis Talbot, television producer and host from MusiquePlus Inc. From Sheridan Institute of Technology and Advanced Learning, we have Avrim Katzman, professor. From BlackCherry Digital Media Inc., we have John Mark Seck, president.
By way of video conference in Vancouver, British Columbia, we have Dennis Chenard, director of industry relations for the Centre for Digital Media, and Lance Davis, chief financial officer for Slant Six Games and chair of the BC Interactive Group.
From the other side of the country, from Halifax, Nova Scotia, also by way of video conference, we have Michael Johnston, president and chief executive officer of TeamSpace.
I know the clerk has spoken to most of you about your opening remarks. Because of the number of witnesses, we will try to keep them to around seven minutes. In no particular order, for your opening remarks we will just follow the order we have on this sheet, starting with MusiquePlus.
After all individual opening remarks, we'll have a period of questions and answers for the remainder of the meeting.
I will say to the committee that I'm going to be leaving in about 20 minutes and our vice-chair, Mr. Nantel, will capably take over.
With that I turn it over to you, Mr. Talbot.
Thank you for having me today. It is a real honour.
I am going to share a little bit about myself. I have been working in communications for about 30 years, including 14 at MusiquePlus where I still work today. I host M. Net. Over the past 14 years, I've had the opportunity to witness the growth of the video game industry in my area of the country, Montreal. I've seen companies like Ubisoft be created. At the helm of that company, there were many very enthusiastic people who were ready to throw themselves into this new adventure on this side of the ocean.
What I most noticed were young people who finished school, who had practically no experience on the labour market, who had just finished a course and who, overnight, found themselves leading projects. At the time, we called them "Lego" projects because they were based on children's games. Fifteen years later, however, the same people are in charge of studios. I am thinking of Cédric Orvoine, who is now in Toronto and who is in charge of Ubisoft's studio. He started out working in media relations.
Unfortunately, most people don't know much about video games, perhaps even some people sitting around this table. We're not just talking about 35-year-old guys who live in their basement or living room and eat cheezies while playing video games. These are people who are passionately creative.
I often see this in action since I also make documentaries on the making of video games. My latest is Deus Ex: Human Revolution, for Eidos Montreal. During four years, I followed the development of this game. I saw dramatic situations where people faced technological dead ends, but finally found ways to get around them. It's all because people who were there 14 years ago are now in key positions. They face situations that can be difficult, but they manage to get around pitfalls thanks to their experience.
People with a lot of experience are few and far between. I realized that. The person who worked at Ubisoft three years ago now works on another project at Eidos. He will work there for three years, then when another position opens up at BioWare in Vancouver, he will apply there. The departure of these people leaves gaping holes. They are important positions to fill.
I went to Paris recently, and I met people from Ubisoft France. They told me they would really like to come work in Canada. They had the impression that things are happening here, that it is a sort of Mecca for development, Hollywood for video games. I told them to come, but they told me that the snag was that they would have to wait 16 or 18 weeks.
If I had one suggestion to make to you, ladies and gentlemen, it would be to reduce that wait time a bit to allow those brains to come here. Yes, Canada is Hollywood for video games, but there are other countries around. I am thinking of England, among others. Last year at the MIGS, the Montreal International Games Summit, representatives from that country distributed bags to promote gaming in England. Their message was the following: "Come and work with us in England; we have great conditions, great job offers."
It is not a well-known field and we should do more to introduce it to, among others, the parents of these kids. I speak on it. I did a tour involving 90 schools as part of a series called Vigilance on the Net. We talked about cyberbullying and the jobs of the future in the video game industry. I realized that parents were completely out of their depth. They are scared of video games because if their children are playing, they aren't studying. For my part, I explain to them that in this field, we need architects, engineers, actors, computer technicians and all kinds of other people. The jobs are pretty much the same as in the film industry. In fact, movies and video games are incredibly similar. The difference is that if we create a game starring Lara Croft, we don't have to pay her 20 million dollars.
It is a great field that I would like to promote more. I don't know if governments could help us do so. For my part, I do it daily on my show. I try to convince people — and especially young people — to go into this field. People who work in this area will have work for the rest of their lives.
:
Good afternoon. I'm Avrim Katzman. I'm a professor at Sheridan College, and I'm also the coordinator of our game design programs at the college.
I'll start with a little historical background.
Sheridan College was founded in 1967, as a result of Ontario legislation introduced in 1965 to create a post-secondary educational alternative to universities. Sheridan occupies campuses in the western greater Toronto area in Brampton, Mississauga, and Oakville.
From its inception, a key component of Sheridan was its art and design unit. The charter documents for Sheridan highlighted the role of art and design as central to its mission and stressed responsiveness to opportunity, flexibility, and integration with the economic growth of the region. This master vision well understood that applied arts encompassed many interrelated growing sectors, including animation.
