Canadian Heritage Committee on Nov. 6th, 2012

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

Thank you, folks, for coming.

I'm going to make this very quick. I'm going to open this with a comment of my own, and if I can get others to comment as well....

Here's what we've learned so far, at least from what I can see and hear.

It's an industry that is incredibly successful in this country, and other countries look to Canada as a leader in this. We have the expertise. Not only do we have the expertise, but it doesn't travel to other countries; it stays within our borders, supported by the right amount of infrastructure.

How do we help this out as a government? How do we invest, or how do we just aid it? We have training and education, which we've talked extensively about, and also getting good ideas—thank you, Mr. Peacock.

Tax credits seem to be king in this particular industry. Would I be right in saying that? A nod will do because I'm running out of time.

On direct funding, we're talking about the Canada Media Fund. As part of Heritage...the department we're concerned with has many agencies and many envelopes of funding, up front in many cases or immediately in the back end. Tax credits obviously take effect after the fact, so that requires you to put more up front. Despite that, though, the tax credits like SR and ED seem to be king at this time.

Essentially, if we're saying that Canada is a leader in many ways, what's the competitive advantage we have? I'll start here in Ottawa and I'll end with Mr. Lucas in Vancouver.

It's unfortunate that you're there because I could rub it in with my 18-year-old gamer son that I met you and had your autograph, but now that I've had a conversation, I'll have to settle for that.

Nonetheless, if you could comment, what is that competitive advantage that gives us the greatest success?

[Scott Simpson]

Sure. As I said earlier, there is an enormous level of talent coming through the colleges in Canada, in all parts of the creative and technical aspects that are there for video games.

As Victor said earlier, video games are a weird art, and I guess there's some debate as to whether it's actually an art or not, but I think it's pretty shortsighted not to look at it that way. But there's an enormous technology base that goes with it.

What's funny is...actually the thing that video game companies such as mine rely on, as far as funding goes, is less CMF and more going to the provincial side, and Victor spoke earlier about the infighting between provinces and whatever.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

Yes. I thought that was a very good point.

[Scott Simpson]

If I'm building a game, most of that building is things like art and sound and voice actors and lots of different things that are not SR and ED eligible. They are media credit eligible, but I can't do anything with that at the federal level. I need to do that provincially. I need to find the right place to stay—Saskatchewan, Ontario, Montreal, or wherever—to actually qualify for those things. There is no double dipping, but there are also not a lot of ways for those things to be married together.

In our dream world there would actually be a federal tax credit that would allow us to do media stuff, but that's not—

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

As opposed to the Media Fund itself?

[Scott Simpson]

The Media Fund itself, again, is very project-focused, and it's also very regimented as to what we can do. In a lot of cases you're in the experimental stream, which is a smaller stream of doing things.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

So it's in the taxation stream.

[Scott Simpson]

Yes. Believe me, I'm not very clear on anything I say. I'm just saying if there were—

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

I got elected on it, so there you go. I don't know what that means, but....

[Scott Simpson]

If there were an annualized SR and ED-like program, and I knew I could budget for it every year and say whatever dollar I put into somebody, I got the 40¢ back from what they're doing on the media side at the federal level, that's unbelievably easy to plan for. I can plan my growth. I can do everything I need to do. But that, frankly, doesn't exist.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

Okay. Thank you. I need to share the time.

Mr. Kelso, do you have any comments on competitive advantage?

[Ian Kelso]

Competitive advantage internationally is definitely, I think, the momentum and reputation we've built here. Internally, kids know about the Canadian games industry if they're interested in video games and they're interested in pursuing a career. They know there's a massive opportunity, and as I said before, there's that virtuous cycle.

When it comes to our own internal competitive advantage with things like the CMF, though, those funds work really well for de-risking projects that are either for emerging companies or for companies that want to experiment and try something new within their existing framework that they wouldn't otherwise do for the marketplace.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

Sorry, Mr. Kelso. I hope you finished your thoughts. I'm trying to move this along because five minutes is pretty short.

Mr. Waddell and Mr. Peacock.

[Simon Peacock]

For me, it's largely what's been said. Canada was lucky it got a headstart on the industry in many ways and has established itself as a leader already, which acts as a magnet for talent from overseas and also from within Canada. Because we have such a great reputation, most kids in Canada are aware of the fact that the games they're playing are made here, so they see that as a viable career.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

How much time do I have?

[The Chair, Conservative, Rob Moore]

You've got a minute and a half left.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

I've got a minute and a half. That's not bad.

