Canada's VFX and Games Industry
June 13, 2017

Canada's VFX and Games Industry

Not long ago I embarked on a five-day tour across Canada, stopping at four major cities – Toronto, Quebec City, Montreal, and Vancouver – to learn more about their digital media initiatives, meeting with government officials, tool vendors, creative companies, and schools. Some of the information that I discovered surprised me, some of it did not. Needless to say, I was impressed with the drive, passion, and focus that all stakeholders in the Canadian ICT space have, as well as their commitment to the industry, both now and in the future.

Day 1. Toronto

Well, let me back up and say “pre-Day 1” in Toronto started with a dinner at Restaurant 360, which offered a birds-eye view of this international city, spread out well into the distance. Somehow I believed Toronto to be smaller in size – I didn’t realize it is the fourth largest city in North America, after Mexico City, New York City, and Los Angeles. There, I met up with the rest of the group on this media tour: nine other journalists from across the globe, with interests focused on the gaming and entertainment industries.  

Day 1 started nice and early with presentations by Mike Darch, president of Consider Canada City Alliance; Toby Lennox, CEO of Toronto Global; and Jayson Hilchie, CEO/president of the ESAC that promotes and protects the interests of the video game industry in Canada.

One of the points Darch iterated in his presentation was that ESAC is looking at sustainable business models not just today, but into the future as sectors and technology changes. Currently, there are 13 cities, from Halifax to Vancouver, that belong to the alliance, all working together to make Canada a leader in the market. He added that in many cities across Canada, including Toronto and Vancouver, 50 percent of the residents were born outside the country. That means people are moving to Canada to live, and to this end, the alliance wants to attract talent in the ICT sector, to make it stronger and even more competitive. 

Speaking of competitive, Lennox pointed out that Toronto has a lot to offer companies looking to start an ICT company, from a strong education base and incubators, to a lower tax rate, tax incentives, an international, diverse workforce that speaks a multitude of languages, and more. There is very little red tape to wade through when initiating a start-up, and that includes immigration.

Hilchie pointed out that 20,000 folks in Canada are employed within the video game industries, which adds $3 billion to the country’s GDP each year. Here is a picture of the average person working in video games in Canada: 31 years old making $71,300 a year. This includes those working at micro companies with up to four employees; standard-size companies; and larger studios with more than 100 workers. 

Something Hilchie said was very interesting. In the 1990s, companies like EA and Microsoft were attracted to Canada for a few reasons: the dollar was lower than in the US, the US had more stringent immigration laws, and more. All this helped spawn the sector, and it seems that history is now repeating itself, as the US tightens immigration laws and the Canadian dollar is lower than it had been, offering more value – all attracting companies and workers north of the US border. Add to this the Canadian tax incentives for the sector, a skilled workforce, active government support for businesses, and “there isn’t a better time to get people here,” he said.

Along these lines, Canada is now expediting temporary workers to fill holes and transfer knowledge in the industry. Starting June 12, it should take no more than 20 days to process a work Visa. 

OK, it seems logical that this is a good place to start an ICT company. But what about those already here? What do they have to say?

I visited a small company called Invivo, which does animations/technology to explain complex medical information, primarily to physicians. Founded in 1998, the company has a diverse team of those with skills in animation, technology, and medicine. The group introduced me to some fabulous applications, including a VR representation of the human body using Microsoft’s HoloLens, as well as a VR “game” involving a skeleton that has to be put together properly – an application running on the Vive. 

In fact, the company not long ago launched SpongeLab Interactive, which makes educational games. But they are serious about the serious game sector. They want to understand how people learn, and in order to do so, they need to collect and assess data as to how people learn from playing these games so they can tailor them to suit an individual’s learning needs. 

Next stop was Sheridan, where I visited one of the school’s three campuses for art-focused students – the only school in Canada that offers a degree program in animation. As the Dean of Animation and Game Design explained, the school takes a stepped approach to instruction, starting with the basics of art before introducing students to 2D, 3D, and stop-motion animation. Then, students work on a group film project, do an internship, and then finish up with a one-minute short film.

Game design is a relative new course of study there, a four-year course that will have the first graduating class this spring. These students, like those in the animation program, will have projects to complete.