The Sheridan animation program was launched in 1968 and, as a result of being targeted so early in the development of the college, has become renowned as a world leader. Locally and abroad, Sheridan and animation have become somewhat synonymous. Computer animation was added in 1985, and Sheridan's early recognition of the importance of investing in computer technology, both from an academic and enterprise perspective, was to have a major impact on the development of arts programming.
Sheridan animation graduates have gone on to great success in the fields of animation and special effects, having received industry recognition in the form of accolades and awards, including several Academy Awards and numerous nominations. In 2012, Animation Career Review named Sheridan's animation program as number one in the world.
In the last 10 to 15 years, we have witnessed a transition such that an increasing number of our graduates are finding employment in the games industry. Dramatically, in any given year, between 40% to 60% of our animation graduates may find themselves working for game companies. Recognition of the cultural significance of computer games and the talent requirement for industrial sustainability has motivated our development of a Bachelor of Applied Arts degree in game design, to be offered starting in September 2013.
As Canada's largest art school, Sheridan College carries a solid track record of innovation in applied learning and fundamental ties to industry. Sheridan is committed to developing strong industry and community partnerships that lead to social and economic growth within the region by offering vital solutions to industry problems through applied research and education.
Sheridan actively seeks opportunities for partnerships with industry leaders in Ontario, Canada, and North America. Sheridan's robust roster of programs, such as those that focus on digital media, gaming, and animation, provide many career pathways. Sheridan graduates are well known and sought after. For example, Corus Entertainment, based in Toronto, is one of Sheridan's largest benefactors, employers of graduates, and partners. Active participation from all levels of Corus employees and subsidiaries has made a significant difference to Sheridan's success as the number one school for animation education.
Corus was first in line to support Sheridan's expansion of our new animation centre, while at the same time renewing its commitment to support student mentoring, internships, and information sharing. They have endorsed many Sheridan initiatives and applications to the Natural Sciences and Engineering Research Council of Canada and the Ontario Media Development Corporation. Corus has contributed over $400,000 in support to Sheridan.
Our relationship with long-time Sheridan industrial partner Walt Disney Animation Studios goes back to the inception of the program in 1968. In 1997, Disney established permanent scholarships for students in Sheridan's animation programs, and Disney continues to play an active role on program advisory committees and in supporting internships each summer.
Pixar Animation Studios, a division of Disney, supports software needs at Sheridan by contributing full licences to its proprietary software for animation students. As well, Pixar actively participates in mentoring Sheridan students, with many receiving coveted summer internships.
We've had a long-standing relationship with DreamWorks Animation. The DreamWorks Animation endowment, established in 2001, provides two annual scholarships for students in the Bachelor of Applied Arts in computer animation programs. Animators from DreamWorks take an active role in reviewing student portfolios and visit Sheridan regularly to mentor students. Annually, interns are placed at DreamWorks Studios in California.
Sheridan has identified digital media as a strategic priority for the college. Given its history of providing internationally renowned applied education in digital media and producing award-winning graduates in this field, the college has demonstrated its commitment to research and development in this area through its creation and support of the Screen Industries Research and Training Centre, known as SIRT.
Established in early 2010, SIRT is dedicated to fostering collaborative innovation with Ontario's film, digital game, and television industries. SIRT works with industry, academic, and government partners to conduct collaborative research and provide Canada's screen-based professionals with the training required to build this country's competitive advantage. SIRT is strategically located in the heart of Toronto's film district at Pinewood Toronto Studios, Canada's largest complex of sound stages. Using state-of-the-art technology, SIRT researchers work together with industry partners in a range of ways that are paramount to improving techniques and practices that reduce the time and cost of film, television, and game production.
In less than two years, SIRT has established itself as a significant contributor to screen-based sectors in Canada and has forged direct linkages between innovation in applied research and production practices. Continued sustainability requires support from industry partners to increase SIRT's research capacity and infrastructure. These partners include the 3D Camera Company, Panavision Canada, Vicon, the Directors Guild of Canada, Deluxe, and Side Effects Software, among others.
Several years ago, when we were first developing the curriculum for our Bachelor of Applied Arts in game design, Ubisoft Montreal announced that they were seeking to develop a presence in the Toronto area. We realized that having Ubisoft as a partner would be terrific for our program and for the industry in the Toronto area. We contacted Ubisoft in Montreal and arranged meetings there, and three of us from Sheridan flew up to Montreal to meet at Ubisoft headquarters. That started a relationship that continues and grows stronger to this day.
