A spotlight series on British Columbia
BC’s Creative Tech Sector Drives Economic Growth and Jobs in Canada
A Conversation with Brenda Bailey, Executive Director of DigiBC
Published in partnership by the Information and Communications Council (ICTC) & the Vancouver Economic Commission
Creative tech has flourished in Canada from its roots in BC, and the sector continues to punch above its weight, showing promise even amid an uncertain economic reality. An already booming industry, video gaming saw an unprecedented surge in consumption with the onset of COVID-19. Similarly, lockdowns and stay-at-home orders have led to a growing demand for animated content, and changes to live-action film are opening new doors for visual effects. Recently, ICTC’s Senior Director of Research & Policy, Alexandra Cutean sat down with Brenda Bailey, Executive Director of DigiBC to learn about this thriving sector.
Alexandra: Thanks for joining me today, Brenda. Let’s start with a brief background on DigiBC. How does it support the creative tech sector in BC?
Brenda: Sure. DigiBC is a trade association for video games, animation, ARVR, and visual effects in the province of British Columbia. We’ve been around for about 22 years in a few different incarnations (for a long time, we were called New Media BC). It’s relatively recent that we also represent animation and VFX. We do that through a partnership with the Animation & Visual Effects Alliance of BC and mppia.
Animation studios are using tools similar to the tools used to create video games, but they are creating a non-interactive linear experience. The three organizations work quite closely together and represent a good chunk of the creative tech space in BC. I’ve been with DigiBC for two years as their Executive Director, but previously when I was running my video game studio, I was on the board of directors of DigiBC, so I’ve been associated with the organization for a long time. It’s been great to watch the evolution of the creative tech sector in BC and witness its continued growth. In fact, I’d argue that DigiBC is a catalyst for growth in the sector.
Alexandra: Can you speak a bit more about the evolution of the creative tech sector in the province?
Brenda: The video game industry is one that I’ve been fascinated with for a long time. I think there’s an amazing book to be written on the video game sector in BC — from the Don Mattrick days of Distinctive Software to today. We have so many brilliant products and creative minds; it’s an area where we really punch above our weight. Across the board — in Video Games, Animation and VFX — the largest entertainment franchises in the world have links to or roots in BC. At the same time, it’s not really on the radar for most people in the province; it’s an unintentional secret. I think this happens for a few different reasons. Unlike the film sector, where people can see movies being made, the creative tech sector doesn’t have that kind of visibility. People walk by huge office towers downtown and imagine that they are full of lawyers and accountants, but many of them are filled with software developers and digital artists. So, what I mean when I say that it’s coming into its own is that the sector is beginning to get on the radar of decision makers, and there is growing recognition that the sector is worthy of attention in regard to job creation and government policy, for example.
But there are some challenges. The work that we do is export-facing and, oftentimes, it’s not a tangible product that’s being exported, so we get missed in a lot of measurements. We’re trying to address that — to provide really good data about the sector in BC. I think it’s very important that people recognize the economic contributions that this sector makes to the province and the opportunities that are provided for people to grow amazing careers here in BC.
Alexandra: Your comment on exports is important. We’re doing some research on trade between Canada and the EU, and media and entertainment (video games, in particular) is one of the areas that Canada is performing well in. I think it’s important that we focus on this opportunity and leverage it, especially as we continue to expand trade ties with key jurisdictions like the EU.
Brenda: Very true. Especially during this terrible time with this pandemic, the majority of the video game industry is doing quite well.
Alexandra: That’s great to hear. I also read a bit about how animation has seen a surge in demand. Can you elaborate on this? How is the creative tech sector as a whole navigating COVID?
Brenda: The way I talk about it is that it was the best of times and the worst of times. For most studios, and I‘m speaking specifically to video games, this is a good time in terms of content — not in terms of worry and concern for how the world is doing — but in terms of business growth. If you have back catalogue that was at the end of its life in terms of monetization, that’s changed. A lot of people with back catalogues are seeing longtail sales that were not expected. We’re also in a time where there’s a cycle of software that’s tied to a cycle of hardware; we’re at the end of a hardware cycle, which means that new hardware is coming out — like the new Xbox X and Playstation 5 — and usually that means that sales drop off while everyone is waiting for the next product and for new software for that hardware. We’re not seeing any of that right now. The tail end of both hardware and software has just taken off on a hockey stick trajectory. That’s an unusual experience and it’s related to the amount of time people are spending at home.
