When the multi-million dollar video game publisher and developer Ubisoft opened a studio in Toronto in 2010, the Ontario government lauded its arrival.

Ontario courted Ubisoft, a highly profitable multinational company based in France, for three years.

With a $263 million grant from the province, to be dolled out in the form tax breaks over 10 years, Ubisoft opened a studio in Toronto in the Junction Triangle to focus exclusively on high-quality, high-budget Triple-A titles.

Opening the company’s fourth studio in Canada has already created more than 100 jobs. It’s also helped cement the region’s hold in the gaming industry.

The company already has a studio in Montreal that employs about 2,100 people, in addition to studios in India, China, Romania, Sweden and elsewhere.

“We’ve hired 120 people (so far),” said Jade Raymond, the managing director of the Ubisoft Toronto studio. “We’ve found there are a lot of senior people in the gaming industry who are originally from Ontario that have been waiting for a Triple-A studio to open up as a way to come back home.”

Ubisoft Toronto is focusing on the next game in on their successful Splinter Cell series, a set of stealth video games based on novels by Tom Clancy about a highly-trained covert operations government agent.

At the time of the Ubisoft announcement, Premier Dalton McGuinty said he saw the investment as a way to prop up the province’s digital media economy.

“Our world is one where you can borrow capital, you can copy technology and you can buy natural resources,” McGuinty said in 2009. “But to build a high wage and a high standard of living you need talent. By investing in Ubisoft, we’re building Ontario’s economy now and for the future.”

The gaming industry in Canada already employs 14,000 people, according to a 2010 report from the Entertainment Software Association of Canada. It’s worth $1.7 billion in direct economic activity, not including retail sales.

The lucrative industry is poised to grow even more.

Canada is set to be the fastest-growing entertainment and media market in North America, with a projected annual growth of five per cent between 2010 and 2014, the report says.

Brainy graduates of video game and animation programs have generally flocked to Quebec and B.C., Canada’s established gaming hubs. But industry players say Toronto – and the rest of Ontario – is catching up.

B.C. has the Electronic Arts studio in Burnaby – the largest studio owned by the California based company. Electronic Art, known for The Sims, Medal of Honor and Madden NFL titles, also has a studio in Montreal.

Radical Entertainment, known for its Crash Bandicoot series, was founded in Vancouver.

Toronto has more small game companies than Montreal or Vancouver, but overall, the industry still employs fewer people.

Ian Kelso, the president of Interactive Ontario, a not-for-profit digital media trade organization, said he’s seen a surge over the past three years in the number of gaming companies starting up in Ontario.

“Toronto has become globally recognized for its thriving independent scene. We’ve seen it reflected in our membership, which has gone from about 120 companies to about 300 companies,” Kelso said. “A lot of those are game start-ups.”

To support these start-ups, the Ontario government announced in last year’s budget they would increase the Ontario Digital Media Tax Credit to 40 per cent from 30 per cent for corporations that develop and market their own products.

This means video game companies can get help covering labour costs, and marketing and distribution expenses.

The Ontario Media Development Corporation (OMDC) also doles out the interactive digital media fund. Last month, it announced 19 recipients from across the province would share $2 million in funding.

Most of those recipients’ projects were gaming related.

Financial incentives and industry growth have helped foster a supportive and creative environment, said Kristine Murphy, the OMDC’s director of industry development.

“Ontario is a thriving independent game development jurisdiction,” she said. “There’s growth in the independent games, (particularly) for games being developed for a variety of platforms: the iPhone, BlackBerry, all of the small hand-held devices (and) social media games.”

More platforms means the games will appeal to a broader range of people.

Forty-nine per cent of gamers play on the computer, according to the Entertainment Software Association of Canada.

Thirty-four per cent play on a console like the Xbox 360, 10 per cent play on a hand-held system and seven per cent use a mobile device like a cellphone.

A puzzle game like Critter Crunch, developed in Toronto by Capybara Games, can be played on the iPhone or the online PlayStation Network.

The tight-knit industry has also helped keep talent in Ontario, Murphy said.

The founders of DrinkBox Studios, a small independent video game producer, wanted to keep working in Ontario when they set up shop in 2008.

“We were all working here in Toronto at another game company and that game company dissolved,” said Chris Harvey, one of the founders. “We didn’t want to leave the city because we were already here. It seemed like the support for the game industry in Ontario was increasing.”

Toronto is the hub of Ontario for game development, Harvey said.

“There are a number of larger studios in and around Toronto like Silicon Knights (and) of course ... Ubisoft is in town,” he said. “At the same time, there are a number of small teams as well ... like Metanet (Software Inc.) and Queasy Games.”

DrinkBox released its first console game, Tales from Space: About a Blob, earlier this year.

But the gaming industry isn’t limited to Toronto.

Denis Dyack, the CEO of Silicon Knights, says gaming is growing all over Ontario.

He started his studio, Silicon Knights, in St. Catharines 23 years ago.

The company employs roughly 100 people. It was a recipient of the interactive digital media fund a few years ago.

“Back when I started ... people only thought of the West Coast (of Canada) and Silicon Valley,” Dyack said. “My belief is we are creating things where location is really less important than the previous media.

“Our medium is distributed all over the world,” he said. “There’s not just one place for video games.”

That said, Dyack is “a big believer in Ontario.

“I know how great our education system is,” he said. “I know how smart we are.”

Microsoft used to travel to the University of Waterloo to interview students a month before any other company, Dyack said.

“They’d take all the best people from Ontario to Seattle,” he said. “Our educational system is funded significantly by the government. If we continue to do this, and let companies like Microsoft take our best people, we’re essentially subsidizing our education for a foreign company.”

Silicon Knights, which is working on the game X-Men: Destiny, has done its best to keep the “best people” at home.

“We do really fun stuff here,” Dyack said. “It’s always a challenge. We have the latest hardware, so if you’re a programmer, you’re never bored. We’re creating brand new content.”

Silicon Knights can offer programmers and content creators a different experience than a big producer like Ubisoft, he said.

The company plans to open another studio in Hamilton in about six months.

‘We’re focusing in building up areas outside of Toronto, which I think is good for Ontario,” he said.

“Twenty-five years from now or maybe 50 years from now, it’s going to be questionable if there will be any divide. The whole Golden Horseshoe might just be one big city.”