A permanent and increased tax credit could benefit some of the province’s smallest studios
A permanent and increased tax credit could benefit some of the province’s smallest studios
Effective Sept. 1, B.C.’s interactive digital media tax credit program will increase to 25 per cent from 17.5 per cent and will effectively become permanent.
This is the highest tax credit the province’s video game industry has ever received, said Loc Dao, executive director of DigiBC, a non-profit creative technology industry association. He added that the changes—which were announced in the latest provincial budget—signal faith in the sector’s ability to help grow the economy and create jobs.
According to Dao, the program allows studios in the video game, virtual reality and augmented reality industries to claim a credit on the production of interactive products.
“[It] will make a huge difference for our small B.C. businesses that, like for every business right now, it’s not the easiest time,” he said. “We know that by itself, it isn’t going to be enough for small businesses, so we’re immediately starting work on how we can help them raise capital.”
Dao said the tax credit is expected to attract more investment and talent to the industry, where raising capital is one of the biggest challenges facing small studios.
A Jan. 28 report by the Entertainment Software Association of Canada (ESAC) showed that small video games studios across the province are in decline, while the broader workforce is expanding.
According to the report, 35 per cent of B.C.’s micro studios—those with two to four employees—ceased operations or downsized between 2021 and 2024, dropping from 52 to 34.
Sole proprietorship studios—those with only one employee—doubled during this period from seven to 14. Micro studio downsizing may explain the rise in sole proprietorships, said the report.
Despite this decline, B.C. is the only province where full-time employment in the sector has actually increased, rising from 9,970 workers in 2021 to 10,930 in 2024—an increase of 9.6 per cent.
The report attributes the rise in workforce demand to the expansion of large studios in B.C.
Additionally, the ESAC report showed that salaries in the industry have risen throughout Canada from $81,000 to $102,000 in that same time period. This is partly due to an increasingly senior workforce, ESAC CEO Paul Fogolin told BIV.
“B.C. has probably the most mature workforce in the industry,” he said.
Fogolin says the pandemic triggered a significant increase in video game demand, with independent, medium and larger studios retooling the workforce to meet needs.
The end of the pandemic sent ripples throughout the industry, with winding down demand, cost of living pressures and economic challenges decreasing the number of studios, he said.
Nevertheless, since the ESAC study was conducted between May and July of 2024, Fogolin says indie studios are making a rebound, adding B.C.’s future looks bright.
Micro studios experiencing upticks
On March 4—the same day the provincial budget was released—226 future micro startups registered for the monthly Full Indie Meetup at DigiBC, a space where developers can network and showcase the games they’re working on. The meetups usually host between 150 to 175, said Dao.
He says these micro startups are not included in industry studies or counts because they may not have incorporated yet or they aren’t bringing in any revenue.
“When we’re looking at that decline in startups, that number is always going to fluctuate,” said Dao. “Knowing that we have them in our farm team makes us feel a lot better in the big picture.”
Although Vancouver’s talent pool seems to be thriving, the ongoing expansion of large studios could create competition for smaller local players.
Large studios are vital for creating well-paying jobs and for training talent, said Dao.
“New Canadian-controlled private corporations are created as a result,” he said. “They’ve been our university and our farm team for new studios.”
He added that it is important to have proper measures to support new studios and protect Canadian intellectual property.
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