Thank you, Madam Chair and honourable members, for the invitation to appear before the committee as part of your study on artificial intelligence in the creative industries.
My name's Paul Fogolin. I'm the president and CEO of the Entertainment Software Association of Canada, which is also known as ESAC. We're the voice of Canada's video game industry, which includes publishers, developers and console makers. Our mission is to ensure that Canada remains a world-class environment for creating, innovating and publishing interactive entertainment.
Canada's video game industry is both a cultural and an economic success story. It contributes more than $5 billion annually to GDP and sustains over 34,000 high-quality jobs. It's also export-focused, with 88% of the games made in Canada sold internationally, bringing our amazing games to audiences around the world.
The global games industry's revenue is at $260 billion and climbing. While this creates opportunity, it also leads to significant competition between countries to attract the talent and investment required to build a successful games industry.
Beyond economics, this is an industry of imagination. Studios blend art, technology, design and storytelling to create immersive experiences that reflect Canadian innovation and diversity.
It's also a proudly Canadian sector. According to a StatsCan report in 2022, almost 98% of all the game companies in Canada were Canadian-owned. Global companies also choose to invest here, employing thousands of talented Canadians to make some of the most successful AAA titles available on the market.
Artificial intelligence has been part of the video game process for decades. Players might encounter it when a computer-controlled character reacts realistically, when a game world adapts to player behaviour and when moderation systems help keep online play safe and welcoming. Some game designers use AI to optimize performance, generate environments, detect bugs and translate dialogue. These tools assist developers by streamlining more redundant tasks, allowing game makers to focus on the more creative and expressive elements of game development.
It's these elements that differentiate good and great games in this highly competitive global market. Electronic Arts, which is known for its sports franchises, like NHL and EA Sports FC, which are developed in British Columbia—I know we have some B.C. members here today—is using an AI-powered technique called “swish” in some of its sports games. Swish predicts how the fabric in a jersey moves across a character's body, making uniforms and player motion appear more realistic while also increasing the speed and quality of the overall game.
Safety and trust teams can also employ AI to support human moderators to detect harassment, cheating or security breaches in real time. For example, Activision's Call of Duty now uses voice chat moderation systems that employ AI to detect and enforce rules against toxic speech.
Some studios have also begun experimenting with generative AI. These tools can be used to create text, sound and imagery based on human prompts. Writers might use generative AI to draft early ideas for non-player characters', or NPCs', dialogue or quest lines—content that can total hundreds of thousands of lines in a given game. Artists could use it to generate quick visual references for background textures, so they can focus on the distinctive, handcrafted art that defines a studio's style.
For example, Ubisoft, creator of the popular Assassin's Creed franchise, which is developed in Quebec, is experimenting with generative AI to improve these NPCs. Narrative directors can now build a character's personality, backstory and motivations as a model, resulting in more natural interactions with players.
In all these examples, the human creator remains central. Video games are driven by imagination and protected by strong intellectual property rights. For our sector, IP is not an abstract legal concept; it is the product itself. Our members invest deeply in creating new IP—original characters, stories, worlds and technologies that showcase Canadian creativity.
AI is just one of the many tools that are helping studios explore new ways to improve production and efficiency. The authorship and the quality of the storytelling are all driven by human creators. It is critical, however, that these creators can use cutting-edge technologies, including AI, that enable them to tell better stories.
Looking ahead, our goal is simple. We want to ensure that Canada remains the best place in the world to make games—where creativity, investment and innovation thrive under a stable IP framework. To remain a leader, we need to ensure that creators have access to the most advanced technologies, including AI, so they can compete on that global stage that I referenced earlier.
Thanks once again for inviting me. I'm happy to take questions.