Maclean's columnist Jesse Brown launches a misguided missile at tax incentives for video game companies.
Foreign firms bring benefits that Brown doesn’t include in his column. Often dubbed the acorn model, in Vancouver, the presence of companies like Electronic Arts actually bolstered independent Canadian game studios by building a culture that was hospitable for game development, leading to EA employees splintering off to create their own studios, such as United Front Games. Similarly, the award-winning Klei was started by a developer who worked at foreign studio THQ in Vancouver.
Montreal has seen less of this, instead attracting more large companies instead. Critically acclaimed blockbuster games are now made in Quebec which otherwise could have been made in, say, California or London. Let’s not kid anyone: some work must already be off-loaded to countries with lower costs of programming. This doesn’t necessarily mean Canadians are losing jobs though; instead, the more likely outcome is that Canadians are taking more demanding higher-level jobs that also pay more.
The assumption that Vancouver and Montreal would have become such prominent game development cities without large studios moving in is shaky, though it isn’t impossible—just look at Toronto. Until Ubisoft moved in, Toronto was predominantly filled with local independent developers. The most well-known studio wasn’t even in the city, with Silicon Knights based instead in St. Catharines. Ten years ago Vancouver and Montreal were building their game communities, while Toronto lacked a cohesive one. What allowed Toronto to prosper, however, was the recent shift in technology to allow for downloadable games off platforms like XBLA and PSN and the introduction of iOS devices for mass adoption of mobile games. This move to smaller games suited Toronto because the developers here, without support from a major studio, could only work on smaller games.
In Toronto, tax incentives make sense; our local industry is fledgling relative to those in Vancouver and Montreal. In fact, Ontario has smartly focused on supporting the industry here with tax breaks and grants and has tangible results to show for it: Toronto is now a rising star in the games world. However, what convinced Ontario to invest? It’d be hard to argue that the success of Vancouver and Montreal wasn’t a major factor. So, while Brown would like a Canadian industry of our “own,” the presence of one was undoubtedly catalyzed by the draw of foreign corporations, which brought along their knowledgebase and visibility.
Given the deep connections between foreign companies and our domestic industry, a call for a reduction in tax incentives isn’t as simple then. The calculation depends on whether the overall benefits to the Canadian economy outweigh the tax incentives provided. Fine-tuning tax incentives might make sense, but both Brown’s article and the New York Times piece lean heavily on the use of hand-waving arguments instead of a sharp cost-benefits analysis. A one-size-fits-all reduction in incentives is throwing the baby out with the bathwater, a wrong-headed move considering our startup domestic studios could use the help.
One area Brown fails is in the oddly condescending tone he uses when discussing developers. (“Unshaven” as a pejorative is just silly.) In part, Brown’s whole argument for cutting subsidies to the industry hinges on how trivial he can make developers and their work. It’s the same trope the right often uses when attacking academic research: Have you seen that ridiculous study on the mating habits of flies? What a waste of tax dollars!
We’re not going to get into a fight with Brown over the utility of video games (although we will note that the mass availability of the new Kinect technology has provided local surgeons an affordable tool to do their job more efficiently, potentially saving lives). The point is that the cultural utility of an industry isn’t the only reason the government provides subsidies.
Still, that doesn’t stop Brown from sketching video games as trivial, and, in the end, this is why Canadian game developers are upset with Brown. The government hands out provisions to businesses, often without regard to what they sell or what services they provide (within limits, of course), because it believes this will generate positive economic outcomes. For a technophile like Brown to write such a far-ranging argument against subsidies predicated on a judgment that video games, one of Canada’s fastest-growing industries, are beneath support—especially so soon after a landmark American government decision that games are a form of art—demonstrates he can’t see the digital forest for the trees.
This article originally indicated that Klei splintered off from Electronic Arts, when in fact it was founded by a member of THQ. United Front Games is an example of a company founded by former Electronic Arts employees.