The real treat came when I was shown some projects – “Feathers” and “ed.” “Feathers” is a stop-motion animated film created by a group of third-year students (Sarah Kieley, Eustace Ng, Melissa Gabric, Sarah Stefanon, Anita Yen, Melissa Chin, Christine Le, Lilja Pettursdottir, and Jacob MacMillan) who call themselves Hands On Deck Pictures. It is about a young girl who begins to morph into something very different, and how her mother comes to accept her physical changes in appearance. 2015 animation graduate Taha Neyestani embraced his passion for figure drawing, making it the subject of his final-year thesis film, “ed,” about a figure drawing model who comes to life when he steps onto the stage.

The last stop for the day was at Clearbridge, a mobile app developer. They made it clear, they are not developing games, but rather streaming and news apps for some big-name clients, including Disney. They have been in business for six years now and are growing, with 15 employees. All the work is done in-house, and since its inception, the company has developed more than 200 apps that have totaled 100 million downloads.

The company is located in the York Region, so it is situated north of Toronto, far enough outside the city to be able to offer a more affordable living situation for employees, yet still close enough to major customers, which are also located outside the city of Toronto, and easy access to the airport for international travel. Despite the savings the company reaps from its location, their work is not cheap. In fact, it is more expensive than its competitors – the company wants to do the work right, and that means it hires quality people, and customers pay for that quality. The alternative is to risk an app failing, which could result in large amounts of money lost by customers, and no one wins in that situation. The group is trained in iOS and Android development, and the average cycle to create an app is three weeks. 

As the sun was beginning to set, I jetted off to Quebec City, settling into my hotel for the night, ready for another busy day in the Canadian ICT market. 

Day 2. Quebec City

I woke up in a beautiful, old hotel, Le Chateau Frontenac Hotel, which, I was told, is the most photographed hotel in the world. Before heading off for the day, I walked to the back of the structure, which overlooks the Saint Lawrence, with its strong current. 

The first stop was Le Camp, an incubator. There, I met with various officials, including the Mayor of Quebec, Régis Labeaume, a local businessman and politician. He reinforced what others have been saying about Canada in general: The low employment rate has resulted in a need for workers, including the ITC sector. 

Carl Veil, CEO of Quebec International, explained that they have created an economic agency to attract foreign investment, attract foreign qualified workers, support trade and foreign market development, develop and promote key clusters, foster innovation and high-tech entrepreneurship, and promote the competitive environment of Quebec. 

Quebec is unique in that its GDP has been growing for the past 25 years, and it is on track to continue that trend for the 26th consecutive year. The growth rate has been steady, about 2 percent a year. The problem with this – what a problem to have – is that the city is generating more jobs than it has qualified people to fill them. And, these are high-value jobs that are knowledge-based and come with an attractive (high) salary. 

Thierry Champagne, managing director of foreign investment for Quebec International, gave 10 reasons why a company would want to set up shop in Quebec, among them the location and quality of life. Of course, there are those business incentives and tax credits so many companies are coveting, as well. Making the city even more attractive is the fact that operating costs are lower than in many other locations, especially the US. Rent and salaries are lower here, too, making it attractive to businesses as well as workers, where their dollar can go a lot further than in the US and even Montreal.

But, in additional to the national tax credit, there is the provincial one, and in that regard, Quebec is in the same province as Montreal. So, what makes Quebec more attractive than Montreal? After all, Montreal is home to a number of large game studios and some of the biggest names in the 3D content creation tool business. Champagne answer is that Quebec is smaller and is able to introduce and integrate a new business into the community, introducing them to talent and customers, among other things. Here, he said, the businesses work together and are partners and support one another. 

Also, Quebec is “more French” than Montreal, and that was an attractive feature for some companies moving their business from France, where it got too expensive to operate. The culture, schooling, language… everything makes them feel at home and makes such a move enticing to employees. Also, it oozes a nice mixture of North American/European feel for others. 

Among the business sectors, ICT (digital arts and interactive entertainment) accounts for 51 percent of the jobs in the region recently. More than half of a company’s costs in ICT can be subsidized. For instance, for a company in R&D spending $100,000 for an employee, $19,313 is covered by the national subsidy; $15,750 by the provincial government credit. And the credits last the lifetime of the company.

There are 472 active studios in Canada, and they rely on Quebec International for training, R&D, help with government agencies, introduction to industry peers, and so forth. 