We are also seeing new consumers as a result of COVID-19, although it depends a bit on the kinds of games people are playing right now — so if you’re making puzzle games or multi-player games, this is a great time because people are connecting with their friends and family through them. Dissimilar to video conferencing, which is kind of taxing and hard, when you connect with people thorough their avatars, it’s a lot closer to connecting in real life, and that experience is expanding the market.
That said, some of the smaller studios aren’t having this experience. That’s about the business model and the fact that getting to market usually happens through conferences and other in-person events, most of which occur in spring and early summer, and these were cancelled or delayed.
Alexandra: I can certainly imagine that conferences are helpful for small studios to engage with potential clients. Pivoting a bit away from video games, can you speak to the demand for animated content?
Brenda: Yeah, for sure. Animation is seeing a huge demand for content. In particular, I’m hearing that co-viewing content — content that the whole family can enjoy together — is seeing a surge. It’s also an interesting time in regard to business models for animation. Just look at some of the big releases that were meant to happen in theatres. Trolls World Tour, for example, has released online primarily and it’s been record-breaking. The business models are changing to accommodate the need for high quality content during a pandemic, and many of the assumptions we’re used to — AAA content must be released in cinemas to be successful, for example — are being put to the test.
In BC, the VFX industry — which is of course tied to live action film — has taken a huge hit because live action got shut down and many jobs were lost. It’s starting to come back now that we are officially in Phase 3, and that’s great news for the sector. BC has a competitive advantage as live action reopens because we’ve done such a great job of containing the virus here. This province may be where companies will shoot early, with new restrictions and guidelines. That’s really important for VFX. When live action film comes back, VFX will bounce back.
Alexandra: On this front, what are your thoughts on VFX filling the gap left by live action film? For example, can it replace anything traditionally done by live action? Is the technology there?
Brenda: This is such a fascinating area. You ask, is the technology there: go watch Gemini Man and tell me what you think. I would argue yes. I think that’s the first film I’ve seen where I could say that I believed that CG Will Smith was 23-year old Will Smith. But there are a few things to highlight, here. First, the technology we’re talking about in Gemini Man is not the same technology we’re talking about in the Irishman, which was about backdating people’s images. That’s a different technology. What happened with Gemini Man is a full rendering of a human being as a CG character entirely. That’s the first time this has been done, where they’ve been able to pass the uncanny divide, as people refer to it. Often, people look at a CG character, and there’s something about it that just doesn’t look right — it’s because of the CG overlay. Watching Will Smith today fight 23-year-old Will Smith in Gemini Man was incredible. There were five studios around the world working on it, and it was an interesting character to choose because of the popularity of Fresh Prince of Bel Air. Folks working on this film were watching Fresh Prince to see these past images of Will Smith because he was a successful actor at 23. They had unbelievable access to content that could inform what a CG 23-year old Will Smith should look like.
What does this look like in the future? Is it possible that actors can become fully CG? Once again, I’d argue yes. Now, I won’t get too carried away, as this was a very expensive process, and from what I understand, it took about five years to build. But is the technology there? Yes, it is. Like any new technology, it’s expensive at first and it becomes gradually less so, but I think the current environment is going to drive things very quickly. And then we get into all kinds of fascinating topics, like licensing, business models, legal agreements, questions of IP ownership — it’s all very interesting.
In addition to the fully CG actor, we are seeing new technical solutions for environments. Studios are now filming within digital engines and using gaming technology to create a virtual environment rather than creating a set on location. This allows for the creation of stunning new worlds — and rather than the actor having to act in front of a green screen, they are immersed in the CG world. A great example of this is the work Jon Favreau did with The Madalorian in the Unreal engine. By shooting the series on a huge LED stage with dynamic digital sets, they were able to create real-time interactive environments. I think this is precedent-setting technology and will have a huge impact on the future of film and post-production. And it’s happening right here in Vancouver.
Alexandra: I’d like to pick at one point you made, where you say that it’s doable but it’s expensive. What part makes it expensive? Is the type of talent needed to do it, the software, or a combination?
