Evidence of meeting #11 for Industry, Science and Technology in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was games.
A recording is available from Parliament.
4:10 p.m.
Vice-President, Strategic and Business Affairs, Frima Studio
You progress. You always have a choice. Most games will have the same system. You can play if you want—some games will let you play—but it will take you so long that you'd rather take a power-up, as we call it, so that you'll be stronger and you'll save time.
That's very important. That's what you say to your client, “If you want to go faster, buy this.”
4:10 p.m.
Conservative
Mike Lake Conservative Edmonton—Mill Woods—Beaumont, AB
It's free to start, but you can pay to make the game better, basically, in a sense.
4:10 p.m.
Vice-President, Strategic and Business Affairs, Frima Studio
Yes, that's what it is. In other games, you'll be able to play the first six levels. If you want to play the whole game, you'll need to unlock the other levels and you'll have to pay for that. There are many models like that.
4:10 p.m.
Conservative
4:10 p.m.
Conservative
The Chair Conservative David Sweet
Thank you very much, Mr. Moisan and Mr. Lake.
Ms. Quach, you now have the floor. You have eight minutes.
4:10 p.m.
NDP
Anne Minh-Thu Quach NDP Beauharnois—Salaberry, QC
Thank you, Mr. Chair.
I thank the witnesses for having come here to enlighten us on the impact video games have on our economy.
You all mentioned the importance of research and development to further the good development of small and medium enterprises working in Canada in the digital entertainment. In 2012, there were cuts to this program specifically. How did this affect your sector and how could the situation be improved?
You may answer in turn. I think you were the first to raise that issue, Mr. Moisan, and so I yield the floor to you.
4:10 p.m.
Vice-President, Strategic and Business Affairs, Frima Studio
I can tell you that this was a key point in our development. Most people probably know Club Penguin, which was conceived by some Vancouver residents and purchased by Disney. Webkinz was a Toronto creation. We created GalaXseeds for Corus Entertainment in Toronto.
There was a point in the history of video games where Canada was the leader of the strongest children's game trend, called multiplayer online games, or MMOs, an acronym for the English term massively multiplayer online games. The children would play them, find friends, build a small house, and so on. Databases containing all of the goods they accumulated were then created.
Our company, Frima Studio, became a world leader in this area thanks to the R&D credits. We designed an MMO motor that allowed us to create games. We designed a game for Build-A-Bear Workshop, which you can visit at www.bearville.com, that allows you to take a stuffed animal and make it your own by dressing it. The number of users has reached 25 million. They are mostly little girls. Only 10% of the users are boys. They probably go on the site in the hope of meeting girls. Be that as it may, this was a huge success for us.
We worked on the Littlest Pet Shop project with Electronic Arts. We worked with several other businesses, even with Microsoft and Activision programmers, imagine that. We created Skylanders online, and this is currently the most popular toy in the world. The Ubisoft company also hired us to create a massive multiplayer online game for children.
This technology is designed in Canada thanks to tax credits for R&D. We need this support. We have the necessary talent. At a certain point, we were the best in the world in this area. In my opinion, these credits are still useful. This is a knowledge industry that needs to be stimulated. It is very risky to do research and development, but if the government shares that risk with us, this can lead to enormous gains for all Canadians.
4:15 p.m.
NDP
Anne Minh-Thu Quach NDP Beauharnois—Salaberry, QC
Before concluding, could you talk to us about the consequences of the cuts? Are you already feeling them?
4:15 p.m.
Vice-President, Strategic and Business Affairs, Frima Studio
Yes, certain plans that were in the works could not be brought to fruition, but we continue to do a lot of R&D despite that. We have a 30-person team that works on that. That represents almost 10% of our workforce. However, we could possibly do more.
4:15 p.m.
NDP
Anne Minh-Thu Quach NDP Beauharnois—Salaberry, QC
Thank you.
Mr. Shariff, what do you think about that?
4:15 p.m.
Chief Executive Officer, Project Whitecard Inc.
I'll just say that very early on we took advantage of tax credits in Manitoba which, for the new media industry, are 40% of your labour. It comes back as essentially cash the next year. With that, over the last four years we developed our own IP and were able to take advantage of that.