Ubisoft personnel have given talks and demonstrations to standing-room-only audiences at Sheridan College. Ubisoft has participated actively in our program advisory committees, and in September of this year, Sheridan and Ubisoft formally agreed to work together in defining joint research projects that will foster development of virtual production and performance capture techniques in Ontario and worldwide. This partnership provides a unique opportunity to collaborate and establish a global centre of excellence for research, curriculum, and training in interactive storytelling using virtual production practices.
Ubisoft Toronto will also work with Sheridan to maintain leading-edge curriculum in its Bachelor of Applied Arts in game design and graduate certificate in game level design programs, as well as programs for film, television, and animation that will benefit from performance capture and virtual production practices. This collaboration will help position Canada as a leading innovator in the development and adoption of new virtual production practices that are expected to become key to the future of interactive storytelling throughout the game, film, and television industries.
At Sheridan, we like to think of ourselves as being in the business of taking young peoples' dreams and turning them into careers, but of course we're only part of the equation. We can't do it on our own. We need strong participation from government and industry in order to accomplish this mission.
Thank you.
:
BlackCherry was formed in 2004. We're located here in Ottawa. It started pretty humbly, with three employees doing service work in interactive media. Our initial work was largely web-based educational service interactive work. The clientele were mainly Canadian film and television production companies and government.
In the past five years, we've made a decision. As we had some experience in game production, we decided to focus strictly on game production. We've had a few quite notable projects over the past three years. One was Path of the Elders, in 2009-2010, which was produced in partnership with Carleton University and the Mushkegowuk Cree. We created that educational game and the website Explore Treaty 9.
We produced Virtual Safety Village in partnership with the Safe Communities Partnership in Sault Ste. Marie. It is an online virtual world experience that allows kids to learn about home and outdoor safety.
Over the last two years we've worked on another project in partnership with Carleton University, called First Encounters. It is a game and educational project focused on aboriginal themes that gives kids the experience of what it was like to be one of the first people to arrive in Canada from Europe.
Really, the core of our work has been educational and game-based.
In 2010, I was approached by an investor, Dan Yang, who was trying to create essentially an iPad for kids. What she needed for that device was content. She hired our company to create the initial content for that device and then asked me to form another company as a branch of our company and to build that company out. That company has grown over the past year and a half to 40 employees. It's a pretty good story. That product is now for sale at retailers throughout North America. It's called VINCI.
Over the past two years, our company has really focused more on game production. We're now at 15 employees. We're growing pretty quickly right now. We have representation in California. We're in discussions with Ubisoft, Slimstown, and EA on casual game work. We're just completing work now with Beeline, Capcom, and Jim Henson.
In the last few years we've made the transition pretty much to gaming while we still carry on some of our interactive work. Gaming has certainly been the growth business for us and is where we see the most opportunity. We expect that we'll double our numbers over the next year.
I'm Dennis, with the Centre for Digital Media in Vancouver. It's a very interesting initiative. It's a 19-acre site that is shared among UBC, SFU, BCIT, and Emily Carr—four of our leading universities out in Vancouver—with a core focus on digital media. It's the Centre for Digital Media.
One of our main operations is a master's of digital media program, which was established in 2007 mainly to service the game industry. We had a program that came out of industy for industry. Industry leaders, in working with the premier's technology task force, identified that this sector was one that was growing at a pace that identified a significant demand in having trained leaders who understand digital media, can become great content producers, and work together. With the establishment of this program, we have managed to recruit talent from around the world. About 60% of the students who come into this program are from the international community, and about 90% of those students are choosing to stay in Vancouver when having the option.
Our gaming community has, over the years, changed its focus a little bit. This is going to look at it from a bit of a competitive standpoint.
Vancouver has seen a bit of a decline with a number of major studios, at least on the triple-A side, that have been doing business in Vancouver. That said, we have had a number of smaller companies within the casual and mobile space start up. However, we have also lost a number of our graduates back to the international community because they are choosing to pursue opportunities abroad. I have five students who just moved to Berlin last year.
One of the areas we are really interested in, at least from the B.C. perspective, is continued growth and support for the game industry, both at the triple-A level and with the emerging companies.
Another factor I have recognized at international events is that Canada seems to be very provincially represented, but not so much nationally. With that, we have a strong partnership with industry. One of my colleagues on the industry side, Lance, is with Slant Six Games, one of our larger game companies in town, and is also a representative of BCI. I will let him speak to that in a second.
The reason I am interested in this conversation today is that any time we can have a discussion as to what is going to better position Canada's digital media strategy and employment opportunities for young graduates and talent, I am all for that.
To speak to B.C.'s state of the industry, I will pass the microphone to Lance.
:
Thanks very much, Dennis.
It's a privilege to be here today and to be part of the interview and feedback process, so thanks very much for that.
Also, I'm quite pleased to see that the video game development industry—and the digital technology industry overall, the entertainment industry—is recognized as part of our Canadian heritage. It's definitely part of our culture.