Brenda: When you have really high-end [software] engineers doing something innovative, it’s just expensive, and they have some of the best people in the world working on this. But even with this top talent, it’s a very complex process. Human emotions and human expressions are difficult to get right in CG — the way our faces move, the texture of our hair and tones of our skin is all very complex to get right in CG. So, five years, five studios. That’s a huge amount of money. But over time, we will have the tools and software to automate the process. This has been the holy grail in CG. So, the fact that someone has done it successfully is exciting. I understand that the engine companies — Unreal and Unity, for example — are very active in this space as well.
Alexandra: For sure, very exciting. You also mentioned a change in the business model, particularly as movies go to digital release. Do you think that’s something that, once COVID is over, so to speak, will disappear? Or do digital-first or digital-only releases have legs post-COVID?
Brenda: I don’t know the answer to that, but it sure is fascinating to think about. I think more than we expect to change is going to change. I think humans have a tendency to hang on to the idea that things will go back to the way they were, but I don’t think that’s how its going to be. This sector will see massive changes. Maybe it won’t be just digital release, or just theatre. It could be same-time release, or something else entirely. There are all kinds of considerations, but my assumption is that we’re not just going to go back to the way things were. Similarly, will we go back to offices with hundreds of artists and coders in them, or will the success of work-from-home lead to a new reality post COVID-19? Likely, the new business models will be some type of hybrid.
Alexandra: What would you say are the biggest challenges and successes that the creative tech sector in BC has experienced during COVID?
Brenda: In terms of challenges, it’s really about the impact on the small and medium-sized enterprises: they are struggling a bit, and again, it’s tied to the business model. The business model is capable people who can make product looking for a product to build. A lot of people create their video game studios because they want to build their own IP, but it’s very difficult to get funding. Particularly in BC, the most common way is to establish a work-for-hire studio, then try to put aside some of the earnings from each project, so you can develop your own IP. The business model is problematic. We’re dependent on foreign entities for these contracts, and connections with those entities are usually forged by in-person business development opportunities at trade fairs, events, and conferences. That’s not possible right now. For established studios that already have those relationships, they’re probably okay, but for smaller ones trying to enter the market, it’s going to be tough. I can tell you that so much of my career, when I was making video games, was talking to people at trade show events, getting to know them, and building relationships. You can’t do that online, and we have to figure out how to solve that. It’s a big worry because these small studios don’t have a ton of runway. There was some research done at the beginning of April, which found that the average runway for a small studio was about four months. We’re getting close to that now, and it worries me. It’ll be a real loss for the ecosystem if those studios can’t survive this period. DigiBC is working on helping studios in that situation.
In terms of success stories, the extraordinary task of transitioning thousands of software developers and artists into a work from home situation within a week was astonishingly successful. The second biggest thing has been the way the community has come together. The leaders in video games, and animation in particular, are extremely collaborative right now.
Alexandra: That’s an interesting point. Some of the work we’ve done on the Canadian tech ecosystem in general, in comparison to other markets like the US or Europe, has highlighted this high level of collaboration, with organizations helping each other make connections or find partnership opportunities. Are you seeing that the big studios in BC are looking for ways to help the smaller ones get through this challenging time?
Brenda: No question, absolutely, and vice-versa. I’ll give you an example. When it first looked liked COVID was going to become a pandemic, Klei Interactive, which is a successful medium-sized studio in Vancouver, did some great work on what that would mean for the sector. They looked into people’s capacity to work from home and developed recommendations on how to navigate the shift, and then they shared their playbook via DigiBC with other studios. The consideration and the thoughtfulness they showed was really important. Similarly, when studios were beginning to think about the return to work, Electronic Arts used their significant resources to develop extremely thorough recommendations for how to safely bring people back to the office, and they shared their findings with other studios in BC. This kind of resource sharing is relatively rare, but it was really helpful. Essentially, they allowed even the small studios in town to have access to the resources that EA has. I think we have a very strong network of leaders in our sector, and I’m proud to say that DigiBC is part of that. Our Board Chair is Jon Lutz at EA, and he sets a very collaborative tone. Everyone wants BC to come out well from this and to continue to succeed. It’s a great environment to work in.
Alexandra: Is there anything that you think the sector needs to continue to succeed, even after recovering from COVID?
