MONTREAL’S GOT GAME
Vast resources, motherlode of talent help transform city into a global video game hot spot
Canada has a rich history of innovation, but in the next few decades, powerful technological forces will transform the global economy. Large multinational companies have jumped out to a head start in the race to succeed, and Canada runs the risk of falling behind. At stake is nothing less than our prosperity and economic well-being. In an ongoing series, the Financial Post set out explore what is needed for businesses to flourish and grow. Budge Studios Inc. has spent the better part of a decade making video game apps for kids, banking on its in-house abilities and relationships with the owners of popular children’s content such as Thomas & Friends, Barbie and My Little Pony to compete in a hotly contested industry.
But its recent launch of Transformers: Bumblebee Overdrive, a game tied to Hollywood hit Bumblebee and available on the Apple App Store, shows the studio is proving its tricks are more than just for kids by ramping up operations and broadening its focus with a game designed to appeal to players of all ages.
A key to both its past and future growth and success, the company’s founders say, is its location: Montreal, a global hot spot for making video games because of provincial tax incentives for the industry and an education system that churns out ready-to-play talent.
Aside from Budge, the city is home to giants such as Ubisoft Entertainment SA, Warner Brothers Interactive and Eidos, the studio behind the Tomb Raider games. Teams from Montreal have even won the Entertainment Software Association of Canada’s annual Student Video Game Competition in each of the past two years.
Sitting nicely between those two extremes, Budge has grown steadily from an initial collaboration in 2010 between its three founders to a current staff of 115. Over the years, the studio has built up a library of nearly 50 apps for kids that have amassed close to half-abillion downloads globally.
As the studio evolved, it chose to focus on and embrace mobile. For one thing, the company started up when Apple Inc.’s original iPad launched, so its hallmark innovations revolve around developing natural and intuitive ways for young children to use touch screens and motion-based controls. Phones and tablets also provide more flexible publishing and simpler technical transitions compared to other platforms.
The company also chose to partner with companies such as Mattel Inc. and Hasbro Inc. that own internationally recognized children’s brands, which makes it easier for its products to find audiences in the highly competitive world of mobile apps. Furthermore, it can rely on those deep-pocketed companies’ legal teams to guard against piracy.
Another critical decision was to become its own publisher, which has allowed Budge to develop its brand in such a way that millions of people now recognize and trust it.
Perhaps most important, however, it committed to do everything — from art and programming to marketing and analytics — inhouse, which the founders knew would be best served by setting up and staying in Montreal.
“We always knew we wanted to be in Montreal,” said David Lipes, one of the studio’s co-founders. “We’ve seen a lot of momentum in our space here over the last 20 years. Being in Montreal meant we would have the expertise we needed at our fingertips.”
Quebec — particularly Montreal — is the beating heart of the Canadian gaming industry, which is the world’s third largest, behind only the U.S. and Japan.
Canada has about 600 active studios that collectively employ nearly 22,000 full-time workers, adding $3.7 billion to GDP each year, according to the Entertainment Software Association of Canada (ESAC). Nearly half of those employees work in Quebec.
A big reason for that concentration is the Quebec government’s decision to grow the video-game industry as part of its economic development strategy
“The momentum from the 1997 decision to introduce a tax incentive for the video-game industry continues more than 20 years later, spinning off talent into other sectors like AI, VFX and simulation firms,” said Jayson Hilchie, ESAC’s chief executive. “The mix of government support, world-class talent and a culture of creativity make Quebec, and Montreal specifically, the perfect environment for a video-game industry to thrive.”
Lipes said the tax incentives — including a credit for a percentage of eligible employee salaries — that lure game companies from around the world to set up shop locally are working, and the province’s “current status and recognition on the world stage is proof positive of that.”
Adds Budge co-founder Michael Elman, “I look around the world at other cities and companies that aren’t in our position, and I imagine they need to lobby their governments to create the sort of ecosystem we have.”
Part of that ecosystem is education: schools in both Montreal and the province have technical programs that churn out more skilled workers for the industry every year.
“If you don’t have the talent, it doesn’t matter how many tax credits you get,” Elman said. “You need to have people who are passionate and skilled in games and technology. There’s a tremendous amount of young people coming out of the school systems that we hire. They’re hungry, and skilled and knowledgeable in the latest technologies.”
But even with an annual wave of new expert workers and a community of studios famously co-operative and supportive of each other, the competition for talent can be fierce.
For instance, the annual Montreal Game Summit is a conference at which game designers and innovators gather to share their ideas and innovations as well as their stories of success and failure with one another. But landing the very best talent can turn otherwise friendly companies into rivals in an industry where the average salary is more than $77,000.
Indeed, Lipes said, human resources has been the company’s biggest challenge as it grows.
“There’s a lot of competition. Finding talent and putting the right people in place is always a challenge,” he said. “We have a great HR team that draws locally, but we’ve also brought in employees from across Canada to join us.”
Another big key behind Budge’s growth was partnering with the Business Development Bank of Canada (BDC), which has backed its vision since the very start and helped it plan for — and succeed in achieving — profitability almost since day one
“BDC was an early supporter of what we were trying to do here,” Lipes said. “They take a very entrepreneurial approach to supporting businesses. They really want to see innovative Canadian businesses grow and become strong.”
The next phase of Budge’s growth focuses on its action games division, Budge Games. During the past couple of years it has hired 25 new people to fill technically specialized roles in the development of Transformers: Bumblebee Overdrive, the division’s first game.
Despite being based on a kids’ toy, the game is geared for players of all ages. It contains a strong dose of action — including frenetic racing and intense battles — that sets it apart from Budge’s games designed with younger kids in mind.
Both Lipes and Elman believe this is the perfect time to broaden their company’s demographic to include older players. Kids who have been playing Budge games from an early age are now ready for more sophisticated games, and their parents — many of whom also play games on their mobile devices — have come to trust the brand through the apps their kids have played.
“We want to grow our company with our audience,” Elman said. “A lot of these kids are older now, and we want to widen our demographic to include them. We want to make games the whole family can play together.”
Also acting in their favour is that longtime partner Hasbro came to them a couple of years ago with the thought of making an action-oriented game based on the movie Bumblebee, which hit theatres just before Christmas. It was the perfect IP for Budge to leverage while making its transition.
“Transformers fans are young and old,” Elman said. “It’s for everyone. It’s perfect for us to line up with. It meant we could create a game for the whole family. It meant we could grow our company. We’re all gamers, and it’s exciting now to take home games not just for our families, but also that we want to play.”
And it all began with the founders’ initial and, it turns out, essential decision to set up shop in a city with all the resources necessary to get started and keep growing.
“Montreal is just a great place to start a company making games.” Elman said.
If you don’t have the talent, it doesn’t matter how many tax credits you get. You need to have people who are passionate and skilled in games and technology.