Thank you, Mr. Chair.
Thank you to the committee for the opportunity to participate in this study today.
Again, as stated, my name is Jayson Hilchie, and I'm the president and CEO of the Entertainment Software Association of Canada. The ESAC represents a number of leading video game companies with operations in this country, from multinational publishers and console makers, to local distributors and Canadian-owned independent studios.
Canada's video game industry is one of the most dynamic and prolific in the world. We employ close to 22,000 full-time direct employees, while supporting another 19,000 indirect jobs. Our industry's contribution to Canadian GDP is close to $4 billion, and this is not revenue. These are salaries of our employees, those who our industry supports, along with their collective economic impact, and our impact is considerable. With only 10% of the U.S. population, Canada's video game development industry is roughly half the size of the U.S. industry, which is the world's largest, so I cannot stress enough how important Canada is within a global context with respect to the production and the creation of video games.
Many of the most successful games globally are created right here in Canada. Like many other IP-based industries, piracy is still an issue for us and we have to innovate constantly to battle it. One of the ways we have combatted piracy is to move to a model where most of the games we produce have some sort of online component. This involves creating an account that enables content to be downloaded from a central server or, more commonly, including a multi-player mode within the game. This is very effective in limiting the ability of counterfeiters to flourish as pirated games will not be able to access the online functions that are offered. The only content the player accessing the pirated game will be able to use, in most cases, will be the single-player mode, which within our industry is becoming less and less common.
In addition to making games that have this online functionality I just spoke about, our industry uses technological protection measures to combat piracy, both in the form of software encryption technologies and physical hardware found in video game consoles. These technological protection measures essentially do two things: They work to encrypt the data on a game which thwarts copying it, and they make copied games unreadable on the hardware console. While in many cases these measures do eventually fall victim to committed pirates who work to crack the game, they provide a window for the company to sell legitimate copies during the period of most demand, which is often the first 90 days.
As encryption technology improves, it's taking longer and longer for the pirates to crack the game, which improves and lengthens the window a company has to recoup their investment in their product. In some cases, those who sell what we refer to as “modchips” offer their services online with the promise to allow your console to circumvent the protections found within it and play copied games. These circumvention devices were made illegal in Canada in 2012 as part of Canada's Copyright Modernization Act.
In fact, just last year, Nintendo used Canada's copyright law to successfully sue a Waterloo, Ontario, company that was selling circumvention devices online. After a lengthy process, Nintendo was awarded over $12 million in damages, and multiple media outlets reported the ruling in Federal Court affirmed Canada's copyright law as one of the strongest in the world.
The Copyright Modernization Act has proven effective by providing protections to content creators in the games industry. As our economy moves increasingly to one that involves digital goods and services, it's critical that these protections remain in place. However, we can also do more to ensure that consumers understand the impacts of piracy.
The notice and notice regime in its purest form has intentions to do this, but notices are not consistently forwarded from ISPs as is required, and consumers who receive those notices often do not understand them or ignore them. We believe there's an opportunity for the Government of Canada to work with ISPs to ensure that the notice and notice regime is properly enforced and utilized. Ensuring that these notices of infringement are regularly and consistently forwarded by ISPs is the most effective way to increase accountability and promote awareness and education opportunities for those who are infringing content, intentionally or otherwise. By better educating people about the harms of piracy, we can work to improve conditions for creators of all types.
Thank you very much.