Mr. Lucas, I'll go to you and then Mr. Acosta.

I took particular interest in what you talked about, the provincial infighting, because I notice that with this taxation regime it is siloed within the provinces, and that seems to be a problem.

[Victor Lucas]

Yes. I think the key thing we should take away from this meeting today is the why: Why does this matter? Why are we having this meeting? Why is this heritage? The reason we are is that Canadians are great at working together. The video game industry, probably more than any other medium, requires the realization of the impossible. There is nothing—nothing—no world, no actors, nothing at all until a bunch of people get together, combine their disciplines, push their egos aside, and work together. Canadians are the best in the world at that because we have a great empathetic education system, we have people who care about one another, we have a social structure that manufactures concern and care for one another, and that's really important.

So if we're looking at sustaining this and growing this across the country, I think it's imperative for every business owner in every province to stand up and talk about their team dynamic. That is the most delicate thing that each one of these companies create: that group of people who know how to work together to create something compelling.

I can tell you, as a business owner who's been doing this for 16 years now, it's so fragile. It's so profound to find people you can work with and build cool things with, and that's what Canada needs to support. That's what our federal government needs to support and work with these business owners and these teams. Video game teams are like movie directors. They've only got so many great projects in them, and you've got to protect them and nurture them and support them. The minute we see things like Radical being closed down by Activision....

Radical was one of the biggest independent production companies making games in Vancouver. They were acquired by Activision. Their last game, Prototype 2, didn't sell. Activision closed down the studio. They were a landmark company in this city, and so many offshoot divisions and companies were built off ex-Radical employees. I really feel passionately that the people who were running Radical should have done some kind of buyback to preserve the legacy.

I also think it's incumbent upon all the game creators across this country to start thinking of their own projects, not just become work-for-hire shops. The key to long-term success is creating new IP and new ideas out there. Federally, and across the country, we need to support that.

[The Chair, Conservative, Rob Moore]

Thank you, Mr. Simms.

Mr. Armstrong.

[Scott Armstrong, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

Mr. Lucas, I'm going to start with you.

You're an infectious guy. You talk about video games like they are the railway uniting Canada from coast to coast to coast: it's the coolest, the most important thing that we do in the country. I think a lot of people in the older generation might question this, but when they look at the sales and the amount of jobs provided for Canadians, I think you do have a basis for that argument.

You talked about how we have to celebrate this and make it part of heritage. When I think about other areas—for instance, you have the Emmys and the Oscars and the Junos. Is there a video game awards night currently?

[Victor Lucas]

Yes. It's the Canadian Videogame Awards. I'm a co-founder of it. The next one will be the fourth annual and will be held in Vancouver on April 20, 2013. It's been growing every year, and we still have a long way to go. We're sort of in the infancy stage.

One of the coolest things for me is to have grown my TV show from a weekly sort of Saturday afternoon or morning video game show to now. I've been doing this for a while. So we've expanded this, and now we talk about everything. We'll have Brad Pitt talking about a movie and then we'll talk to an independent game developer, and we'll put those two segments side by side. That's the way consumers digest entertainment now. A video game is just as important as a Brad Pitt movie.

That's the show we make. Frankly, we're one of the only entertainment shows out there that talks about entertainment—we're not a gossipy thing—and so much of that entertainment is built right here in this country.

[Scott Armstrong, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

Is there an international equivalent, like the Oscars is for the movie industry?

[Victor Lucas]

There's a bunch of different ones. We're probably closest to the BAFTA Awards. There's a big film and television component in the U.K.; they also celebrate video games. There is an awards show called the D.I.C.E. Awards, in Las Vegas, which is run by the Academy of Interactive Arts and Sciences. A former colleague of mine runs that organization. It's terrific. Then there's also the Game Developers Choice awards.

There is no holistic sort of body representing the entire planet and all of the output out there, and hopefully that does start to happen. But I think the CVAs are uniquely positioned. We've been airing on Rogers, Citytv, and G4. Last year they went to the CRTC and got the accreditation for it to be a program of cultural significance, which was really great.

[Scott Armstrong, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

Mr. Lucas, I encourage you to actually have one big awards night for the entire planet and have it somewhere in Canada. You could host it. I think that would be a wonderful thing.

I'm going to move on to another question, to Mr. Kelso and Mr. Simpson.

Currently the corporate tax rate in Canada is 15%. I'm sure that aids this industry. That's a competitive advantage that we have compared to many other countries. Would you agree with that?

[Ian Kelso]

Absolutely.