I'll talk about the macro level for a second.
Last year, in 2011, globally the industry generated over $55 billion in revenue. That is games sales, hardware sales, and all the peripheral services. That is a very serious number.
On a more micro level, here in British Columbia we have fallen off from being the number one video game development hub in the country. We are now hanging on tenuously to second place. Our friends, nos amis in Quebec, are now in the number one place, thanks very much to their tax credit program.
Certain of the provinces have reacted by implementing these tax credit programs and have created a very uneven competitive space. There has actually been an exodus of very well-qualified people from British Columbia, unfortunately, to other geographies to seek jobs, so at BC Interactive, working in conjunction with our friends at DigiBC and with the good help of people such as Dennis and the Centre for Digital Media, we're striving to hold our position now, to regain our position as number one, and also to cultivate the industry globally. BC Interactive represents the video game industry here in B.C. We're working to unify and then to “evangelize” our position.
Currently in the video game development industry here there are approximately 4,000 people. That number, unfortunately, is diminishing. Again, we need to take constructive steps to halt that from happening.
On a more constructive level, we feel that there is ample opportunity. I like to portray it as a perfect storm scenario. B.C. currently has all of the necessary ingredients not only to regenerate and to grow our hub back to its former status but also to remain a competitive force globally. We do deal with people all over the world. At Slant Six Games we've dealt with publishers in Asia, the U.S., Germany, and beyond, and that is the nature of our industry. It's a wonderful thing that in Canada we get to provide our services to those people.
If we could, we would like to see some constructive steps toward ironing out the uneven competitive environment in place now that has some provinces offering 40% in tax credits. We recently campaigned successfully for the implementation of a digital tax credit. Unfortunately, it's 17.5%, and it hasn't served to help us protect our workforce and to stop the erosion.
We would very much like to see the implementation of a federal digital tax credit. That would be extremely helpful and might take some of the pressure off provinces to try to implement ad hoc programs, if you will. I say that with all due respect.
It's more than ad hoc; Quebec has become number one in less than four years, and the contribution of our industry to the GDP in that province is absolutely staggering. At 4,000 people here in B.C., our GDP contribution to the province is well in excess of $500 million annually.
I was a little bit chagrined to see the Jenkins report and the adoption of some of the recommendations from it whereby the SR and ED program was rolled back. I understand that some of the assets related to that will be going towards IRAP and perhaps some venture capital programs, but please understand that our people don't participate in those programs. We would perhaps need to see the SR and ED program get a bit more proactive that way.
My peer, Mr. Talbot, alluded to easing up some of the immigration policies, shortening the time for application and bringing good talent in, and perhaps offering a tax holiday to attract certain people from other geographies and other territories to our good country. We would also like to see prioritizing of training and education extend to the digital realm and video game design, art, audio, etc. Many great disciplines are involved in the typical evolution of a video game these days.
When you're looking at regulations for the CRTC, how about a more robust set of rules for our broadband? Games are very much going digital and online. That, in fact, is the new generation, so anything that could bolster that change would be very much appreciated.
On the timing of the LMO for people immigrating in, if we could do anything constructive to reduce that, it would be great.
I think our time is close to drawing to an end, so again, thanks very much for allowing us to be a part of this. We welcome any questions whatsoever, and beyond today's event we remain very much available to you.
Thank you.
:
Good afternoon to members of the committee and to the other invited guests.
Thank you very much for inviting me and allowing me to join you today from a very rainy Halifax via video conference.
I'm founder and president of TeamSpace. We're a development studio based here in Halifax. TeamSpace maintains a full-time staff of roughly 80 people, the majority of whom live here in Nova Scotia, with some staff in Toronto, the United States, and England. Roughly 12 years old, TeamSpace has grown steadily, having been recognized five times as one of the fastest-growing companies in Atlantic Canada.
A native Nova Scotian, I founded TeamSpace after returning from a degree at Harvard and an IT career in Boston. I'm very proud that we've been able to build a world-class business here in the Maritimes.
TeamSpace's core business is software engineering for interactive projects. Like many companies in this region, and I suspect across Canada, we've built our business on a mix of services contracts and original intellectual property game development.
We do very little work on the large, blockbuster-style console video games. Instead, we target and service the other huge and growing segments of the entertainment software industry: interactive websites, web-based casual games, online multiplayer virtual worlds, social games on platforms like Facebook, and mobile games on smart phones and tablets. That strategy of building many smaller games and projects has allowed us to better manage our human resources, I would say. It's helped us to retain a stable and steadily growing pool of talent rather than having an up-and-down flow of staffing for large projects.