Brenda: Yes, and some of these challenges that we face are perpetual. I don’t know if this is Canada-wide or just BC, but we really lack the ability to take successful companies and keep them Canadian controlled. The way that people scale is most often through acquisition. We have extraordinarily talented people here who can create great content. Selling a studio can be a mark of success, and it’s also good for the ecosystem in a way. It does create people who can invest as Angels or VCs in other companies, for example, providing the capital and resources for new companies to start up, so there are positive spinoff effects. Still, having growth-stage companies that are Canadian controlled and that keep their revenues in Canada is important, and that doesn’t happen here as much as we’d like it to.
I know that BC Tech has been working diligently on this topic — I’ve heard Jill Tipping speak very eloquently about it a number of times; they’re all over it. We all know this problem. It’s not unique to video games, animation or VFX. It’s throughout the entire tech sector in BC, and maybe in Canada.
In creative tech, I think this has to do with the fact that our leaders are brilliant engineers and creators, and scrappy builders of companies. What we seem to be missing is more experienced leadership who can lead growth — men and women who have successfully scaled companies in the past.
Other direct needs that I would point are related to the ecosystem. For example, when comparing ourselves to Quebec and Ontario, we’re very different. Tax credits are not the same for the sector in BC, and funding from other sources — like the Canadian Media Fund — is also relatively shallow in BC, compared to the other two leading provinces. Quebec and Ontario have put a lot of money and support into the sector, and as a result, Quebec has overtaken us as leaders in the creative tech space and Ontario’s is just as large. Quebec has a long history of video game development, but Ontario’s sector has largely been constructed through government policy — and there’s a lot of BC talent working there. This has been hard to watch. Some of the biggest Canadian creative tech success stories came out of small studios in BC. The Need for Speed series, a billion-dollar venture, was originally created by a small Vancouver studio, Black Box, prior to being acquired by EA. PopCap Games developed Plants vs. Zombies and Peggle. These are massive multi-national franchises that came from small studios here in the province. Since a lot of high-quality IP are often born in small studios, it’s important that we find better ways to support these businesses, especially in light of the disruption caused by COVID-19.
Alexandra: The topic of IP is an interesting one. When considering scaleup challenges, are you worried that we will see more foreign buyouts and loss of Canadian IP in the sector?
Brenda: Absolutely. There are a lot of people shopping right now. We’re seeing that interest in the sector. It’s often true that the higher American dollar is good for us because so many of our studios work for US companies. The work-for-hire model is happy when the US dollar is strong, but you might also see a lot of acquisition action.
I think we should be incentivizing IP. Dr. Alan Winter published his findings from the time he was the BC Innovation Commissioner, and one of the things he highlighted was the need for BC to do a better job to incentivize IP creation. We’re seeing Quebec focus on this. They have a very innovative policy that they put forward in March: if you are creating your own IP, your tax rate changes. It’s not a tax incentive as such, but a flat rate of 2% if you’re building your own IP. This is just smart. There’s a lot of money in this, and if played right, it can be a huge factor for GDP. Look at Rovio, the creator of Angry Birds. At some point, they represented a relevant portion of Finland’s GDP. It’s just incredible, the impact of really high-quality IP like that.
I hope that this experience of the pandemic will cause us to take more seriously the place of technology in our province in general, as well as our online entertainment systems, because they are really important. People have played games since time immemorial. If you look back at ancient cultures, there are games. It’s just part of who we are. Connecting to and through entertainment is part of being human, I think.
Alexandra: Agreed. If nothing else, I think this experience may shine a bit of a spotlight on the sector and its unique attributes.
Brenda: Absolutely, I think instead of thinking of the creative sector as a somehow less important offshoot of tech, we need to realize that it’s more than that, and BC has a unique role to play. One of the success stories that I’m particularly crazy about is Molly of Denali. This is a children’s animation property that shows on PBS and CBC. It was built by a local animation company, Atomic Cartoons, and it’s just wonderful. It’s the story of an Indigenous girl, and if you’ve not watched it, I highly recommend that you do. It fills a really important gap in the children’s entertainment sector, so much so that it won a Peabody, which is like a Pulitzer Prize for kids’ entertainment. It’s just extraordinary, and I don’t think that it could be made somewhere other than the Pacific Northwest. BC is home to the original Canadian creative tech ecosystem, and we continue to have important contributions to make in this space, globally.
This article was published as part of a spotlight series on the province of British Columbia (BC) through a partnership between the Information and Communications Technology Council (ICTC) and the Vancouver Economic Commission. Our contributing partner for this post was DigiBC.
