News : Outlook for video games industry optimistic

Gloomy economic predictions and recent layoffs in the sector aside, new report finds reasons to be cheerful.

Andrew Petrozzi

The global video game industry’s prospects remain strong despite predictions of slow growth in 2009 and recent layoffs that have thrown scores of local game developers out of work.

That optimism is contained in The Game Industry: Now & in the Future. The report was released by the Vancouver Film School (VFS) to coincide with Game Design Expo 2009, which was held this past weekend.

The report identified several key industry trends for 2009, including a move to co-operative rather than competitive games and the continued growth of the casual game segment. It added that the popularity of massively multiplayer online (MMO) games will grow and developers will focus more on content to attract the mainstream rather than the more traditional gamer demographic.

The arrival in Vancouver last week of one of the world’s largest video game developers also buoyed industry spirits. Paris-based Ubisoft acquired Action Pants Inc., which employs about 110 developers and is working on two titles, including a sports game for the Nintendo Wii that will be released this year. The other is a PlayStation 3/Xbox 360 title.

There are no plans for layoffs as result of the acquisition, and because the studio will develop a minimum of two titles at any given time for Ubisoft, there’s potential for growth.

Action Pants is Ubisoft’s first in-house development studio on the North American west coast. It joins Ubisoft’s 21 in-house production studios in 17 countries.

According to Action Pants marketing manager Wendy Boylan, the studio will be renamed Ubisoft Vancouver as part of the transition.

She confirmed that access to veteran talent was a primary consideration in the acquisition, which has been in the works for several months. Boylan added that Ubisoft traditionally focuses on lower-cost locales for its in-house studios.

“You need to mix that with studios that are known to have veteran talent in order to have a really good mix, so you can come out with some really strong games.”

She said Ubisoft Vancouver will report directly to Paris. While it might share some HR functions with Ubisoft Montreal, it remains its own studio.
Boylan added that the senior Action Pants management team of Simon Andrews, Nik Palmer and Omar Al-Khafaji will remain with the studio.
No financial terms were disclosed.

“Game development studios are typically purchased for one, or both, of two reasons: development capacity and talent and/or exploitable IP,” according to Sean Murch, head of business development for Next Level Games. “Strategically, it also makes sense for any publisher who is not already in Vancouver to have a presence here. We have the highest concentration of developers per capita in the world after all.” Murch declined to speculate on the potential value of the transaction.

The VFS report also included the inaugural Game Design Graduate Salary and Job Satisfaction Survey, which polled the 162 graduates of its game design program since 2005.

It found that:
•84% are employed in the game industry;
•77% of those working in the industry consider themselves to be fairly compensated; and
•90% are positive about their long-term career opportunities.

Murch concurred that the longer-term forecast for the industry is good.
“What we’re seeing in terms of layoffs and reduced forecasts from the major players just amounts to good, defensive business practices. A collective tightening of the belt has been long overdue in our industry and was a trend that started even before the recession hit,” he said.

Davis LLP partner Chris Bennett, who heads the firm’s video games and interactive entertainment law practice, declined to comment on the Action Pants transaction, citing a conflict, but did say that recent industry layoffs were creating new opportunities locally.

“I’ve received calls from a bunch of people who are starting up their own games companies now,” he said.

“The talent in this city is still spectacular, so I’m sure it will all play out. It’s just going to be tough for the next while.” •

apetrozzi@biv.com

Posted on 2009-02-11 by Philippe Filiatreault

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