Our work in the entertainment software industry primarily targets large media companies and broadcasters that own and license popular intellectual property and characters and that drive much of the online entertainment revenue through established advertising business models. International brands such as Nickelodeon, MTV, Sony Pictures, Fox, and NBC all buy software engineering services and games from us. Nearly 100% of our business comes from outside Nova Scotia, and most of it comes from outside Canada.
Our services and products are highly exportable around the world, which drives a direct benefit to our region. I would argue that the entertainment software industry is a key component of the shifting export economy in Canada. In support of that argument, I would note that TeamSpace was recognized as Nova Scotia's Exporter of the Year last year.
As an exporter, however, we are fully exposed to currency effects. The rising Canadian dollar has had a direct negative impact on our profitability and our ability to be competitive on the world stage. We have world-class talent here in Canada, but we have seen our traditional cost advantage erode dramatically due to our rising dollar.
I mentioned our world-class talent. While the large game development centres in Montreal, Vancouver, and Toronto have traditionally received much well-earned attention, other regions of the country, like Atlantic Canada, should not be overlooked.
The success of the film and animation industries here in Atlantic Canada over the past few decades has built a strong base of talent in art and design, sound production, and acting talent. Those industries, particularly animation and including a number of graduates I know locally from Sheridan College, have faced significant challenges in recent years in trying to remain vibrant and to reinvent themselves in the global economy. The rise of the game development industry has provided a new outlet to apply those skills and to keep that experienced talent employed here in the region.
At TeamSpace, we recognized early that software programming talent is often hard to find for many studios. We focused on building a concentration of programmers in Halifax for use on our game projects and to fulfill services projects for larger studios and for our media clients. For the life of the company, though, finding enough skilled programmers and project leads has always been our greatest challenge.
Nova Scotia is home to many outstanding colleges and universities, many of which are adjusting their curricula to graduate students with the skills needed in this industry. Their doors are open, but from my perspective, there aren't enough students enrolling or enough graduates staying here. I believe more work can be done by all of us to make Canada's youth better aware of the career prospects in this industry, to support them financially as they consider enrolling in post-secondary computer science and game-design programs, and to incent them to seek employment in all regions of Canada, including Atlantic Canada. A good mobile game can be built with a relatively small team. With the right incentives, we could see many more successful studios in all corners of the country.
Our ability to grow our staff has also been impacted by immigration challenges, some of which have already been spoken about by other members of the invited panel. Our industry moves at a brisk pace. When we need to add skilled personnel to help us fulfill a new contract or to complete an existing game, we often need people in a matter of weeks or even days.
A few years ago, we were able to look to immigrants to help us fill that need, but over the past couple of years, changes to temporary foreign IT worker guidelines have slowed the work permit process to a pace that is, frankly, untenable for us. That is particularly unfortunate, because often the immigrants we tend to need bring critical experience as mid- to senior-level project leads and game designers. Those experienced workers are much harder to find in Canada—most of them are busy—and it can take years of investment to grow them in-house. Those people have a multiplier effect. One new senior staff member may open up an opportunity to hire an entire new team of junior-level graduates to work under their leadership.
As I sit within sight of the Irving shipyard, I would also like to suggest that investment in the entertainment software industry can have benefits in other sectors, beyond traditional game development. For our part at TeamSpace, we have found that our skills and experience in programming, art, and game design translate very well into fields that rely increasingly on complex training and simulation, such as aerospace, defence, and health care. Similarly, our investments in game-related technical R and D have yielded dividends beyond that sector.
Projects in both traditional gaming and interactive simulation benefit from the government's investments in tax credit programs. As a studio with a heavy focus on software engineering, many of our projects contain elements that qualify for the federal SR and ED tax credit, which has helped us further innovate and remain relevant in the global digital marketplace.
Tax credits focused more specifically on digital media and gaming, as we've already heard, have to date been administered provincially, with notable differences across the country. Because of that provincial silo effect, as it currently stands, we have a strong disincentive to hire people in other provinces or to engage partners in other parts of Canada, since we can only claim credits against labour resident in our home province. A national digital media tax credit strategy could help to unify the industry and incent us all to source talent from across Canada first, before looking abroad for potentially cheaper offshore resources.
I would close with a request, which echoes comments we heard earlier, that our government continue to invest in programs that support Canada's telecom infrastructure. The gaming and digital media industries are moving at a breakneck pace toward online and wireless usage models. The demand for stable, ubiquitously available wired and wireless bandwidth is only going to grow, and grow fast. Things like high definition mobile video, anywhere/anytime gaming, and wireless commerce are becoming our new normal. We as a country need to have an infrastructure and a digital ecosystem that aligns with those demands if we hope to remain relevant to our target customers of tomorrow.
Thank you very much. I welcome any questions.
