According to Canadian hockey legend Wayne Gretzky, “a good hockey player plays where the puck is. A great hockey player plays where the puck is going to be.” And that’s exactly how the game is being played in the thriving Ontario Technology Corridor, as evidenced by “hockey stick” expansions by companies including Google Inc., Electronic Arts Inc. (EA), Gameloft Inc. and Arkadium Inc.
The Ontario expansion of multinational digital media companies comes as Martin Soltys, CEO of Transmedia Entertainment Partners Ltd., an offshore investment fund intent on investing in Canadian gaming, digital media, film, music and TV projects, stated in TechVibes last month that “Canada could rise from third worldwide to become number two and eventually number one in the worldwide scope.”
Google’s presence in Kitchener has increased six-fold from 35 employees in 2008 to more than 200 today, many from the neighbouring University of Waterloo. Those employees work on key Google projects including Geocommerce product search, the Chrome Browser and the DoubleClick Ad Exchange. In the same Ontario city, Electronic Arts is expanding to a new location to accommodate its growing team.
Bill Elliot, Integrative Trade Consultant for Canada’s Technology Triangle in Waterloo Region and a member of the Ontario Technology Corridor, says, “Ontario continues to score with top talent and financial incentives. Ontario also has a tremendous team of home-grown all-stars fed by 22 colleges and universities that produce18,000 graduates per year from 174 specialized digital media programs including 3D animation, film studies, advanced computer programming, math, and hardware engineering.”
Federal and Ontario provincial research and development tax credits combine to give Canada the most favourable tax treatment among G-8 countries. Ontario innovation companies are able to cut R&D expenditures by up to 63 per cent.
Other recent gaming and digital media wins in the Ontario Technology Corridor include:
- Magmic Inc. – Ottawa-based Magmic is a homegrown Ontario success story. A developer and publisher of mobile games, apps and entertainment that include Texas Hold ’em King Live, The New York Times Crosswords, Phase 10 and Ka-Glom!, in 2012 Magmic plans to double game production of 10-15 titles per year, and add 20 per cent to its 55-employee staff as it extends its reach across mobile platforms like iOS, BlackBerry, Android, and Java. 2.2 million unique users play Magmic games every month, the equivalent of 750 years of monthly play.
- Gameloft Inc. – This France-based company has started hiring 205 people for a new Toronto office that will be a state-of-the-art gaming studio. The company also confirms the key role played by the provincial tax credit. The company’s General Manager for Canada, Mario Poulin, says, “We remain at the top of our game by partnering with jurisdictions like Ontario where there is a real interest backed by sound policies to make the gaming sector a strong contributor to the economy and the creation of jobs.” Gameloft posted 15 per cent revenue growth in the first part of 2011.
- Arkadium Inc. – On July 19, 2011, this global leader in online games opened a Toronto, Ontario, office to focus on mobile gaming titles. Company executives stated “key factors” in the move were assistance from the Ontario government and the Digital Media Tax Credit, plus help from the Greater Toronto Marketing Alliance. New York-based Arkadium’s Toronto office has a goal of producing ten new games to introduce to the market within the next 12 months.
Ontario’s lead agency for provincial incentives in digital media is the Ontario Media Development Corporation (OMDC). Darius Basarab, Senior Business Development Specialist with the Ontario Ministry of Economic Development and Innovation, says, “Ontario is well positioned to compete with other jurisdictions that are trying to attract gaming firms and we have a lot to offer.” To date the OMDC IDM Fund has contributed $7.7 million to 76 projects with budgets totaling $32.7 million — and the OMDC continues to offer the following incentives:
- Ontario Interactive Digital Media Tax Credit — refunds 35-40 per cent of eligible production costs
- Ontario Computer Animation and Special Effects Tax Credit — refunds 20 per cent of labour costs
Ontario’s fast-growing entertainment and creative cluster employs nearly 300,000, while contributing $12.2 billion to the province’s GDP.
The C.D. Howe Institute, which studies social and economic policies, notes Canada’s international reputation as a destination for capital and investment is better than it has been for a generation. Canada’s federal corporate income tax rate will fall to 15 per cent this year — less than half of the top U.S. federal marginal corporate income tax rate, and the lowest in the G7 plus the lowest R&D costs in the G7, with a 12.9 per cent advantage over the U.S. Canada also has the world’s soundest banking system according to the World Economic Forum.