Ontario atop Leaderboards for Independent Video Game Development

On August 29, 2012, just after 1 p.m., Miguel Sternberg stared obsessively at his computer in his Toronto home office. He had not slept in days. Sleepless and exhausted, Sternberg finally completed the final touches for the launch of his PC video game, They Bleed Pixels. After submitting the final game build, he watched in haze as the sales figures refreshed throughout the afternoon. He waited to find out if the countless hours, savings and government funds would pay off.

 

Years later, things aren't much calmer for the independent developer as he juggles a new They Bleed Pixels update with two other projects.  Sternberg works alongside programmer Andrij Pilkiw under the studio name, Spooky Squid Games Inc. They hope to hire another employee this year and dedicate time to working on newer projects. "I think at this point we'd like to grow a bit," Sternberg says, "and that takes more money than we have."

Spooky Squid Games and other Canadian developers can expand studios with help from government tax credits and creative grants. Canada's early establishment of video game tax credits helped it become the third largest country for video game development. Quebec and British Columbia now house the world's largest studios and created multimillion dollar franchises such Assassin's Creed and FIFA soccer. Each of Canada's successful video games combined to contribute $2.3 billion to Canada's gross domestic product (GDP) in 2014. With most of the large studios in other provinces, Ontario's grants and business incentives transformed the province into the destination for independent game development.

In 2014 the Entertainment Software Association of Canada (ESAC) tallied 96 total video game studios in Ontario. Micro studios employing fewer than five people make up 53 per cent of Ontario's companies, whereas small-sized studios employing between five and 99 people, make up 35 per cent. With just one more studio than Ontario, Quebec employs close to 7,000 more people.

Ontario's large grouping of micro and small-sized companies happened because of bad timing rather than favourable business incentives.  Jayson Hilchie, president and CEO of ESAC, says Ontario moved late in attracting video game companies: "Once Quebec started offering tax credits, that model spread all over the place. I think Toronto is just not the first mover." Quebec saw its first international company establish a studio in 1997 when French company, Ubisoft Entertainment, opened a studio in Montreal.

On the west side of the country, the Vancouver video game industry already began to grow even before the advent of government support. B.C initially didn't offer any tax credits, but its proximity to Los Angeles, Seattle and San Francisco, made it one of the world's largest video game hub.

If Ontario's aspiring game developers couldn't find employment in local studios - either Digital Extremes or the now defunct Silicon Knights - they created their own games.

Sternberg, now 38 years old, cofounded one of Toronto's largest studios, Capybara Games Inc in 2003. He points to Capybara as the perfect example of people looking to make games who had no place to work. But success didn't come for a while, so Sternberg left Capybara. "A start-up like that was really difficult," he says. "It doesn't make money for a long time and I just decided to go sort of freelance."

After some successful contract work, Sternberg opened Spooky Squid Games in 2008 and developed his first prototype. Spooky Squid's first game, Guerrilla Gardening: Seeds of Revolution, came from the idea of people illegally gardening in public spaces. Sternberg applied for an Interactive Digital Media Fund (IDM) grant, which funded a prototype for Guerrilla Gardening. Sternberg wouldn't disclose the grant amount.

The Ontario Media Development Corporation (OMDC), an agency of the government of Ontario, helps fund independent developers. George McNeillie, communications and corporate secretary of the OMDC, says the OMDC only distributes the grants and administers tax credits, they don't alter funding.  "We administer six media tax credits on behalf of the Ministry of Finance," McNeillie says. "We don't deal with policy."

Kim Gibson, a consultant who works with a number of funds for the interactive digital media industry, tries to help Ontario developers realize their projects. People who apply for the IDM grant can receive up to $150,000 if the board approves a project. She says anyone with the proper skills can make a game; the difficulty comes in making a successful one. "There's a little bit of luck in that magic you have," Gibson says, "but it's an industry where you can work with a very small team and make fabulous products." The OMDC says their grants provide support and reduce risk for people making games. Couple the OMDC and local educational institutions, and Gibson only see talent growth in Ontario.

The University of Toronto's computer science program churns out dozens of qualified programmers. In 2009, the Shanghai Jiao Tong University ranked the University of Toronto's computer science program as the 8th best in the world.