:
Thanks. Yes, I would be very pleased to talk to those issues.
Let me correct something. We do use SR and ED. It's very helpful for our industry. Most of our members do well qualify, as there is a high degree of experimentation as well as development in the course of video game manufacture.
What is wrong with some of the provincial programs that provide the digital tax credits, ours included, is that the provincial SR and ED element is offset. You may recall that I mentioned that the B.C. digital tax credit is 17.5%. We take the 10% for B.C.'s SR and ED credit off that, and with the fact that the qualified labour pool is different between the two—and I can speak to that in a minute—our effective tax credit digitally here in B.C. is just over 5.5% as calculated by PricewaterhouseCoopers.
What we have to watch for if we were to contemplate the creation of a federal digital tax credit.... We don't mind that there are stacking provisions with SR and ED. It's okay that this does get deducted off; no one wants to double-dip. However, watch for the qualifying pool of labour. For instance, the B.C. digital tax credit doesn't allow for owner members of certain video game companies to be included in the calculation. I humbly submit that in a studio of five to 10 people—and that's very common in the social and casual gaming realm these days—half the people sitting in that office are owners. In fact, we give equity in our companies. We're very pari passu in our organizations, and flat. It's part of our culture. They should participate.
Contract labour is often excluded, and it's very common in our industry. Because of the project nature of the video game development industry, we parachute people in, if you will, to various projects at certain times, so the contract element is very common to us. Just watch for those things.
:
First of all, Mr. Davis is right: the typical gamer plays a lot.
I also consider my mother a gamer, because she plays on her iPad and online. She now realizes that her Internet accounts cost a lot. They are very, very expensive. God knows she spends a lot of time doing that. Everything goes into the cloud.
[English]
Everything is going to the cloud now, the famous cloud. In order to get access to the cloud, you need the Internet. This Internet costs a lot of money, so if we want to continue developing games that will be going in the cloud, the consumer has to have easier access to Internet and not pay a lot of money.
[Translation]
Gamers play a lot. Game creators watch players and wonder how many hours they play on average.
Did you know that the average gamer is about 35 years old?
[English]
They're 35 years old. It might be because I'm playing a lot and raising the average.
[Translation]
Thirty-five-year-olds spend a lot of time doing this. Not only do they spend their time playing for their gaming pleasure, but they also watch movies and make purchases online. This becomes extremely expensive by the end of the month. Therefore, we need to find a way to regulate or standardize prices. It would be difficult to convince the bandwidth providers to do so.
Furthermore, gamers are always up to date on the latest technologies. They show interest as soon as a new game arrives on the market. I see this happening every night. For 14 years, I've been doing live TV shows. You can see it happening on Twitter and Facebook. The amount of time these people spend gaming, studying or playing a little game here or there is incredible. The industry is bustling with activity.
Something we haven't talked about is kickstarters. These are individuals who have good ideas.
[English]
They have great ideas. They want to work. They want to produce their game, but it's hard to get access to the funding sometimes. What they do is they go to the States, find a buddy who lives there, join up, team up, make
[Translation]
an independent game
[English]
and get the funding.
[Translation]
This is called crowd funding.
Once again, these are losses in revenue for Canada, but it still translates into good games that we can get here via bandwidth.
In short, I think we need to reconsider the way in which the gaming industry is designed. It's constantly evolving. Five years in this industry is too long. A new technology arrives on the market every two years. Take the Apple company, for example. It comes out with new phones every six months, new gadgets or new products.
Gamers try to follow these trends and to purchase the new technology. However, all this goes into the famous cloud, and you need money to access the cloud.
I think it's really important to adapt to this new technology and this new reality that didn't exist 5 or 10 years ago.
Thank you to our witnesses for being here. I would like to continue the conversation with you, Mr. Talbot.
My generation had the good fortune to watch your show for a good part of their lives. I have several points of interest, so I will try to be brief.
Let's start with Internet access. We hear about the importance of games for the iPad and the iPhone, but these require access to the Internet. The same goes for game consoles. More and more, updates are mandatory to play new games that arrive on the market, even if you have the DVD.
I represent a riding that is 20 minutes away from Montreal. It is not a rural area, it is an urban suburb, yet some people still have a hard time getting Internet access, sometimes due to the price.
Could you expand a little on what you said earlier about this and on these other concerns?
[English]
I like your points about the proliferation of the Internet. It's not just money that's the barrier, but geography. I have 200 towns in my riding, and 36 towns do not have access to any type of Internet. It's so behind the times; it's like highways and railways.
I want to get to Sheridan first, and I have a question for our folks on the coast.
I was reading the other day, and I brought it up at committee, about how Germany is now using a model for its technical colleges to create schools, and to heavily subsidize them, to put them into clusters over certain industries.
