Hello.
Thank you, Mr. Chair, and thank you all for making the mistake of inviting someone like me to this committee. I will do my best to provide you with information, but soon you will realize that was a terrible mistake on your part.
I have no prepared remarks, so the good news is I'll get you back on schedule. I'll pick up on a couple of things that Ian said.
Good work, Ian. That's an “Ian” five to seven minutes. That was very good.
Things like the CMF are very good to provide some necessary funding for projects that we do. I have two businesses. One is a tech business that's been around for about 17 years, which actually takes advantage of a lot of federal programs, such as SR and ED and IRAP, and that's great. We also have a spin-out games company that's been around for maybe five years, and we find it much more difficult to actually qualify for different programs based on the structure of the business or the projects that we're actually doing. Even though they are primarily provincially focused, in terms of the funding aids that have been there, we've always tried to take the tack that you shouldn't be entitled to money; the money is there to help you succeed, but it should not be the be-all and end-all. You should not be operating a business if all you need is government incentives to actually make a profitable business. I think that's very important to remember.
One of the things that I think we lose a little bit when we talk about things.... And by the way, I really would like to preface all of this by saying, don't take away funding programs; they're all very good. But I think you need to build a sane business based on what that is. What we find is that through different programs, as great as they are, there are different downsides, I'll call them, to what's there.
Most of my friends in the entertainment industry are outside of Canada. A lot of them are in the U.K. Ian was just talking about how they are clamouring now to rebuild their industry. We took over the number three spot of a video game provider, and the U.K. fell down to number six or seven or something. What we find is that Canada is actually very good at putting out the message about how much they help developers, which they do, but the unfortunate side effect of that is that then people expect you to be cheaper, or they expect you to be able to do things a lot more advantageously than they can do there.
That's actually somewhat problematic. It's not your fault; it's my fault, or it's my developer's fault because they're not working hard enough, or something. They actually say, okay, fine, if it costs $1 million to build a game...they know we're going to get $400,000 back, we're going to get 40% of that back somehow, through SR and ED, or through one of the OMDC programs, or through IRAP, or whatever, so they expect it to really cost $600,000. Then all of a sudden they only want us to charge $600,000. That means I can't even claim my $1 million. There's this weird rabbit hole whereby knowing that we are beneficiaries of good programs means that they're expecting our cost sheet to be very different. The fact of the matter is it's not. A developer in Toronto costs about the same as a developer in London, England. The cost of living is actually a lot higher in London than it is here, but the fact is that in Toronto we have great programs that keep the standard of living high. Developers like to make good money, and that's all very good.
That's very beneficial for the developers who are working, but it's this weird idea or perception that because we've been very successful in doing what we're doing, the world knows about it, which is fine—that's good, it's the way it's supposed to be, and it's a good attractor for talent into the country, which is great, but it's one of those things that makes it difficult to actually operate a profitable business, especially when you consider that gap financing or the ability to actually get from, hey, I'm paying a guy, so today I paid somebody $1 to do a job—I actually think I pay them a little bit more than $1 today. That dollar, when I get my incentive from the government, through SR and ED or IRAP or the OMDC, or whatever, can take anywhere from 18 months to 46 or 50 months to actually return to me. I have to actually finance that money for the time it's gone, and that's very difficult, especially considering a lot of the chartered banks are very reticent to loan me money against something, especially on the provincial side. The federal is actually very good, so it's good work to you guys. But it's a little bit difficult to actually set up something where I can even borrow to put up for something that I'm actually going to receive from the government later.
Anyway, I don't want to bog down too much on that, other than to say, yes, as Ian said, tweaks in things like the CMF are probably important, but the programs themselves are very sound. The biggest problem the CMF has for a company like mine is that it is a very project-focused business, and yet the application deadlines are in August and September. That means that if I have a publisher who wants to do a game starting then, that's great, but if I come up with a good idea in May, I'm kind of out of luck.
Further, I might apply to the CMF in September or October, but I'm probably not going to hear if I'm successful until December or January, so it's very difficult to actually go through. Unlike a program like SR and ED or IRAP, which is a very immediate and timely thing, things like the CMF, which are great, are specific to one kind of project that happens at a certain time of year with a certain kind of publisher.
What I'm trying to say is that the programs are great. We shouldn't be relying on them to have successful businesses. But the idea that we're in some weirdo saturnalian bacchanal making all sorts of money hand over fist and just pissing it away by paying people too much is not true. We have very real financial concerns we have to work through, especially in the banking system. We look at our incentive programs as more of a defensive mechanism against low times of work or whatever. They're defensive armour that we like to strap on to get through tough times while we wait for projects to gestate and come around.
I probably didn't make any sense there, but I'll answer all your questions later. Once again, it's your fault for inviting me here. I had nothing to do with anything.
Anyway, I thank you for your time.