Industry Committee on March 24th, 2014

[Martin Carrier]

That would probably help.

[Peggy Nash, NDP, Parkdale—High Park, ON]

In your presentation, you talked about the importance of the SR and ED tax credit. Not just your company but your whole industry is one that must constantly innovate and sometimes, I expect, your lead time in your R and D before a game finally starts making money can be quite lengthy. I would love to hear about that.

There were some cuts to the SR and ED tax credit. Does that affect your industry? Is there something else you're looking for in terms of government assistance that helps spur innovation in the gaming field?

[Martin Carrier]

To your point I would say, yes, this is a fast-moving industry. What I like to point to is that when we started the studio on June 1, 2010, the iPad didn't exist, and now that's become a major gaming device. It just shows the speed at which our industry moves.

We're very appreciative of programs such as the SR and ED credit that allow us to take the extra risk of investing in this cutting-edge technology. Sometimes what we don't necessarily see is that this technology that's developed in video games often applies to medical imagery, and it can apply to aeronautic simulators. We see that in our recruitment of folks because we sometimes have programmers and engineers who come from CAE Montreal or who have come through the medical side of the business.

So these programs are important to us, we've made use of them in the past, and want to make good use of them in the future. It's a way, also, whereby when we go after mandates from our head office, in the case of Warner Bros., we're able to point to these programs and say, you know what, we have a very favourable environment for development of new technology, and we have good support from the government. And that says a lot.

[Peggy Nash, NDP, Parkdale—High Park, ON]

So you're happy with the support you have now.

[Martin Carrier]

Yes, and we want to make sure that keeps going.

[Peggy Nash, NDP, Parkdale—High Park, ON]

You talked about the issue of international talent. It sounds like we lose talent to the U.S. in this industry, but we don't have the same flexibility to bring talent into Canada. It sounds like those international collaborations are quite important.

Is that an issue you would like to elaborate on?

[Martin Carrier]

Whenever we need to get someone in the country, we're always in a rush. It's very indicative of our industry. We're in a rush with technology. We're in a rush with talent. This is very fast moving. There's also the issue of lead time as you said. If we're not acting today, then we're wasting a lot more time down the line. That's why we're always looking for the best flexibility in our ability to bring people on board to our different companies, be they in Ontario, B.C., Quebec, or across the board.

I think the programs had a bit of a lull. Things are getting better, but I think it's important for us to keep reminding everybody and send the message that flexibility is key for us to bring in that talent, which is not cheap labour. It's actually well-paid labour that brings expertise, and allows us to keep building and keep creating jobs here in Canada.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Thank you.

Mr. Schmalz, thank you for your presentation. It's quite fascinating that you have had not only a window on the industry, but you have been an active part of this industry for all this time, 21 years I think you said. That's quite remarkable to start up a small business and grow it to a medium-sized business, and sustain your business in competition with a number of industry players in Canada and around the world.

I heard you speak as well about finding those mid-level managers, that we lose some of them to the U.S. and the difficulty with bringing them into Canada.

What advice would you give for other start-ups? Given your long experience, what advice would you have for starting, growing, and maintaining a successful business in this field? This seems to be an area where Canada really can compete with the best.

[Michael Schmalz]

That's a great question, and I get it quite a bit.

I would say if you're starting a business in the video game industry, you have to really love games. You have to love the idea that you're creating new and potentially extraordinary experiences, and you have this potential for reaching worldwide markets. That's a pretty awesome thing, especially for young graduates.

I would also warn them that, as with any start-up, there's a lot of potential for failure. You need to embrace failure as part of the process, and you need to learn from it.

What it takes to build a company, as we've done with Digital Extremes, is you need to get a hit. To get that hit you have to have a combination of the right timing, the right skill, the right idea, and a whole bunch of luck. I think we have done that at least two or three times over the last 21 years. We've pulled a few rabbits out of our hat to be able to make it there.

That would be my advice. Get prepared for those hard learning experiences. Also to a recent graduate I would say to start out for the first couple of years in a job in an established video game company, whether it's a medium, large, or even a small one, and get a sense for the business dynamics of it. It's one thing to be able to go and program stuff—

[The Chair, Conservative, David Sweet]

Mr. Schmalz, I'm sorry, but I have to interrupt. We're way over time. I tried to allow you to answer, but I'm going to have to move on.

Now we go to Ms. Bateman, for seven minutes.

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

Thank you, Mr. Chair.

I also thank all of our witnesses for being here.

Mr. Schmalz, I'm going to give you the first 20 seconds to finish your thought, because I was very interested in what you had to say. If you want to finish what you were saying, sir, you were basically saying to get some real experience. I find that fascinating—

[Michael Schmalz]

Yes, exactly—

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

—because the juxtaposition of industry pushing to get Mr. Smith's organizations for universities to create a program.... I'm humbled here today, because I didn't know there was a program in digital media and digital technologies. The juxtaposition of what you're saying with this academic approach is in saying to get some real experience, to get a real job in a real company that's doing real gaming work.