It sounds to me like you've gone the other way. You've managed to put yourselves in towards a certain industry, which is great, and it seems to me that you're adapting to this new type of industry, but when it comes to the government, I think you did say “government participation” near the end of your speech. To what extent...?
Now, when I say “government”, I say “federal government“. Obviously provincial government does have a role to play jurisdictionally, but then you get into that silo thing that our other guests have been talking about.
:
Nova Scotia is one of the provinces with a more lucrative digital media tax credit. I probably shouldn't complain too loudly, but we do leverage both tax credits.
As I mentioned, we're a fairly software development-intensive company. You're right. It's a model that we understand in terms of the SR and ED program. It's something that has worked. We've learned how to leverage that to grow our innovative software base and to then sell that more broadly on international markets.
You're right that we don't really yet quite understand the nature of the direct government investment in this field. We're certainly interested in where that may go, but we know what works and we know this is potentially being rolled back, so it certainly gives us pause.
On the provincial digital media side, I think a number of other guests talked about parachuting in specialized labour from other regions. At different times we'll need acting talent or vocal talent or engineers or graphic designers or something that we simply can't find in the Maritimes. This isn't a huge labour pool.
We're not able to leverage any of those resources in terms of tax credit filings on the digital media side. Therefore, if we can't leverage them—if we can't get a reasonable break, I suppose, on the cost of that labour—we're incented to look anywhere in the world for that labour, not primarily in Canada, which would be awfully nice. It would be nice to be able to look to Vancouver to find skill for the game that we're building, versus going to another country and having that money leave our borders.
:
That's a fair question. The corporate and personal tax rates probably aren't competitive. If you stack us up against Atlanta, which has been at every digital media conference I've ever attended to talk about their outstanding programs, it is difficult to be directly competitive with some of those incentives.
We have a few intangibles here. Certainly in Atlantic Canada we have the highest number of universities per capita in North America, or so I've heard. We have an outstanding labour pool. We have, for our part, a lucrative—or, at least, it has been lucrative—R and D tax program that has certainly helped us be innovative in the innovative software work we do for global media brands.
We have, as I said, excellent educational institutions and a lifestyle that keeps people here. Everywhere I sell, there is a perception that Canada is a place of integrity with which to do business. I think that goes a long way. I think people understand our regulatory system, our legal system, and our tax system. They know that they can do good business with Canadian companies and get good value.
For my part, personally it's been better to be back home in Canada. I don't have to deal with visa issues and U.S. immigration. I came home shortly before 9/11. It was nice to be able to avoid the visa situation during those dark days of history.
I've been impressed by the quality of the labour here and by the support programs at all levels of government here in Nova Scotia. On the trade side, there is support from some of the ACOA trade programs and certainly from some of the provincial trade programs as well, and there is the federal R and D program.
:
It's an incredible advantage. Artists work alongside very pragmatic people who deal with zeroes and numbers. The artists are in their own world and draft images. It's fantastic to be able to combine that with a voice for a character and bring it to life.
In Canada, in Vancouver, in Toronto and in Quebec, we are very lucky. We can have a lot of exchanges. It is important to know that the young people who are currently doing this kind of work are very talented. To answer Mr. Armstrong's question, it can take 5, 10 or 15 years before these young people have the maturity to manage teams of younger people and pass on the torch, for example.
Being able to work in a stimulating environment is great. I have been at recording sessions where the actors completely become their character as they say their lines. It's very similar to what is done in film. There are more and more international actors coming to Montreal to do voice-overs, to develop the voices, and so on. In Splinter Cell, I actually saw Quebec talent at work. For example, the young princess is voiced by a Quebec woman. Of course, it's important. These actors portray the characters with a lot of emotion and that is integrated into the video game characters by people who know what they are doing.
One day a young man came to see me with a character he had created. It was a knight and it was fantastic. This young man was finishing school. The knight he had created was excellent and included a lot of details. I believe we were at Eidos, which was holding an open house. The young man showed us his creation and said he wanted a job. One of the experienced employees told him that the picture was very nice but that, to integrate it into a game, so many polygrams would be required that there would be no more room to make the game work.
You have to be able to play tricks with technology and exchange ideas with people who were there before you, people from other provinces and even other countries, to be able to find ways to make the animation very realistic and close to what you get in film. You want the people playing the game to be completely immersed in it. You want them to feel as though they are, in a sense, participating in a movie as the hero.
:
Yes, I suppose it is. As I mentioned, the temporary foreign workers we've tended to engage have been people with specialized skills—more senior and experienced skills.
We have a fairly diverse portfolio of clients across a number of media sectors and a number of different specialized technologies. We're doing work with a lot of adaptive video, for example. Most of the video you would watch on MTV's website is delivered through technologies that we have engineered and built. We do a lot of work with adaptive mobile technologies and augmented reality tools, such as interface technologies and game control mechanisms.