A few people who relocated to Quebec and received assistance from Quebec International spoke about how the group helped them get established. These included Edgar De Smet, director of Larian Studios, an independent game developer from Belgium that published the Divinity series. He took advantage of Le Camp, which offers services from the pre-start-up stage to internationalization, even offering low-cost rental space to him and others within the incubation area for up to a year. Renting space in Le Camp includes space there, which includes infrastructure (Internet, phone, meeting space, etc.) as well as financial connections and help connecting with the appropriate legal teams. Help with employee location and visas are also given. While the main team at Larian Studios will stay in Belgium, there are also employees in Ireland, Russia, and now Quebec. The groups work on the same projects in clusters, and the many locations give them the advantage of having someone working on the titles around the clock. 

Another company, Artisans Studios, is moving its France-based company to Quebec. The reason? Paris is getting too expensive. And Quebec offers a very parallel life to France, with its French culture. 

Next, it was time to visit off-site locations. The first studio stop for the day was at the Indie Studios Hub, a collaborative workplace for independent video game studios. Here, the companies operate out of separate offices within the small building space, though they often share information and HR issues/resolutions – they are in this together to succeed and grow, thus they assist one another when possible.  

The studios included Chainsawsome Games, whose game Kona is set in Northern Quebec and integrates local culture within the title. Canadian media funds account for 50 percent of its budget. Another company, Nine Dots Studio, has been in business for about six years. It is taking a unique approach to running its game development business, with a 40-hour workweek. The president and founder said they want a healthy, sane environment for its employees. And everyone gets creative input. The employees are productive because they are not burned out, and with a low headcount, overhead costs are likewise low. 

At lunch, over local cuisine (poutine and sugar pie), I heard from Gearbox Software based in the Dallas area. Some of its employees were relocated to Quebec. The move was successful, and the team in Quebec is growing. 

I then went to Saga World, a design studio specializing in augmented experiences. The two-man operation started in 2008 doing short films and commercials, and now is coming up with innovative augmented experiences: a musical experience in the park, a book, and a unique activity involving play with a ball whereby the kids hit moving targets on the wall. Sounds ho-hum? Not at all. The book is an interactive reading activity. The musical experience is motivated and initiated by stepping on pressure sensors or by motion detectors, which kick off various musical instruments, recorded by a local orchestra. 

Another facility, Squeeze Studio Animation, was started by former employees of Ubisoft for work on film, TV, game, and advertising projects for clients as well as some inside projects. One of the in-house projects is Cracke, an original animated series about a neurotic father bird caring for his eggs, or at least trying to. The studio is also working on Troll, an animated feature, doing the modeling and design, with postproduction done elsewhere. 

Last stop was at Frima Studio, a transmedia entertainment company. It is not a game company, noted Luc Beaulieu, chief technology officer. It does builds for other companies and still has its own IP projects. 

The day ended on a train ride to Montreal, where Day 3 will begin. 

Day 3. Montreal

Eric Kucharsky, director of business development, Investment in Greater Montreal, noted that the move into DCC came in waves in the Montreal area. The first was with tools and tech from major vendors like Autodesk, Softimage, and Discreet. Next came the schools and various facilities. The third wave was Hollywood, then UK film studios (mega studios). Another third wave was with Indie studios. Now there are 140+ studios in Montreal. The next wave is AR/VR.

Some of the larger studios are opening mobile-focused development studios, as well. 

Montreal has a lot to offer; it is a full-service area, an integrated ecosystem with tools, platforms, content, and companies, Kucharsky noted. Hollywood is doing postproduction content here with studios like Framestore, Cinesite, Atomic Fiction, Rodeo FX, and MPC. These are some of the largest studios in the world operating in Montreal. Montreal has received the most VC funding in Canada, which led to many emerging companies. Here you have universities, indie studios, and larger studios. 

Mark Maclean, director, Business Development, Montreal International, pointed out that Montreal is an AI hub. In fact, Professor Bengio – one of the best researchers in this space – had big breakthroughs in AI, and he stayed in Montreal, and the city is benefiting from that expertise. There is a funnel of talent coming out of his school – there is an explosion now in the talented students and up-and-coming stars in the field, all within this geographic space. 