As for the second question, budget cuts directly affected us because we were the educational developers for the Canadian Space Agency, and that budget for creating online interactives with the Canadian Space Agency, their education budget, went to zero. You would never know it from the wonderful year we had. As well, the education budget at NASA in the United States has also been cut.
It's very difficult and we're kind of out there on our own. We're taking everything we learned over the last eight years and we're pouring it into our commercial product.
4:15 p.m.
NDP
Anne Minh-Thu Quach NDP Beauharnois—Salaberry, QC
Thank you.
I am going to ask Mr. Henderson and Mr. Lutz, who are appearing through videoconference, if they have something to add.
4:15 p.m.
President and Chief Executive Officer, Interactive Ontario
Yes, as has been mentioned, there are federal tax credits for scientific research and experimental development, as well as provincial tax credits that are focused on the creation of entertainment software. Those are used by the different companies in Ontario to help them grow their businesses and often to make the shift that Mr. Moisan talked about, going from a company that creates fee-for-service projects where they do not own the actual brand or that intellectual property, to being a company that actually is owning and developing its own property, which is of course more valuable to the Canadian economy.
Right now there is no federal tax credit to match that provincial digital media tax credit. In other types of businesses, such as film and television, there is a federal tax credit, but I think that would be a good way to help support the growth of this important industry.
4:20 p.m.
Vice-President and Chief Financial Officer, Electronic Arts (Canada) Inc., Electronic Arts Inc.
I would add that EA is fairly unique from the other members of the panel today in that not only do we develop interactive entertainment software, but we also publish it. Globally, we're a company that employs over 8,000 people and we do look more and more at the cost of development and the economics of development as a bigger and bigger factor in terms of where we're going to place large-scale production of some of our key projects.
The global landscape is becoming a lot more competitive now. There are universities all over the world now graduating students with the relevant skills, and there are tax credit programs in place outside of Canada as well which are very, very attractive. For us, we need to make sure that the Canadian tax credit programs stay competitive with those available on the global platform so that we see our best and brightest and our key development staying right here in Canada.
4:20 p.m.
NDP
Anne Minh-Thu Quach NDP Beauharnois—Salaberry, QC
Thank you, everyone.
Mr. Shariff, you talked about learning. The Canadian Space Agency had its education budget totally abolished. This affected you directly. You want the industry and researchers to be able to work together to stimulate learning. What do you get from the involvement of the institutions?
4:20 p.m.
Chief Executive Officer, Project Whitecard Inc.
From what kinds of institutions?
4:20 p.m.
NDP
Anne Minh-Thu Quach NDP Beauharnois—Salaberry, QC
Do you deal with several types of institutions, for instance colleges and universities?
4:20 p.m.
Chief Executive Officer, Project Whitecard Inc.
We do business with the University of Winnepeg by choice. I'm also a graduate from there. We did work with the Canadian Space Agency, and I've had conversations with NASA for the last five years.
What I take away from this is that what we are attempting to do now, which is different in developing our own brand, is to create a sustainable model for educational product. I believe it's very important, if we're to increase the quality of education overall in North America, that we look at it very—
4:20 p.m.
Conservative
The Chair Conservative David Sweet
Mr. Shariff, I'm sorry. We're way over. I was trying to get you to finish, but it's now really off the rails on that one.
4:20 p.m.
Conservative
February 24th, 2014 / 4:20 p.m.
Conservative
Joyce Bateman Conservative Winnipeg South Centre, MB
Thank you very much, Mr. Chair.
Thank you to all of the witnesses. That's extraordinary.
This is so interesting.
I want to start with you, Mr. Shariff, not only because your business is in my riding, but also I'm very fascinated with some of the comments that you've made in terms of the potential for harnessing this tool as an educational tool.
I was at a conference on Saturday where I heard the CEO of General Electric in the United States speak of the need for math and science for America, and by that he meant North America, to succeed.
I'm struck by your statistics. The 40 hours a week—trust me, I have a 16-year-old—this is not out of line; this is right on, if not small. I have an older child who used to play Gizmos & Gadgets. You may remember that video game.