Good afternoon. I am Vice-President of Frima Studio, a business in Quebec City which started up with video games. Frima has 350 employees and is the largest independent video game design studio in Canada. The business extended the scope of its activities by moving on to animation films with its first feature film entitled Le coq de Saint-Victor.
Frima has clients in the United States, Europe and Japan. We began by providing a lot of services for large companies like Warner Bros., Electronic Arts and Disney. We still work with them, but increasingly we work on the creation of original intellectual properties. My main objective in this presentation is to explain the reasons why we started doing that.
As you know, Canada has become a very fertile video game design hotbed. This began in Quebec thanks to some very interesting tax credits for businesses, and the other provinces followed suit. For instance, Electronic Arts, one of our clients, settled in Montreal. Ubisoft and Warner Bros. are also there, among others. These businesses settled in our area in order to take advantage of the very interesting tax regime and very competent employees.
This type of fiscal framework is now offered in Ontario, British Columbia, Nova Scotia and Manitoba. The Canadian provinces are attempting in this way to attract and help video game companies and digital entertainment product companies, and that is a good thing.
In Vancouver, that has been called Hollywood North because of its very strong film industry, this type of tax credit was not being offered and this recently led to the closure of some companies. Consequently, British Columbia has decided to offer tax credits also.
It is extraordinary to have attracted all of these businesses here to Canada and to have created expertise in programming and animation, particularly. The only risk is that we may not further the creation of Canadian-owned businesses that create Canadian brands. Tax credits are an interesting tool, but you know as I do that businesses are now inclined to shop around everywhere in the world to find superior tax advantages or more interesting ones, which can sometimes lead to a slew of business closures here, which then open elsewhere.
Competition is becoming increasingly fierce, be it in Asia or in Eastern Europe. Canada remains competitive on tariffs, thanks to the tax credits it is offering. Without those tax credits, we would be competitive because of the creativity and expertise we offer, but we would have a problem with keeping companies here.
I want to emphasize the importance of this rootedness. We have to continue to invite businesses from other countries to settle here because that is an excellent thing. However, we have to be aware that even if a video game that is created in Montreal sells very well, for instance, often the design of the game or the marketing plan was done abroad. This means that the business intelligence does not benefit Canada, and France or Santa Monica instead of Canada will be pocketing the profits. We thus have to ensure that we create Canadian brands, while welcoming foreign businesses.
One of the federal government's initiatives I find particularly interesting is the Canada Media Fund. It is managed by Heritage Canada and offers programs that support the creation of original intellectual properties. Any business may submit a funding request as long as it is Canadian-owned. Thanks to this initiative we can create brands here and prepare our marketing strategy here and thus keep our profits here. This type of rootedness is essential if we are to ensure the durability of our industry. That is the main point I wanted to make.
We work a great deal to export our products. Assistance to exports is very important. As you know, in the video game industry, business models have changed enormously. In the past, a game was created on a disc, on a physical support, it was put in a box and placed on shelves at Walmart, and we had sales. Now, games are living organisms because of data exploration and management. People no longer pay for the games at the outset; they will pay if they like them. There is a tendency toward free-to-play games which makes marketing games much more difficult.
With Google Store or Apple Store, for instance, access to games is easy, but there are so many apps that in order to be noticed in the crowd, we have to make considerable marketing efforts. This is another area where Industry Canada could intervene. The department could help market Canadian products so that they could be sold throughout the world.
We are not hiding it: we want to broaden our markets. Even the United States has become a small market for certain games, given all of the extremely promising new markets such as China, South Korea and India. We have to compete with their businesses and conquer those markets.
Consular offices, embassies or trade attachés could help us to establish contacts in these large markets. That is another useful thing the federal government could do.