Maclean feels AI and deep learning is the next wave to hit the area in terms of technology, and so does Canada, as evidenced by the funding and capital this market sector is receiving. Google has invested in AI research in Montreal. Microsoft, too, through an acquisition of Maluuba, an artificial intelligence company focusing on deep learning and natural language. The company plans to double the size of the existing team in the next two years. 

So, what makes Montreal so attractive? Stephane Paquet, VP Investment Greater Montreal, for Montreal International, said the group helps provide talent to the region. We have a team who will locate talent abroad for a company needing it, he said. He noted they have 12,000 resumes from people in France wanting to come to Quebec and Montreal. If a company needs someone to set up shop from abroad, Montreal International has a team to help that person do so and navigate immigration and all the related red tape. 

Guillaume Provost, creative director of Compulsion Games, is an independent game developer based in Montreal. He said talent is important, very important. He left Montreal years ago, thinking they would never make games there; he worked in Toronto, New York, and France, and moved back to Montreal in 2009 to start his studio. He worked in indie development for about 20 years and understands the challenges studios face and how to run them. Now there is a resurgence of indie games and an emergence of AR/VR. His studio is the average size of a successful commercial studio in the city (which is about 30-40 people); his studio has 30 employees. The move to digital distribution from retail is enabling the production of larger games, he said.

Montreal International is helpful to businesses that need to get talent – Compulsion used their services to help bring in people from abroad to work at the studio. Over half the Compulsion team is from abroad, and Compulsion helps with immigration services. We’ve had them bring people for possible investment in the city and those wanting maybe to invest in our company, he noted. 

When Provost came back to Montreal, he was attracted due to the talent available – the top talent needed to do the top games. I wanted access to the best talent, he said. In 2010, the Canadian Media Fund started supporting the video game industry, and it led to an explosion of game development that enabled studios to start their own projects. That was the catalyst that ignited the founding of studios in Montreal. Before then, many did service work with just some IP. 

Another boost came last year when the Quebec provincial government came up with a fund for IP. Before, it had been focused on film and TV production but recently included game development. Provost said, Now we can level up and have bigger studios that started small, with 10 t 15 people, that can grow and can provide products that compete in the AAA space.

On a site tour, I visited Ubisoft, which has a large studio in Montreal. In fact, Ubisofts Montreal Studio is one of the world s most successful game development facilities, with 2,600 employees (out of a total of 3,000 throughout Canada and 10,000 worldwide). Here, company reps were happy to show off some of the technology in use there, including an Artec digital scanner that generates a detailed 3D image of a person in minutes.

Next up: Framestore, which offers VFX, production, direction, and postproduction services. The studio has grown to 1,500 employees worldwide. In January 2013, it started with four employees in Montreal; today there are 300. The facility was set up to mirror that of London, where it was founded. The Montreal office comprises international talent as well as local talent, recruited from schools in Canada. Of the 300 Montreal employees, 53 percent are permanent Canadian citizens. 

And the work keeps coming. There is more work available than there are artists, and to that end, Framestore recruits and trains them. 

Like at Ubisoft, there was a wonderful show and tell of some recent work done by Framestore that was quite impressive to say the least. Coming soon: Framestore VR is relocating to Montreal.

What would an ICT tour of Montreal be without a stop at Autodesk, one of the largest tool makers in the M&E and architectural spaces? Maurice Patel, industry manager at Autodesk, explained that the company continues to evolve its products to meet the needs of the growing complexity of projects. 

Next I visited Maluuba, an AI company (recently acquired by Microsoft) focused on deep learning. Montreal provides a good place for a start-up like theirs, with new incubators, government investment (especially in AI recently), and talent. 

Another small start-up is VRVANA, makers of Totem, a 3D immersive mixed-reality headset with onboard cameras and positional tracking.

Before heading to Vancouver for a new day, I stopped at GamePlay Space, a dedicated coworking place for the game industry in Montreal, where the community of developers can share, inspire, and support one another. This seems to be a big trend in Canada – getting smaller companies established through a cooperative, whether an incubator or nonprofit like this. It enables individuals or small groups to have a working space (here, $300 for a desk per month) and not worry about incidentals that can nickel and dime a fledgling company to its demise. Plus, the cooperative spirit often offers moral and technical support among its residents. Meanwhile, Jason Della Rocca, CEO and cofounder of the Execution Lab at GamePlay Space, brings in potential investors and even media to introduce to the renters, giving them access they otherwise would be hard-pressed to get on their own.


