Canadian Heritage Committee on Sept. 25th, 2018

[Jayson Hilchie]

We employ 22,000 employees directly and we support another 19,000 indirectly. Those would be people who are working because of the video game industry, such as motion capture artists, and in some cases musicians who work on the games, and so forth, but it would also involve all sorts of other people. It's just over 40,000 direct and indirect employees in Canada.

[Randy Boissonnault]

Where are your video game hot spots in the country?

[Jayson Hilchie]

They are in Quebec, Ontario and British Columbia—primarily in Montreal, Toronto and Vancouver, but Edmonton is growing.

[Randy Boissonnault]

We're continuing to support that growth.

You mentioned piracy. Are there other things that this committee should be concerned about, or is that primarily the work of our colleagues at the industry committee? I also sit on the justice and human rights committee. I'm interested in what we can do for extraterritorial pirates. The laws of Canada are limited, but if you have suggestions for this committee to look at, I'm interested.

[Jayson Hilchie]

The ability to prosecute these people in Canadian courts when we find them in Canada was a huge step forward for us. As I said, our members have already utilized that law in order to tackle one that was a prolific modchip seller for a number of years.

I would certainly include thoughts in any subsequent submission that we put in, but for us—I'm in front of the industry committee next week as well—our main ask is to ensure that technological protections do remain in any review of the Copyright Modernization Act.

[Randy Boissonnault]

Thank you.

Ms. Francoeur, do you have any other suggestions as to what we could do so that more money reaches the artists?

[Annie Francoeur]

We made other proposals to the CRTC, such further regulation of other services or other kinds of industries that are not regulated for the time being.

We are concerned by the fact that cable distributors who have platforms or digital set-top boxes using a much more advanced or developed technology can now offer applications like Netflix or other services that are not regulated.

We made another proposal to the CRTC about that. As soon as there is a digital set-top box or basic device unit, all of the available content should be subject to the same regulation. If you want to drop Stingray Music, for example, because all of the music you want to listen to is offered by Spotify or Apple Music, those services should be subject to the same Canadian and French-language content requirements.

[Randy Boissonnault]

Thank you to both of you.

[The Chair, Liberal, Julie Dabrusin]

Thank you very much.

Mr. Blaney, you have the floor.

[Steven Blaney]

Thank you very much, Madam Chair.

I want to welcome our witnesses.

I also want to take this opportunity to congratulate them. They represent some very successful Canadian businesses—and there are many in Quebec—that work in a very dynamic sector.

My first question is for you, Mr. Hilchie.

You mentioned Xbox All Access as well as PlayStation. In your opening remarks you said you were in a mature industry, but now it seems as if you're.... Could it impact the way you distribute your video games if the kids, instead of buying a game, subscribe?

How do you see this? Is it a threat or an opportunity for your industry?

[Jayson Hilchie]

The first answer is that I think we all see it as an opportunity. The ability to give consumers what they want in the way they want it is one of the reasons our industry is so successful.

With respect to the service models, as I said in my statements, it used to be in our industry that you bought our games on a disc in a box. You would go to the store and get it. Barely two-thirds of our revenues now come from that model. It's still quite prolific; it's still our major source of revenue, but we're already moving down a path where our games are being digitally distributed directly from the publisher or the console maker onto a box. Quite frankly, a subscription service is just another way of offering games in a digital format.

[Steven Blaney]

Just for my knowledge, in those video games, when you are using artistic material, are you paying copyright to those artists?

[Jayson Hilchie]

If we were using someone else's material in a game that wasn't already owned by the company, then the publishers and developers would have had to license that material, but if it's made by that company, using internal artists it employs, then it would have its own copyright.

[Steven Blaney]

Thank you.

Ms. Francoeur, you say you made a recommendation here, and to the CRTC, concerning what you call background music. Could you tell us about your proposal?

[Annie Francoeur]

In the course of proceedings before the CRTC, we responded to Broadcasting Notice of Consultation CRTC 2017-359-2, in which we were asked to comment on the future of programming distribution models. We submitted our proposal last February, and it included the two points I mentioned earlier, among others. We don't know what these proceedings will lead to.

[Steven Blaney]

Fine.

Madam Chair, I am going to share my speaking time with Mr. Shields.

[Martin Shields, Conservative, Bow River, AB]

Thank you.

It's great to have you here and to listen to your information.

On entertainment software, I'm an old guy. I remember the Commodore. I remember playing Pong when it came out, and I thought that was exciting.

[The Chair, Liberal, Julie Dabrusin]

Eight-tracks and Pong.

[Voices]

Oh, oh!

[Martin Shields, Conservative, Bow River, AB]

This was before eight-tracks. Trust me.

Where are you going in the future? Gaming is changing drastically to an audience-watching league format. It's changing drastically in the sense of where it's going. How do you view that change in the industry as we now see stadiums full of people watching game players?

[Jayson Hilchie]

One could make an argument that it is now an industry of its own. I think the CEO of the Canadian Olympic Committee just left his job two weeks ago to become the head of an e-sports team in Toronto. That says something.

I guess I'll preface it by saying that I think the way we look at it is that e-sports is an industry that's running parallel to our creation and development side. It's not necessarily intertwined. You still have to make the games in order for people to have something to play and then others to watch.

I'm less involved and our organization is less involved in the e-sports side of things, but it's definitely a huge opportunity for our industry with respect to becoming more mainstream and more ingrained in the culture of what people do, especially given the fact that we certainly consider video games to be mainstream entertainment, something that everybody does, something that's played by both men and women, people across all demographic spectrums. E-sports is simply an extension, an evolution of the industry in a sense.

With respect to where our industry is going from a creation standpoint, that's a really good question. I'd be lying if I told you I knew, because nobody does. We are going in the direction of some really exciting developments, with virtual reality, augmented reality, and the things that those two technologies are doing with taking games away from a 2-D screen and putting them into a more immersive context. I don't know if you've had an opportunity to put a VR headset on—

[Martin Shields, Conservative, Bow River, AB]

Yes.

[Jayson Hilchie]

—but I could definitely arrange it for you, if you are interested.

It really is a wild type of technology that's revolutionizing not just our industry but also a variety of other industries. We did a conference here in Ottawa last October at which we showed how virtual reality was training surgeons. It was allowing people who were going to the hospital to experience surgical procedures and lower anxiety before even leaving the house. It lets you learn how to maintain your aircraft by doing it virtually before ever setting foot in a physical environment, and those types of things. Our industry is driving advances in AI and autonomous vehicles. What really excites me is that obviously it's the technologies we have that are driving the entertainment side of our business forward, but it really is the opportunities and the things our industry is doing to help non-entertainment purposes that are the sweet spot that's really interesting.

[Martin Shields, Conservative, Bow River, AB]

Thank you.

[The Chair, Liberal, Julie Dabrusin]

I now give the floor to Mr. Nantel.