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U.S. loses video game jobs to Quebec

Patrice Desilets, creative director of THQ Inc., a developer and publisher of interactive entertainment software, poses in their Montreal office August 30, 2011. REUTERS/Christinne Muschi

By Liana B. Baker

MONTREAL (Reuters) - Outside, the sun is shining, but it is dark in the production room where more than 150 Ubisoft artists, animators and engineers are racing to finish the latest edition of "Assassin's Creed," one of this holiday's hotly anticipated games.

They are working not from Ubisoft's headquarters in Paris or California, but in Montreal, Quebec. And they aren't alone. Quebec has become the preferred place for some of the biggest names in video games to set up shop.

According to the economic development agency Invest Quebec, 86 companies and 8,236 jobs have migrated to Quebec as a result of a government program under which 37.5 percent of a video game company's payroll is subsidized by the majority French-speaking city in the form of a refundable tax credit.

Put another way, for every dollar a video game company spends on paying its development staff, it receives 37.5 cents from the Quebec government.

The incentives, which include extra credits for companies that make French versions of their games, have enticed heavyweights such as Electronic Arts and Activision Blizzard to open major operations in Quebec.

"There's a buzz right now, just like how Hollywood was the place to make movies in the 1920s," said Charles Jolicoeur, a coordinator at Invest Quebec.

Last year, Quebec spent $100 million on the program, up from $83 million in 2009 and significantly more than some U.S. states with similar programs such as Texas and Louisiana.

The province first set aside money for video games in 1996 after starting a program to jumpstart the film industry a year earlier. According to Jolicoeur, the aim was to move Quebec from a manufacturing economy to a "new economy" by creating artistic jobs for young people.

Fifteen years later, the bet appears to have paid off.

"The incentives the government provided helped plant the seed, and now it's big and everyone is hiring," said Yanick Roy, studio director of Bioware, an Electronic Arts outfit.

THQ, the Southern-California based company that makes the popular "WWE Smackdown vs. Raw" video game, recently made Montreal its adopted home. After putting up disappointing results the last few quarters, CEO Brian Farrell told investors in July that THQ was moving most its resources to lower-cost areas, including Montreal, as part of its restructuring. Studios in New York and Phoenix shut down over the summer.

Since relocating, THQ has hired 145 employees for its new studio, housed in a converted newspaper printing press near the cobblestone streets of Old Montreal. The next step is for the company to hire 100 employees every year for the next five years until it reaches a staff of 500.

"When you look at our plan, it would be very difficult to do it in a lot of markets. But the right ingredients are in Montreal, with the tax incentives and the quantity and level of talent," said Dave Gatchel, general manager of THQ Montreal.

This week, the Montreal newspaper La Presse reported that the Tokyo-based video game company, Square Enix, was going to double its staff and hire 350 developers to become the third-largest studio behind Ubisoft and EA.

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