Virtual worlds beginning to produce actual dollars
Local companies claim their stake in the global VR technology market, writes Francois Marchand.
You don’t need stereoscopic goggles to see the piles of cash virtual reality is bringing to the Pacific Northwest. VR technology is making Vancouver and B.C. companies some very real money.
VR developers have sprouted all over the place, organizing regular meetup and “jam” events among themselves. They even organized Vancouver’s first Consumer VR expo, held in May at Canada Place.
After a short bust period in the early 2010s that saw companies like Radical, Ubisoft and Microsoft close shop in Vancouver, business is once again booming.
Microsoft officially opened its new development office — the Microsoft Canada Excellence Centre — earlier this month in the heart of downtown Vancouver, and Prime Minister Justin Trudeau was on hand to try out the company’s new HoloLens, a highly anticipated mixed reality headset.
“I think (virtual reality) is a key component in driving B.C.’s economy forward,” Creative B.C. CEO Prem Gill says. “It’s been noted in B.C.’s tech strategy, and we talk about it in our creative industries strategy as well. It’s interesting because there are a lot of clusters in the world right now exploring where does VR fit in their ecosystem?”
This year the governmentsponsored non-profit agency (working in tandem with the B.C. Arts Council) invested $641,000 through its interactive fund in 14 different companies and projects including Charm Games, the creators of the virtual reality puzzle game FORM, which The Sun introduced in the first part of its VR series last week.
Other recipients from the interactive media fund included VR gaming company Cloudhead Games and non-VR organizations such as the Surrey Art Gallery (for an interactive installation using touch-sensitive technology) and Bowen Island’s Turtlebox Productions, the creators of the kid-friendly Run Salmon app, featuring music by children’s music duo Bobs and LoLo. Creative B.C. gave the recipients each $50,000.
That amount allowed Charm to further the development of FORM and hire two new employees. Its team now comprises a crew of seven, working out of a shared space between Main and Cambie north of Broadway, near where social media trailblazer Hootsuite has its home.
“For the first six months, we were working out of my mom’s basement,” Charm Games co-founder and managing director Alan Jernigan says. “We’ve been in a shared office space since November of last year.
“There are a lot of tech teams in here, and we’re actually not the only ones working in VR.”
Gill says B.C. is “so well poised” because it has always had a strong startup community — “companies that become strong developers and supply a global market.”
GLOBAL SPAN
The boom in VR is impacting a much larger creative radius than just gaming, an industry which alone accounts for 168 companies and 5,500 full-time employees in the province, Gill says, quoting a report by DigiBC, the digital media and wireless association of B.C.
Film and television post-production facilities like MPC and Sony Imageworks are also looking at virtual reality technology, Gill adds. The National Film Board is working on VR projects with content creators in Vancouver and Montreal.
“The NFB has a unique opportunity to define what it is to be a digital first public media organization,” said Loc Dao, the newly appointed chief digital officer and executive director of programming and production for the NFB’s Interactive Studios, in a press release in May. “We must embrace this generation in public producing and explore the possibilities of digital creation, interaction and immersion.”
Almost every tech and creative area — including sound design, web design and multimedia production — is being influenced by the VR boom, which is spreading all across the West Coast, from Silicon Valley to B.C.
“It’s definitely playing to our strengths,” Gill says. “The relationships we have in Silicon Valley and Los Angeles — from the tech side and the movie side — those are key, important relationships. We’re developing talent and we’re well situated here in Vancouver and Vancouver Island.”
Other avenues of funding have been instrumental in the growth of VR development in Canada’s Pacific Northwest region.
Two major federal initiatives, the Industrial Research Assistance Program (IRAP) and the Scientific Research and Experimental Development tax incentive (SR&ED, commonly referred to as “shred”), have also given a boost to blossoming small and medium B.C. tech companies.
Private investors have also come knocking on Vancouver’s virtual door. Archiact Interactive, the creators of popular VR mobile game series Lamper, recently received $3.2 million from Chinese company 37 Games in return for a 10 per cent share in the company. China is fast becoming the largest consumer of VR worldwide.
Vancouver digital studio Axiom Zen, which develops software applications for mobile and sales platforms and acts as a “startup that builds startups,” spent $1 million to acquire VR studio Hammer & Tusk in February.