A lot of these things are emerging technologies. We're able to invest in some of that work here in Canada. We have people who are capable of leading that charge, but often our clients need help quickly. Opportunities come up very quickly, and they leave just as quickly. Being able to look globally for the very specialized skills, sometimes a skill that may only be available in a handful of places the world over, helps us to win an opportunity we may not otherwise be able to take advantage of.
Being able to at least go back to looking at immigrant labour, temporary foreign workers, I think would be essential. Realistically, that door has essentially been closed to us. Opportunities come up and disappear too quickly. We usually have, at most, one month to turn an RFP response to most of our large media clients, and it can take two to three months to even engage a foreign resource any more than on a sort of consulting basis.
We've heard in this committee three broad themes. One is that the access to broadband is not where it needs to be in our country. We've heard that in the labour gap that exists in this industry, it's taking too long, and therefore opportunities are being lost. We've also heard that the one-two punch of a high Canadian dollar and the reduction in the availability of SR and ED dollars has also impacted this industry.
My friend across the way has also suggested that we've lost a number of manufacturing jobs. His number, though, is woefully under the mark. As we know, 300,000 to 500,000 manufacturing jobs have been lost.
We need to support an industry like this that's creating jobs, that's growing, so it's very important that we hear this testimony. This is a multi-faceted, complex industry. I'm curious to know if there are voices that we're not hearing at this committee yet that we need to be hearing. I'm just curious.
Our witnesses have all delivered some very helpful testimony. Do you think we should hear from other groups or individuals or stakeholders that we may not have heard from? I'm opening that question up to anybody.
:
I might be able to jump in on that.
Here in Vancouver, with the Centre for Digital Media and the masters program, we were originally thinking that the traditional triple-A studios in the gaming industry were going to be the industry that we were serving by producing talent and helping them with R and D work, which is another thing we do here.
We also found that there's a strong start-up culture that's really come out of Vancouver. We're seeing a lot of student-initiated companies, as well as initiatives in partnership with some of the recently laid-off employees in town, who have formed companies. Any incentives that can recognize that these small one- to five-member teams are being formed that may become the next Flickr or Club Penguin or HOOPS suite.... We've had a number of big successes come out of small teams. Everything grows that way; our industry did, too. Don Mattrick's EA Canada started off as an indie. There's a strong start-up culture.
I think any programs we can have in place that help at the studio level, the larger studios.... We're just seeing that effect here in Vancouver with some of the larger studios that have pulled out of Vancouver. We had a strong relationship with Ubisoft in Vancouver, but they pulled their studio out of Vancouver and relocated it to Ontario. Rockstar had done business in Vancouver for a number of years, and they've relocated to Ontario. Slant Six was a larger studio that has dropped in size recently as well.
The small and mid-sized companies haven't made up that entire gap yet, but there's a lot of opportunity there and I think across Canada. A lot of studios have done work-for-hire, working on non-original IP, meaning licensed content, but I think if we can incentivize small businesses to create original IP, Canadian-owned and Canadian-controlled assets, we'll be doing the economy a favour.
Thank you.
:
I'm going to go into a line of questioning I took with the guests from our first meeting.
Since we are the committee for Canadian heritage, a lot of what we deal with has to do with tools like the Canada Media Fund, which many people use, many clients use, in the production of movies, television shows, and so on and so forth, and to a lesser degree in your industry as well.
When it comes to Canadian heritage, it's a mechanism that mostly requires investment up front within the industry, including by the CBC, all the departments, and even the museums. All this stuff comes up before you endeavour to grow your industry. We're hearing that the vast majority of benefits are coming on the back end. In other words, you have to make that investment first. Then you get your federal benefits, such as the SR and ED tax credits and so on.
Is there any way the federal government could play a role in being more upfront, meaning being on the front end of an investment into a project?
I will go bicoastal again. I am from the east coast, but I will go to the west coast this time.
:
You're almost done, actually.
Does somebody else here want to comment? After that, we will be done.
[Translation]
I would like to thank all of you for participating in this study today. Mr. Seck, thank you very much, and thank you also to Mr. Talbot, Mr. Katzman, Mr. Johnston, Mr. Davis and Mr. Chenard.
By the way,
[English]
was “Slant Six” a reference to that famous Chrysler engine that never died?
A voice: Yes.
The Vice-Chair (Mr. Pierre Nantel): I think it's an AMC engine.
Anyway, thank you very much, guys.
[Translation]
We will interrupt the session for a moment because we will be dealing with internal business.
We will resume our meeting as soon as our guests have had the opportunity to leave the room.
Thank you very much.
[Proceedings continue in camera.]