Canadian video game industry saw 9% drop in number of companies: report

This Wednesday, March 6, 2019, photo shows a person playing "Apex Legends" in Jersey City, N.J. THE CANADIAN PRESS/AP, Jenny Kane

The number of video game companies operating in Canada dropped nine per cent in the wake of a pandemic-fuelled gaming boom, most of them smaller independent shops with fewer than 25 employees, according to an economic report on the industry.

The report for the Entertainment Software Association of Canada says 821 video game companies operated in 2023-24, which is 78 fewer than the peak in 2020-21.

Association president Paul Fogolin said a post-pandemic dip was expected, since gameplay surged during COVID-19 lockdowns, leading game studios and developers to scale up.

Fogolin said the number of people who played games didn’t increase that much during the pandemic, but people who played did so more than ever.

“Coming off of that, we knew there was going to be a slight dip in engagement with games, and that was also at the same time as new macroeconomic conditions, inflationary pressures, lower consumer spending,” Fogolin said in an interview.

There were 573 video game companies in 2017, and 692 in 2019, according to previous economic reports for the association. Fogolin said the latest numbers show the Canadian industry “remains strong and stable.”

That’s despite a 3.5 per cent decline in jobs since 2021, when there were the equivalent of 35,260 full-time positions, including programmers, writers and artists. The report says there were 1,250 fewer full-time jobs in 2023-24, with work largely based in British Columbia, Ontario and Quebec.

At the same time, the report says the ratio of full-time work increased — to 86 per cent from 81 per cent — suggesting that was due to companies scaling back on temporary hires and focusing on longer-term projects. In addition, average salary increased 21 per cent to $102,000 per year.

The report, released Jan. 28 and based on an online survey between May and June 2024, credits those gains with three per cent growth in the sector’s economic impact, which it says resulted in $5.1 billion contributed to total gross domestic product.

The report also noted disparity between local and foreign-owned companies who took part in the survey: while 76 per cent of respondent companies were Canadian-owned, foreign companies employed 88 per cent of the workforce.

It also found most of the companies that folded or downsized had fewer than 25 employees.

The global video game industry has seen thousands of layoffs in recent years, mirroring trends in the wider tech sector.

In Canada, Edmonton-based BioWare laid off about 50 people in August 2023 and an undisclosed number this January, saying in both instances that it wanted to become a “more agile and more focused studio.”

Behaviour Interactive cut 95 jobs in June 2024, most of them at its Montreal base, amid what it called “unprecedented competition.”

But much of the sector is driven by big players with Canadian outposts. Ubisoft developed most of the “Assassin’s Creed” titles in Quebec, while Electronic Arts produced “NHL 24” and “EA Sports FC 24,” a successor to the FIFA series, in Burnaby, B.C.

There are homegrown hits, too. The indie darling “Balatro,” a poker-themed game developed by an anonymous Canadian, has sold more than five million copies since it launched in February 2024.

But Michael Iantorno, a PhD candidate in Concordia University’s communications program, said it’s becoming more and more difficult for game developers and workers alike.

“If you’re a small developer ... you’re kind of fighting over scraps in terms of funding,” said Iantorno, who studies video game history, industry labour and intellectual property law.

There are several funding sources including the Canada Media Fund and provincial organizations like Ontario Creates, but there’s more demand than money, he said.

“We need to fund arts and small businesses more, especially in the games sector,” he said. “That’s an uphill battle. Those organizations have often stagnated or had their funding decreased over successive governments.”

Remy Siu, the Vancouver developer behind the critically acclaimed video game “1000xResist,” which came out in May 2024, said the game would not exist without help from the Canada Media Fund.

Siu, founder of Sunset Visitor, said “there’s a degree of really having to stand out” as an indie developer as he credited the fund with allowing certain kinds of artistic risks.

The studio received just under $490,000, according to the fund’s website.

Siu said studios can also seek bank loans or an advance from a publisher but his sci-fi narrative game was a “hard pitch” because of its niche subject matter.

Siu said a weak Canadian dollar could pose a future challenge if his studio wanted to hire U.S. talent. The loonie recently dipped to its lowest levels in more than 20 years. But layoffs at bigger companies mean there’s no problem finding workers.

“I actually don’t think there’s a talent acquisition issue,” he said.

“We see a lot of really talented people looking for work right now in the game industry, which is unfortunate.”

One way to support and encourage smaller or newer developers is to create new funding paths, said Iantorno, the game scholar from Concordia University.

An example is a games incubator known as Baby Ghosts, he said, which provides grants and education to emerging studios in Canada.

“If we can distribute funding in ways where we can get it to people who don’t typically receive game funding in areas where they don’t typically receive game funding, we can both foster the indie industry and tell stories from all across the country,” Iantorno said.

Fogolin, from the Entertainment Software Association of Canada, said he’s seeing more and more critically acclaimed games being produced in the country, even amid ongoing inflationary pressures and less discretionary spending.

He said that just as Ontario is known for its automotive and film and television sectors, the country should be recognized for video games.

“We are really, really good at making video games in Canada,” he said. “And I think a lot of people don’t know that.”

The study, conducted for the industry association by Nordicity Group, collected data based on responses from 150 video game companies.

This report by The Canadian Press was first published Feb. 5, 2025.

Curtis Ng, The Canadian Press