New studios are smaller, focusing on mobile and social games, and pioneering new business models in an uncertain economy

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For some 20 years, Vancouver was a jewel in Canada’s video-game industry. It was home to the first Canadian companies that developed games, and as the interactive-entertainment sector grew, so did the studios in the Lower Mainland. Today, though, Vancouver is no longer the largest centre of video-game development in Canada.

“Montreal has taken the lead when it comes to employment,” Julien Lavoie, spokesperson for the Entertainment Software Association of Canada, told the Georgia Straight.

A report commissioned by the industry group found over half of the jobs in the Canadian sector are located in Quebec and a quarter of the companies operating in the Great White North are based there. On the phone from his Toronto office, Lavoie said that the average number of employees in a Montreal studio is twice the national average.

While the larger Vancouver studios have been reducing staff levels in the past couple of years, studios in Montreal—including those of Ubisoft, Eidos, Electronic Arts, Warner Bros., and THQ—are bursting at the seams. But don’t think the Lower Mainland is down for the count.

The ESAC report, published in May, shows the entrepreneurial spirit that has always characterized Vancouver’s digital-media sector is alive and well. The city is still an important hub for the industry, but the local development community looks much different than it did even two years ago. When the Straight drew up a video-game family tree for Vancouver in January 2009, the local scene was surging with new studios—Smoking Gun Interactive and United Front Games, for example—working on console titles.

But the number of console games in development throughout the industry has dropped, forcing the closure of studios like Propaganda Games and the cancellation of titles like True Crime: Hong Kong, which was being developed at United Front for Activision. In addition to the exploding indie game development scene, the new companies formed in Vancouver in the last couple of years are smaller and much more open-minded when it comes to deciding what platforms to make games for. Most are working on products for social networks like Facebook and now Google+, and mobile devices running Apple’s iOS, Google’s Android, and even Microsoft’s Windows Phone 7.

Examples include the mobile games School 26 from Silicon Sisters, Zombie Minesweeper from Frogtoss Games, and the location-based Bounty Island from Compass Engine, as well as Pot Farm, the standout Facebook game from East Side Games (formerly Downtown East Side Games).

“The real money and momentum and excitement in the industry is around social and mobile,” Jason Bailey, CEO of East Side, told the Straight by phone.

The Vancouver games sector is simply in transition. Newly formed Nine Tail Studios is an example of how things are being done differently than in the past. Bryna Dabby cofounded the company with Terry Chui and Brent Disbrow. While they haven’t yet started work on a project, Dabby told the Straight that Nine Tail is not interested in the traditional development model of getting a publishing deal and hiring a lot of people to make a game.

“If anything goes wrong, you lose your team,” she said on the phone from New York. “There’s a huge excitement in that, there’s a lot of wonderful things about it, but it’s also very scary.…We’re trying to create a system that works for us that doesn’t mean that if something falls apart that everything does.” Instead, Nine Tail plans to work on a contract model where people are brought in for a project, as opposed to being hired outright by the studio.

It’s similar to a business model that Roadhouse Interactive is already having success with. Founded by veterans Ian Verchere and Tarrnie Williams, both of whom worked at Distinctive Software before it became EA Canada, Roadhouse is modelled after production companies that develop films. In a Skype interview, Verchere told the Straight 300-person development studios were never really sustainable, and they have most certainly come to an end.

One of Roadhouse’s first big projects is Family Guy Online, being created as a free-to-play experience for Fox. Verchere said it’s a complete inversion of the typical development model. In the past, Roadhouse would have licensed intellectual property to create a game, but with this model Fox funds development. Instead of having one big studio with lots of overhead, the engineering team for the game is based in Burnaby and the animation studio is in China.

Williams said that one reason the production-studio model is viable now is that there is such a wealth of talent available. “There are game schools all over the world now churning out game-ready people every year,” he said, adding that the graduates are also getting better every year.

Available talent is why Kenshi Arasaki and his business partners, Wilkins Chung and Eric Diep, moved their company from Silicon Valley to Vancouver. A Thinking Ape was already a burgeoning success with the iOS game Kingdoms at War before the relocation in January 2010. In a phone interview, Arasaki said that, in California, developers from the traditional console-game industry were migrating to new social-games companies two years ago. “In the Valley, the competition for talent is extremely fierce,” he explained to the Straight.

In Vancouver, A Thinking Ape discovered a web-application development community in addition to the traditional console-gaming community. That creative mix also enticed Flickr cofounder Stewart Butterfield to establish the creative studio for Tiny Speck, which is working on the massively multiplayer online game Glitch, in Yaletown.

“We came up here, hired a few contractors, and the contractors were so good at what they did we decided to stay here,” Arasaki said. The company, which has been doubling its business every four months, can’t hire staff quickly enough. “Right now,” he said, “not accounting for future growth, we have 30 open engineering positions.”

A Thinking Ape has released two more social games, Future Combat: Patriots at War and Party in My Dorm. The games are all free to play; revenues come from the sale of virtual goods.

Arasaki admitted that his company’s games are not as slick or rich as competitors’ titles. “But we have some of the highest engagement rates in the entire App Store,” he said. “The reason is we’ve gotten really good at building online communities.”

The company is aiming to expand its portfolio of games “to more aggressively push into the mobile market and reinforce our position”. The acquisition of indie developer Good Guy Robots was a step in that direction.

While the type of game-development studios in Vancouver may be changing, and the titles they are developing are different than they were a few years ago, what is still clear is the economic importance of the video-game industry. The ESAC report calculated that the sector “conservatively” contributes $1.7 billion to Canada’s economy. A December 2010 report commissioned by the Social Sciences and Humanities Research Council projected annual revenues of $2 billion. Studios and publishers typically employ the young and well-educated, whose annual salaries double the median Canadian income.

“It’s a desirable industry in terms of the jobs that it can provide to Canadians,” Lavoie said, “but also it’s a source of national pride.…It’s a creative industry that we can all be proud of. We’re making games that are being enjoyed all around the world.”