Is that basically it?

[Michael Schmalz]

That's part of it, yes, the fact that they have internships. We've been in touch with a number of programs that were mentioned here, at Ryerson and over in B.C. They understand that this is a big part of it, because besides being a great programmer or a great entrepreneur or whatever, you have to understand the business and you have to be able to see it first-hand; otherwise there are many big bear traps out there that can take you down before you've even started.

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

Fair enough.

On the same theme, perhaps we could go to Monsieur Carrier. But I'll start with Richard Smith.

Your program, Richard, is in existence because the industry came to you and said, we need qualified people. You categorized your typical student by saying that there are some who need to learn how to run a business and there are some who are transitioning from other careers—maybe as an architect, and you used a few other examples of professionals such as teachers—such that they want to build their skill in a different way.

That fascinates me. I'm a business school graduate—I went to Ivey—and I'm a chartered accountant. If I were hiring, if I were running the business—and this is why I want to make sure I get Monsieur Carrier's position as well—I wouldn't go to your one-year program. I'd hire a business school grad and then work with that person, because these guys can manage any industry. We have somebody who's been in this career since 1997—Monsieur Carrier—who was also in the aerospace industry. That speaks to the skill transfer piece.

I'm fascinated with the fact that industry put up obviously a lot of money to.... You're clearly filling a niche that is required. Can you tell me what it is and why they need you and not the business schools?

[Richard Smith]

When I came into this position, a colleague of mine who also ran a professional degree gave me some really good advice, which is that my program needed to be industry-relevant but also had to be research-informed.

If you build a program that only responds to industry, you end up reproducing that industry, and in the case of the video game industry, reproduction is not a viable option. You can't produce the game that somebody produced last year. You can't do that; this is an industry full of innovation. It comes in our program and in programs similar to ours from the blend of research and industry.

On the industry side we have a program that has a lot of industrial input, in the projects and in the internships. But we also have the input of our four universities and the global research community to create the new knowledge, the new approaches, and the new ideas. Quite frankly, the heads of the young people coming out of graduate degrees are bursting with new ideas.

So it's in that blending and making sure that it's industry-relevant but also research-informed, so that you are advancing the industry and are pushing it forward with your new graduates. That is really the distinctive and the absolutely important element of running something that is not vocational but professional.

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

Thank you very much.

Could we have your view, Monsieur Carrier? Clearly it will be slightly different. You're with a very big player, not a small independent. Where do you fit in this discussion?

[Martin Carrier]

What you point to is one of the interesting peculiarities of our industry: there are so many different needs, and we have so many job types that we cater to many different academic programs and many different employer profiles.

For example, we have a level designer who may not have formal training per se. The person may have gone to school and may have a college or university diploma, but you won't find anybody who has a level design graduate diploma. An artist may be an architect by way of background and a computer programmer. Usually I like to say that these people didn't hang out at the pub at university; these are very different people who have different backgrounds but who all work in games because they're brought together by their passion for gaming. We need many different academic programs and job trainings to be able to fill these different roles.

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

So is it fair to say that you'd focus on the knowledge of the individual, however eclectic that might be, as opposed to the academic background?

[Martin Carrier]

Well it's actually both. We don't say that we need only people who graduate from university, but we'll look for someone who has been playing games for a really long time and knows them inside out, so it's really a mix of everything. It's a little hard to really sort of peg down, but we find success in our ability to mix it up, really.

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

Okay.

You also mentioned that Montreal is the best place to be in the video gaming industry, this digital industry. I'm sure there are cities everywhere in Canada that want to know why. Why is it? What are the key recipes for success for this industry in your city?

[Martin Carrier]

Today we consider that it is, and pretend to be that because of the concentration of talent that we have.

If we go back, it is about universities, colleges, academic training, being on the edge, and having that culture of academia. It's also about creativity. It's about having, in a sense, that je ne sais quoi that you find, and it's that sort of spark that created Cirque du Soleil. You have that sort of creative spark in Montreal.

It also comes because there are lots of different influences in Quebec and in Montreal per se. It is an immigrant city, so you have people coming from all over the place and that sort of adds to the mix. So the mix is academia, creativity, culture, and technology also, because there are lots of high-tech industries.

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

Okay.

[The Chair, Conservative, David Sweet]

Thank you very much, Mr. Carrier and Madam Bateman.

Now on to Madam Sgro for seven minutes.

[Judy Sgro, Liberal, York West, ON]

Thank you very much, Mr. Chair.

Thank you to all three of you.

This gets more interesting every week that we are on this study.

I'll start with you, Mr. Carrier. How did you end up going from aerospace into the gaming industry? What skill set did you take from aerospace that you were able to apply so successfully to this industry?