Alberta Interactive Media and Game Development Sector Top Challenges

Submission

7 Action point items that the interactive media and game development industry in Alberta feels are necessary to grow Canada's digital economy.

1) Balancing out Grants/Funds/Incentives Offered in Other Jurisdictions

The one key item that the Government of Canada must consider with this Digital Economy Action Plan is how it can create a plan that will fairly benefit various jurisdictions across the country in order to spur technological development across the entire nation and not in select areas that are already leaders of the pack because of provincial tax grants that are offered.

As you are likely aware, many provinces within Canada offer their own set of wage based Tax credits and grants to help lure and maintain development studios in the interactive media industry. By doing so they allow these studios to operate at a discounted rate and push their budgets further to create an advantage that developers in provinces that do not offer these programs (such as Alberta) cannot compete against. The end result is that both work and man power moved out of province to a few select locations within the Country, which causes a brain drain that will within the next 5 years will create a much larger divide in the overall skill set of developers here in the province if nothing is done.

For reference, list listed below are some of the tax credits that are offered by various jurisdictions in North America (this do not include tax programs like SR&ED).

• Quebec 37.5% of labor costs
• Ontario 40% of labor costs
• Manitoba 40% of labor costs (up to $500,000 per project)
• British Columbia 17.5% of labor costs
• Nova Scotia up to 50% of labor (and up to 25% of total production costs)
• Prince Edward Island 35% of 150% of eligible labor done in–province (max $40,000)

In order to understand these wage based tax grants better, it is important to understand that 70 to 75% of costs incurred by Interactive Media and/or Games development is wage related. As such when you look at the actual cost of a developer, per month, at various tech centers across the country, you see a

• Edmonton 1.0
• Vancouver 0.73
• Montreal: 0.54

In our honest opinion the best way to correct this is to ensure that additional funding, resources and opportunities are pushed towards the provinces that offer no support. A province like Ontario or Quebec already has access to all the resources that they need to push their digital economies and in fact they have already proven this because of the programs that they offer. As such funding Ontario or Quebec based businesses would be like throwing a stone at a wave to make it go faster, while dumping significant funding to digital economy building in Alberta or Saskatchewan is like dropping a boulder into a calm, deep lake, the results would be explosive and immediate.

Simply put, talent should never be forced to move or relocate simply because of a narrow minded and short sighted federal plan that lumps all of its eggs into a single basket. To do so would be counter productive towards building a successful Digital Economy within Canada.

2) Connectivity

Contrary to popular belief, Canada lacks affordable, reliable and cost effective ubiquitous high speed internet access both at the business and residential levels. While 10 years ago Canada was seen as a leader, today it ranks 38^th out of 180s countries and continues to fall due to slow, overpriced internet. Much of this is due to a lack of competition in telecommunications space and the way that bandwidth providers are able to control and dictate how the bandwidth is used.

As such, while penetration rates for ubiquitous high speed internet access are high for residential users, the speed that is offered is well below 4Mbps (38^th best in the world). While this speed might sound impressive, in a changing world that involves rich media interactive with our day to day lives, it is barely enough to provide what the market needs today, never mind tomorrow. Severely limiting what Canadians consider is possible for internet usage.

For developers in the interactive media space the news is much bleaker. Many developers who need the bandwidth to provide their content (both upload and download) are faced paying 10x more per month than businesses in the United States for the same internet access. They must also pay significant costs of several hundred dollars in hookup fees and/or additional hardware to access a vital service that their business needs to operate. The end result being that developers are typically forced to pay these ridiculous fees in order to operate, but they choose to only operate the most basic of servers and hosting here in Canada and instead setup co–location agreements with U.S. providers for unlimited bandwidth for a server for on average $150/month.

3) Incubation and Accelerator Space

There is a serious lack of good, effective and intelligently located incubation space for Interactive Media businesses to get their footing under them.

What is truly needed is a solution that allows for a company to move out of its basement and grow from a startup to a full fledged business by providing a set of tiers that evolves with a companies needs as they grow. This would not only allow the business to look more attractive to an investor and to the general public, but it would also help form a creative core that would foster partnership, growth and mentorship by having so many talented developers in a common field working in closer proximity to one another.

What is important for this incubation space is that it needs to provide more than just office space but also meeting rooms, internet bandwidth, business assistance (project management, legal, accounting, reception and HR help) all it needs to do so at a subsidized rate. For the first year "start up" the level of subsidization needed would be high, however this rate should decrease based on each year the business operates in the incubator and other factors like size and revenue to ensure that the incubator is being fairly utilized.

What is also important is that at least one incubation and acceleration center for the Interactive Media industry be setup and maintained in each city with an accredited University.

4) Professional Development

One key element towards growing our industry is by growing and ensuring that our talent here has knowledge of and access to cutting edge techniques that constantly emerging. This can be done by providing access to properly managed funds that allow for non–profit industry groups and associations to access funding to hold not just events that allow for professional developer through social events or conferences.

This type of funding was at one time available through Telefilm but was removed when the funding was transferred to the CMF and as such industry associations and their members are suffering significantly because of this oversight.

5) Post–Secondary Education Quality

One area of concern is with effectively building a Digital Economy here in Canada is with regards to the quality of education that is provided by post–secondary institutions. Generally speaking more needs to be done to ensure that post–secondary institutions produce talent that can effectively operate in our sector without a significant amount of time spent re–training the graduate on industry standard practices and tools that were purposely not taught in the school.

6) Profiling the Industry More

Far too much effort is put out by all levels of government with regards to using smoke and mirrors to try to pretend that they are doing a good job at supporting the Interactive Media industry.

Simply put more effort needs to be made to promote the numerous large and small businesses who have a globally recognizable success story and promote them to the world. The message should be "This Too Was Made in Canada" so that people across the globe can witness and recognize Canadian made products from our Digital Economy.

7) Federal Programs Do Not Benefit the Industry

Simply put there are far too many Federal programs out there that fail to support the Interactive Media industry at all. The key reasons for this fall down to 4 key points:

1. Nearly all Federal programs are setup to benefit art, or technology, but not the combination of the two, which the Interactive Media industry is all about. As such Interactive Media productions are ineligible for many numerous programs that they should be eligible for.
2. Information is not shared with the industry in a timely manner. Often this information is dumped upon industry with less than a week's notice and as such we are ill prepared to best access it because we have businesses to run. Unlike other sectors, Interactive Media does not wait for government hand–outs and as such we cannot simply drop everything at a moments notice.
3. Information sessions are limited to only a few select locations with only a small number of industry speakers invited to attend. While this might be a cost saving measure by a group like Industry Canada, the net result is that it causes industry to want to be less involved with the government, it makes businesses feel slighted and thus not want to ever deal with Industry Canada and it gives the feeling that the government is ill equipped or prepared to actually do the task given to them. A great case in point is holding only a single Digital Economy consultation for Alberta in Calgary only because this is where Industry Canada employees are situated.
4. Involvement in programs is too heavy handed, requiring more paperwork and hoops to jump through than what makes the program beneficial. As such things like SR&ED, or GST tax credit programs are ignored by our industry because we cannot afford to lose time to paperwork. Those businesses that do utilize these programs do so because they have an employee whose sole duty is to handle this kind of stuff.