Frank Palermo, 22 years old, studies computer science at the University of Toronto and says the program's broad scope still applies for game development. "It can vary from databases, algorithm design, which can help with building an artificial intelligence for a video game, to graphics programming." Students can acquire a specialist degree, which allows them to take courses with focuses on video games, or programming software.

With plenty of independent developers and graduates, Gibson also sees plenty of simple errors in IDM grant applications. People submit applications with all kinds of different errors by not reading guidelines, preparing incorrect documentation and failing to sell their game's pitch. Despite the simple mistakes, Gibson sees improvement. Over the last three years, the quality of applications, the quality of projects and the level company experience, all surpass previous years. "It's a real sign that the industry is actually maturing in this province," she says.

 

A mistake during game development teaches a lot of valuable lessons, an experience Get Set Games Inc. employees regrettably know a lot about.

Nick Coombe, 39, is one of the four founders at Get Set Games Inc. in Toronto. Get Set began developing exclusively for phones and mobile platforms in 2009, and released hit games such as Mega Jump and Mega Run. Nick works as the creative lead alongside his younger brother and founder, Matt Coombe. Despite their close age, people often mistake Matt as the older brother. "It's just how he comes across. He's bigger than me as well," Nick says. "I've got more grey hair though."

Age or hair colour doesn't matter during development, as each of the six Get Set employees takes on more responsibilities than their job description. Nick and Matt contribute to the art and audio production, but also assist with game design and the business aspects. "We wear a lot of hats," Nick says. Even with a proficient team, Nick says studios risk a lot when the scope of game projects exceeds initial expectations. It happened with the development of Mega Run.

Mega Run launched in 2012 as a free game, which made it an even greater business risk when Get Set lost track of development time. The team lacked producing experience and development time stretched beyond a year. If Mega Run didn't succeed, Get Set could have gone under. "Don't spend 18 months developing for mobile," Nick warns. Mega Run became a huge success, and even reached the top of the Apple iOS app store.  

With a greater understanding of mobile development, Coombe and the rest of Get Set developed the bulk of their newest game, Mega Blast (working title), in about a month. For the next few months, Get Set will dedicate time to prepare the game for release and also put it through quality assurance tests. Get Set sees most of their success with free games on Android and Apple iOS app stores. They aim for the best game experience at launch to generate word-of-mouth marketing.

Even with chart-topping games, Get Set can't afford a large marketing budget. The studio relies on word-of-mouth, cross-app promotion and good ratings to drive downloads. Coombe admits Get Set could make more money through in-app purchases, but they want to give players a great experience, not trick them into spending money. "We've probably erred on the side of not making as much money as we could," Coombe says. "We always wanted to make games that have the feeling of paid game, but happen to be free." 

Free games with optional in-app purchases can bring a lot of risk, but the OMDC and Get Set still developed a strong relationship. The OMDC helped fund a number of Get Set's releases over the years. "We have a good track record," Coombe says. "They know we'll probably make the money back on it, which goes back into the economy when we hire people."

A lot of Get Set's game ideas and employees formed from local events, specifically Toronto Game Jam (TOJam). The annual TOJam gathers local developers for a three-day public event to make the best possible games from scratch. Get Set was formed after Coombe and other employees met at a TOJam, and although they stopped attending a few years ago, Coombe only sees benefits for people participating. "It's good for Toronto, it's good for our indie development scene and it's good for people to make connections," he says.

The growing video game industry and new government incentives create a lot of questions in the community in regards to funding and grants. TOJam and other experiences helped Get Set in a lot of ways. "Because we're all going through the same kinds of experiences as small companies," Coombe says, "the ability to share information with each other helps."

 

Sternberg sees the early successful developers in Toronto's indie game scene as mentors for the next group of talent. He sought financial advice from experienced developers, and even got help creating bonus stages for his game, They Bleed Pixels.