Day 4. Vancouver

I was welcomed to the city by Ian McKay, CEO of the Vancouver Economic Commission. For many years, Vancouver has been driven by resources like timber and the port, but things started shifting in the economy, and the technology sector was kicked off, with TV and film in the 1980s. Now the city is one of the largest film and TV production centers in North America. We have one of the most diversified economies in North America, leading the country in job growth, he said.. 

Nancy Mott, executive director of the film and media sector for the Vancouver Economic Commission, pointed out a new playbook for filmmaking is needed based on all the new models coming out, in addition to the traditional legacy industry. Vancouver has had physical film and TV production for 40 years, so the talent is well established here through physical production within the visual effects industry. It took 30 years to get to a $30 billion industry in this area, she said. We now have the foundation, industry, and talent, and are ready for the next wave for VR, AR, MR. You need storytellers and the technology, and we have those ingredients for the next wave.  

Alas, the cost of living is expensive in Vancouver, particularly compared to some of the cities I visited in Canada earlier in the week. She said the younger generation is focused on the European model: They are not looking for a large footprint of real estate. On the plus side, the jobs available here are those with high wages – yet most companies are coming here from the US (some from the West Coast, like LA) and are used to paying higher costs. In Vancouver, they will find talent here, so companies will find people to work on their projects. 

Like other locales in Canada, Vancouver offers tax credits – federal and provincial. 

Jason Dowdeswell from Darkhorse10 Pictures, which he founded in Vancouver, noted there is a close proximity of different studios here, from Imageworks to ILM to MPC. In the beginning, there were about 50 people working in film and TV; now there are 9,000. It all boils down to talent, he said. We all work close together to keep talent here.

Dowdeswell has worked at a number of big-name VFX companies. Darkhorse10 is a next-gen film production company. I am in this business because I want to be a storyteller; we want to generate storytelling and IP from here, he said. We want to foster that in the area and bring our own IP to market, as well as help others to do so.  

The first stop was at Double Negative, a full-service motion-picture company specializing in VFX and animation, with headquarters in the UK. It started up in Vancouver in 2014 with 20 employees from London. Today there are 530. So, why look at getting a foothold in Vancouver? Various reps from the studio said the same thing: The talent pool. Also, people want to move to the area with families. And the tax credits were attractive for the company. Another plus: The time zone is in alignment with Hollywood, where most of the clients are based. 

Some of the talent is fostered at Vancouver Film School, the next visit. The school offers 13 post-secondary programs spanning every aspect of the entertainment arts. The school recently moved into a large, new space that is most impressive, especially a 280-degree greenscreen room. The courses of study are intense and span a year. This enables the school to keep its curriculum agile and in step with industry trends. Once graduated, students often opt to stay and work in Vancouver. 

Vancouver Film School also offers a game development program (in addition to animation and concept art) to feed the growing demand for talent in the area. There are quite a number of game developers in the area, from large studios (EA, Sega, Relic) to smaller ones focused on indie titles and mobile – all of which hire VFS grads. 

The last stop was at Work@Play, a VR/AR center/incubator. Another collaborative space, Work@Play had some interesting companies within its shared space. Llama Zoo builds interactive experiences that are an e-learning platform married with 3D content, with some elements of gamification. On show was a medically-accurate virtual canine cadaver. Archiact is an immersive-reality studio that builds VR and AR games. Cloudhead Games is another game studio focused on interactive storytelling using AR and VR. Blueprint Reality creates fantastical games using AR and VR, even creating tools to blend art and story. Metanaut focuses on VR experiences that enrich and empower people, usually through applications that are non-gaming in nature. Steampunk Digital builds technology and UX designs for shared digital reality.

The evening ended, as did the trip, with a dinner at a restaurant with a stunning view of the ocean and mountains near the convention center, which will host SIGGRAPH again next year. 

This was a summation of the trip, intended to give an overview of Canadas ICT sector, in particular how the national and provincial governments continue to help stimulate growth and development in this market and how many companies (both big and small) are benefitting. Watch for future articles in CGW pertaining to this subject.