Analysis of the current state of the videogame industry in Canada

The game is not over

One thing that can certainly be said about the videogame industry in Canada is that it is booming. While other sectors might have slowed or taken a knockback, our seemingly insatiable appetite for videogaming seems to be as voracious as ever.

If Canada were a PAC-MAN character, it would have chomped up everything available and be on the constant lookout for more. When videogaming first emerged, few people could have imagined just how enormous and significant an industry it would become. Videogames have jumped out of gaming and created whole spin-off worlds, including movie franchises, immersive live-action experiences, and every kind of merchandise imaginable.

Powering up the economy

Now, videogaming is helping to power up the Canadian economy. It is a vital and growing part of the landscape. The industry's most recent analysis revealed that it employed 34,010 people directly across 821 companies. This generated $5.1 billion in economic impact and played a significant role in the day-to-day lives of millions of people. The industry makes a significant contribution in every province, and it is an attractive and youthful sector to work in. The average employee is 34 and earns $102,000 per annum.

Anyone who thinks of videogaming as child's play needs to think again. The country has a vibrant ecosystem of companies; the number of small ones has declined slightly, and the number of larger ones has increased. Most companies are concentrated in Ontario, British Columbia, and Quebec, but there are studios and operators throughout the country. While 76% of the companies in the sector are Canadian-owned, it is the foreign-owned ones that account for 88% of the people employed. What you can take away from this is that the native companies tend to be the smaller, entrepreneurial start-ups.

Spin-offs and indirect employment

In addition to direct employment from videogaming, there is also significant indirect employment, which is harder to quantify. For example, videogame-related merchandise and service sector jobs are not directly created by the industry, but they would not exist without the sector and franchises in the first place. Another enormous videogames spin-off industry is iGaming - the combination of two key Canadian passions – videogaming and gambling.

Online casino gambling is huge. Canadians are notoriously fond of gambling, and revenue in the overall market is predicted to reach US$15.59 this year. This is another growing market, with a projected market volume of US$17.51 for 2029. While sports betting is popular, it is casinos and casino games that account for the largest share of the market. It is predicted that 28.7 million Canadians will be actively gambling for real money by 2029. The figures for the current market show that more than 6 in 10 citizens have taken part in gambling for real money recently.

Casino-style games driving online gambling growth

It is the 'videogames' element of gambling, known as iGaming, that is driving that growth. Online casinos use the same technology, production, and design as their non-gambling counterparts. Employees move seamlessly across from videogaming to iGaming. Ontario was the first province to cash in on the popularity of online gambling and launched its fully regulated commercial market a little while back. The other provinces have been watching to see the results, with the Albertan authorities paying particular attention to opportunities for online casinos in the province. Currently, iGamers can choose from over 90 casinos in the province, and judging by their popularity, this number is likely to increase.

Latest evolution

Just as elsewhere in the world, videogaming is constantly evolving, taking up new trends and offering alternative options for players. We cannot talk about the current state of videogaming in Canada without touching on Artificial Intelligence, which is transforming game development, player experience, and monetisation.

The role of AI

AI companies are developing models that streamline workflows and shorten the production time from concept to delivery. They are creating more dynamic in-game experiences and should, in theory, translate to lower costs. Whether reduced production costs will be passed on to gamers or used to increase profits is yet to be seen.

However, games featuring AI-driven interactions are reported to boost player retention by 20%, which directly leads to increased revenue where games feature in-app purchases or other monetisation options. It is predicted that 50% of asset development will be undertaken by AI, which will increase productivity and accelerate the time it takes to bring a title to market. It is hoped that indy and mid-tier developers will be able to deliver compelling stories and high-quality assets on limited budgets. With so many of Canada's videogame companies being on the smaller side, AI could be their secret weapon against the mega, multinational gaming giants.

Monetisation

Many videogame companies are now establishing web shops to gain direct access to player data. This gives them control over customer relationships and helps them to reach players in emerging markets. As 88% of the Canadian gaming market's revenue is derived from exports, and with trading conditions souring with the country's nearest neighbour, emerging markets are looking increasingly attractive.

In Latin America and Southeast Asia, players prefer mobile wallets. In the past, gaming companies might have had to use a large online store to be able to handle payments from diverse markets. However, there are now many companies that provide plug-in services for in-house web stores, while others allow developers to track purchase patterns. From the data provided, the game companies can craft personalised experiences and promotions. The personalised experience of a dedicated web shop can see conversion rates from browsing to purchasing of up to 60%. High-spending users generate additional revenue when they are offered something unique and special.

Home and away

While emerging markets are essential to the continued success of the Canadian video games market, it is crucial that developers do not neglect the home market. After all, Canadians are, relatively speaking, well off and have more leisure time than many in other markets. In addition, recent refound patriotism and rejection of American imports could see more Canadians investing in the homegrown market. It will be interesting to see where we are 12 months hence.