Spooky Squid began working on They Bleed Pixels when financial restrictions put Guerilla Gardening on hold. The IDM grant they received for Guerilla Gardening only funded the development of the prototype, and they couldn't afford the complex game they envisioned. Even for They Bleed Pixels, a game with a budget estimated at three times smaller than that of Guerrilla Gardening, most of the funding came from their own pockets. Sternberg estimates he and programmer Pilkiw contributed about 80 per cent of the They Bleed Pixels budget, which includes both unpaid work hours and savings. They applied for an IDM grant for They Bleed Pixels near the end of development to help fund the final production.

Sternberg loves the IDM grant, but wishes the grants awarded more for first-time game makers. The tax credit the Canadian government offers to video game companies doesn't assist developers who can't pay themselves. "They kind of assume people are able to pay themselves, which in the case of indies, is a pretty bad assumption," Sternberg says. "If you weren't able to pay yourself, then you can't get tax credits." With the launch of They Bleed Pixels, Spooky Squid now sees the benefits of tax credits, but Sternberg says he thinks the government can still improve.

To ensure developers continue to see government support, Hilchie and ESAC work to both improve and secure existing credits and grants. When credits come up for renewal or review, the ESAC speaks on the behalf of developers' best interests.

"If the government does start to explore or introduce legislation that may be damaging to our industry," Hilchie says. "We try our best to make sure that our voice is heard and the legislation does the least amount of damage." Hilchie wants to secure tax credits across Canada in places like Nova Scotia, Quebec and B.C, not just Ontario.

On the federal government level, ESAC also promotes the industry to government officials and explains the importance to Canada's economy. "We make sure policy makers and decision makers understand the economic impact of our industry to Canada," he says, "what it means for jobs, youth employment and GDP."

According to ESAC, in 2014 the video game industry contributed $2.3 billion to Canada's GDP and directly employed 16,500 people across Canada. With 27,000 full time equivalent jobs in the video game industry, 53 per cent identify as independent. Even with a large grouping of independent developers in Ontario, the average salary of an Ontario developer is still $74,400.  Business incentives and financial opportunity attracts talent to Ontario from across the world, but creative opportunities also make Ontario a desirable place to work.

Gibson says she thinks people come to Canada for the opportunity to work with internationally recognized developers. Across Canada, studios like Ubisoft Montreal, BioWare and EA Canada developed some of the most successful game franchises ever. "I think it's the opportunity to do rewarding work," Gibson says. "They are the best in the world at what they do." Ubisoft's latest game, Assassin's Creed: Unity, sold over 10 million copies worldwide.

Hilchie echoes the same motivation and says at some point every developer aspires to work on the world's most popular games. "Those games are the biggest-selling games in the world and they're made in Canada," he says. "At some point, everyone wants to work on those big games." Everyone except Sternberg.

Even with the opportunity to work with a large studio, Sternberg chooses to work on his own projects. In his spare time, he develops a smaller game called Russian Subway Dogs. Stray dogs in the Moscow subway system ride the trains into town to scrounge for food, where players then build their high scores. At the end of the day, the dogs ride the trains back to the suburbs.

He and programmer Pilkiw soon plan to release a free update for They Bleed Pixels. The free update improves performance on older computers, adds bonus levels, visual replays of speed runs, and a number of other features. Sternberg hopes the free update helps existing players, while also attracting new ones. "The hope is good word of mouth, more players," Sternberg says, "and the satisfaction that players who didn't check the system specs can now run the game."

Spooky Squid already began development on their next big project, but Sternberg refuses to share any details.

 

When Sternberg launched They Bleed Pixels, he hoped for a crazy runaway hit. The sales weren't what he imagined. "They may have been a little bit lower than we expected," Sternberg admits, "but you always have, I think, overly high expectations on how well something is going to do."

Sternberg declined to provide sales figures.

What he didn't imagine on launch day, the Twitch.tv and the YouTube communities live streaming and recording videos of They Bleed Pixels for thousands of viewers. "I realized I could watch in that surreal state when you haven't had sleep for a few days," Sternberg says. "It was a kind of amazement that all of these strangers were playing the game."

Financial issues always threaten independent developers, but Sternberg says it's definitely less of an issue now. Canada's tax credits and Ontario's grants help studios realize their game ideas, but sales keep studios alive. "It's a hit driven industry," Sternberg says, "and those are hard to survive in."