Axiom Zen’s “pathfinder” Roham Gharegozlou, who worked as a venture entrepreneur in Silicon Valley, was featured on the cover of Canadian Business magazine in February for a story about the country’s most innovative companies.
Axiom Zen has 50 employees in Vancouver in an office located steps away from Douglas Coupland’s Terry Fox statues at B.C. Place, and 15 other team members spread out from California to Santiago, Chile.
“We’re exploring and playing (with VR technology),” Gharegozlou says.
“I know that the number of consumers has to explode in order for there to be real opportunities in VR. In the meantime, we’re playing with what types of content could attract those mainstream consumers and what technology needs to be built to facilitate those experiences.”
Hammer & Tusk founder Mack Flavelle believes big things are yet to come.
“This is not a multibillion-dollar business in B.C. yet, but it will be soon,” he says.
“Two years ago, Oculus Rift was acquired ( by Facebook) for $2 billion alone. Billions of dollars have been pumped into VR from venture capital in the last year. It’s growing really quickly.
“It’s our experience in the gaming industry in this city that makes it interesting because the gaming industry isn’t doing all that well overall. A lot of people moved to Montreal a couple years ago. For those who didn’t, there’s a resur- gence in opportunities here that’s very exciting.”
BUSINESS AS UNUSUAL
At the offices of Capcom Vancouver on Still Creek Drive in Burnaby, studio director Joe Nickolls is still reeling from trying out the PlayStation VR version of Capcom’s forthcoming Resident Evil 7 survival horror game at this year’s E3 Conference in California.
Capcom Vancouver is, by Nickolls’ estimation, the city’s secondlargest gaming studio, with a staff of 250. Gone are the days of the post-2010 “bust” that drove companies and employees out of Vancouver. With the mobile tech explosion and new advancements in gaming technology including VR, Capcom is busier than ever.
Though it’s still the “early days in the world of VR,” Nickolls says his company has been embracing virtual reality for a long time.
“It isn’t business as usual here,” Nickolls says. “It’s not like we have a VR sign hanging on our door, because we don’t. But is Capcom the overall company embracing VR? Absolutely. Will that eventually trickle into Vancouver? Maybe.”
Nickolls is being coy about his company’s VR ambitions, but Capcom Vancouver is firing on all cylinders, with multiple major projects simultaneously underway.
The gaming studio’s Vancouver office is so busy, in fact, that Nickolls admits finding talent has been a struggle.
The company’s many projects require talent that ranges beyond just the tech aspect of the work, opening up opportunities for local artists of all stripes.
Provincial assistance through the Interactive Digital Media Tax Credit program has been a huge help for the company.
“I would still love to see the government being able to do a better job with some of the tax incentives they enjoy in Quebec and Ontario,” Nickolls says. “They get much higher breaks than we do. But it’s a trade-off — you gotta live in Quebec. We’re blessed and cursed at the same time with this beautiful city because it’s really expensive and you have to pay more to get people here.”
Virtual reality has become a booming business opportunity across the planet, and B.C. is already playing a major role in its development. And that will soon expand far beyond the realm of entertainment, where most of the tools and software are being roadtested.
“I think the government is starting to get keen to the fact that this is a major technological revolution that’s going to change every industry: education, health care, training, entertainment,” says Denny Unger, creative director and CEO of Qualicum Beach’s Cloudhead Games, which develops VR games and platforms.
“It touches everything. I think they’re still getting their heads around how best to support small companies like ours. There’s not enough of a hardware market right now to make a full go of it. You definitely need the support of government and external funding to weather these first couple years while hardware is getting into people’s homes.”
“It’s so interesting that with this type of technology, there’s a shift: It’s not just about gaming, it’s about exploring the possibilities,” Creative B.C.’s Prem Gill says. “There’s a huge appetite to learn more and to understand other uses.”
I would still love to see the government being able to do a better job with some of the tax incentives they enjoy in Quebec and Ontario. We’re playing with what types of content could attract those mainstream consumers and what technology needs to be built. The relationships we have in Silicon Valley and (L.A.) — from the tech side and the movie side — those are key, important relationships.