Industry Committee on March 5th, 2014

[Jayson Hilchie]

We very well should.

[Ed Holder, Conservative, London West, ON]

If you do would you let us know? I'm quite sincere. I think that would be useful for the committee.

[Jayson Hilchie]

Yes, absolutely.

[Ed Holder, Conservative, London West, ON]

The industry is how old in Canada?

[Jayson Hilchie]

I think EA bought Distinctive Software in Vancouver in 1991. Distinctive was one of the earliest video game companies. Then 1996-97 was the Ubisoft investment in Montreal. That's where that—

[Ed Holder, Conservative, London West, ON]

So 15 years give or take. The reason I'm focusing on the grads is that if we have 65 institutions that are graduating these pretty bright kids to do the kind of stuff you want to hire, and it strikes me the other 309 organizations across Canada that you don't represent have probably been doing that for a while, or do you even know that? I don't know.

[Jayson Hilchie]

A lot of these video-game-specific programs are relatively new in the last five years as the industry has grown in Canada. The number of institutions offering specific skills to our industry has obviously grown because there is a market demand for that.

In some cases the enrolments in computer science programs have increased because they are offering video games programs.

[Ed Holder, Conservative, London West, ON]

What's the average years of experience of gamers in Canada, if you had to guess? Take a belly button guess.

[Jayson Hilchie]

It wouldn't be much more than the 15 years.

[Ed Holder, Conservative, London West, ON]

But you said what you're looking for are folks with five to fifteen years' experience.

[Jayson Hilchie]

On average.

[Ed Holder, Conservative, London West, ON]

Wouldn't they be there without having to go to temporary foreign workers because my concern of course is that if we don't need to go outside Canada, if we have the best and brightest in Canada—I'd like to think we do. I hope you believe that as well—why do we need to go outside Canada to get these really bright people?

[Julien Lavoie]

I think we would need to come back to the notion of experience because again the industry changes so rapidly. There are hits like Flappy Bird or other hits in other places where companies may want to poach a specific talent from another country.

We're competing on a global scale with every other country that's making video games. We're not making video games for the Canadian market by and large, so having access to global workers in a global industry is really important.

[Ed Holder, Conservative, London West, ON]

You won't be surprised by this next question if you have been paying mind to the testimony from folks, and some of the questions.

Could you survive as an industry without SR and ED credits and federal funding?

[Jayson Hilchie]

Yes, this industry grew globally long before that. However it's not the issue of surviving. It's the question of growth and competitiveness on a global basis.

There is no question these tax credits are vital to the continued growth and success of this industry in Canada. You only have to look as far as Quebec to see an industry that has grown in 15 years to be the largest cluster of video game companies in the world. It was also the first tax credit that was introduced for our industry.

[The Chair, Conservative, David Sweet]

Thank you very much, Mr. Hilchie.

You are done, sir.

[Ed Holder, Conservative, London West, ON]

I'm done?

[The Chair, Conservative, David Sweet]

Thank you very much. It is always the case with the clock. I'm sorry, folks. It's always our enemy.

Mr. Côté, you have the floor for seven minutes.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Thank you very much, Mr. Chair.

I would like to thank the witnesses for being here today and answering our questions.

To follow up on the questions of Mr. Holder and Mr. Harris, I would like to come back to research and innovation.

There has been much discussion about tax credits. However, as you probably know, there have been cuts in real dollars to the scientific research and experimental development program. In other words, there has been a drop in this funding. In fact, the funding is no longer following the curve of economic activity in Canada. We are also talking about money that could be paid directly.

Does this situation have an impact on your sector?

[Jayson Hilchie]

The cuts to the SR and ED program? We also represent a number of global companies that access SR and ED as well. As you may know, the percentage that this class of company can claim is actually considerably lower than other companies can claim, even though the research and innovation work that's being done here in Canada can be quite substantial.

Anything that can be done to improve a level playing field, and SR and ED for all companies would be something that we would like to see.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Another aspect was addressed on Monday by Jocelyn Benoît, namely, the fact that the amounts granted were increasingly being directed toward applied research to the detriment of basic research. Mr. Benoît said that basic research in video gaming is still essential.

What do you think?

[Jayson Hilchie]

I think that any change to a program that our industry takes advantage of that reduces the envelope of eligibility is bad for us. Obviously the more flexible the regulations are for these programs, the better it is for us.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Thank you.

You spoke earlier about changes to marketing and platforms. We are moving more and more toward mobile platforms. As you said, we are even talking about complementarity or multi-platforms for a single product.

The difficulty of obtaining skilled staff to do this marketing is also a major challenge. We spoke about this earlier in the week. As noted by Mr. Landry of the Canadian Interactive Alliance, this is a gap in the industry. It was also an opportunity to clash with my friend Ed. I should mention that we worked together on the Standing Committee on International Trade.

When I asked him about marketing in foreign markets and in emerging markets, among others, Mr. Landry told us that to sell a product, you need to interact with people and know the people on the ground. This is what he had to say about it, “…whether in Beijing, in Accra, Ghana, or in Stockholm. It takes people who know the local people, people who can open doors to those markets for you”.

The Standing Committee on International Trade was already concerned about this. The Trade Commissioner Service has unfortunately had to face a decline in its activities and a restriction of the coverage of various markets. In particular, I could mention the case in Osaka where the consulate general was closed. It is a dead loss that was poorly received in Japan.

Do you think it is a problem that the Canadian government is limiting its support of international marketing?

[Julien Lavoie]

This problem probably affects many kinds of companies depending on the type of products they are trying to market. Regardless, any measure to support the marketing of products is profitable for an industry with a global approach that wants to sell its products internationally.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Does the Trade Commissioner Service in its current form meet the particular needs of your industry? It is in fact a special industry, both in its line of activity and its type of products. We are talking about marketing knowledge more than concrete products and objects.

In your opinion, are there any other measures that could be taken to foster the development of expertise, train our trade commissioners and support your industry?