The online video gaming industry in Canada: what are the trends?

Video: We live in a world of choice, content is available everywhere, on so many platforms…

Video: In this digital era, we are overwhelmed with content on a variety of platforms…

Video: Being able to find this content is a challenge…
…not just here, but around the world.

Video: The challenge is to find content in a digital environment that is constantly changing…

Video: …and more often than not, they’re doing it through access versus ownership.

Video: Users are now faster than TV…

Video: Users are now faster than TV…

Video: The age of abundance turned our world upside-down…

Video: How did we get here?

Video: How did we get here?

Video: The post-TV era, is made of disruption…

Video: And innovation…

Video: Millennials… are commanding change in the digital space.

Video: Forcing change in the digital space.

Video: What can analytics tell creators?
In the digital era…

Video: Find your content…

Video: Find your content…

Video: Or let it find you?

Video: Or let it find you?

Video: Future is now…

Video: Future is now…

Video: And now, how do we move from discoverability…
To discovered?

Carl: Hello, hello, hello! All right. Good morning everyone. Good morning everyone.

Audience: Good Morning.

Carl: We’re alive. We’re well. That’s good. My name is Carl-Edwin-Michel. I am a tech and video games journalist. So, yes. I play video games and play with cool toys for a living. Today we have a great panel. I’m really excited about that. Another, hum, more information about me, I’m also the co-owner and executive producer of the Canadian Video Game Awards and also the co-founder of Northern Arena. You’ll hear a lot about that in the next few weeks; it’s our e-sports initiative. Today we’re going to talk about gaming with a great panel here. We have 15 minutes to have a meaningful discussion and then you’ll also be able to ask questions for like 20 minutes, so you’ll be part of that discussion also.

You can also ask your questions in French if you want.

We have someone on the panel who can answer those questions in French.

So, let’s start with introducing the panel. The first one here we have Alex Parizeau. Alex Parizeau is the managing director at Ubisoft Toronto. I heard Alex is an avid gamer. I heard he plays a lot of video games. The only place with more video games is at the studio. This is really cool. Nathan Vella. Nathan Vella is the co-founder and president of Capybara Games. In the studio here based in Toronto, they do really cool games so we’re looking forward to talk to Nathan.

Jason Kee which is the public and policy government relation council at Google and YouTube. We’re probably going to talk a lot about YouTube gaming and all that cool stuff. Finally we have Jeff Rivait. Jeff Rivait is the senior marketing manager at Xbox Canada. So Jeff is going to tell us more about the new Xbox version. All right. Let’s start the conversation and I have some questions but I just want this conversation to be really laid back. I’m going to sit down and ask my first question and we can dive in.

I guess my first question is about community. I know that building community is really important for you guys for the video game industry, and if you work on the big studio, like you Alex at Ubisoft Toronto or a smaller studio, like you Nathan, I guess the strategy is different. Can you talk to us more about community and how important it is? Maybe Alex, you can start.

Alex: Yes. I mean at Ubi for sure, we’re trying to get closer with digital distribution, twitch, and YouTube gaming and all that stuff now out there. We’re really trying to get it as close to players as possible. Players are our fans. They are people who love our brands. They’re the ones who interact with our games all the time, so we’re really trying to get as close and entertain those communities, and we’ve focused all the studios to try to do that. We try to have developers engage with the community directly if possible. We engage in the events as much as possible. We bring fans to the studio all the time. So we’re really trying to make sure that we’re in touch with our fans and we’re as close to them as possible.

Nathan: When you break it down whether it’s on a massive scale or on a small scale, the goal is to have a group of people that are consistently playing the stuff you’re putting out. Not picking it up, playing it for 20 minutes, dropping it and moving on. The goal is to create that relationship so you’re not only able to bring them into the one game, you’re able to bring them into the studio or the brand.

For us, it’s trying to make sure there are a core group of people that we can talk to whether it’s on the forums on Steam or through Twitter, Tumblr, Facebook, all of those kind of social channels. We want to be able to speak to them as often as possible and as directly as possible like Alex said because they come – there’s a chance that they will become fans of the studio not just fans of the single piece of work that you’ve done. The hope is that you can generate a community large enough, at least from my side, that every time you release something, you know that you have this core group that is at least going to be interested and knowledgeable about it. Hopefully that goes through and becomes an evangelist and becomes your single biggest tool for promoting the game, which is word of mouth, which is our biggest fans whether it’s on YouTube or Twitch or social anything.

They sell more copies than any investment we make in traditional marketing or promotion. Building and starting with that community, starting with the direct conversation. Starting with even something as simple as answering questions. Leaving you a question unanswered on any social channel, for us, you’d be surprised how amazing of a relationship just being available creates. For us, when we’re putting out a game we always say we need this core group of fans. We need 40,000 people to buy into this, to get the message, to really dive in, and then from there we can see how it grows.

Now with Sword and Sorcery, which is our most successful project, what are we creeping up on? 2 million units? It started out with a goal of finding 50,000 people and really communicating with 50,000 people. That happened in the first 6 hours. But, we weren’t sure if that would happen. We knew that if you could get that small group of people and communicate with them and make something directly for them, build for that niche, then you could grow it from there. Then you can build that community. We could create a discussion and grow it larger and hopefully that word enough would spread it.

Carl: You said fans of the studio instead of just being a fan of the game. That is interesting. Is this something that is really important for you guys?

Nathan: I think it’s important in video games period. I think there is a group of people who go to Game Stop and they buy whatever their friends are talking about. Whatever is cool. They don’t really have a direct connection with games or gaming culture. But then there’s also a smaller but equally huge chunk of people where it is culture for them. It is not just something that you don’t just do for entertainment but it is part of their day-to-day life. It’s something that they educate themselves on. It’s something that they follow, you know, instead of reading Gadget or Wider, they’re reading Kotaku or IGN. They’re following video games as a medium and as a culture.

Those people know who makes their games. Those people know actually down to the person, they know who is involved in the studios. They follow that group actionably. To me, finding those people and I hate to be super businessy, but those are also the people that buy the most games. Those are the people that have the most financially invested in playing cool stuff. So, communicating with those people and giving them reasons to love the company. I mean, I think everybody on this panel has done that extremely well.

There are people who are die hard Ubisoft fans, who are die hard Xbox gamers, who are massive YouTube fans. That is their single biggest medium for consuming video game culture. I know for us, that’s most of the stuff that we do trying to promote our work is on YouTube. That’s our single biggest challenge.

Jason: I think from a Microsoft perspective, it’s a bit boring to you for us in that we’re kinda working on three levels I guess. You kinda mentioned there’s Xbox fans. We want to enable them in their engagement with the Xbox brand and platform in general. Then from the Microsoft perspective, we have our own franchises like, Halo, Gears of War, Forza, that each have their own subcommunities that we’re trying to foster new engagement with and gameplay and engaging with those brands. Then there’s just the actual technology and features enabling that platform itself. That’s enabling things like chat, voice chat, community features in your social feeds on your platform or bringing things like the Xbox out to Windows 10 or other mobile devices.

You can have your friends lists, your chats and your achievements with you no matter what device you’re on. You can always be engaging and playing with each other community you’re part of on Xbox.

Jeff: For us, community is kind of the be all, end all. We always talk about it with YouTube generally. That’s actually about building fans, not audiences. These massive fan bases. Take a step back. People in the room may not be that familiar. Gaming is a category of content on YouTube that is massively successful. I mean like, hugely, ridiculously successful. Pewdiepie, Felix Kjellberg – he’s basically out of Sweden – he’s the single most popular and successful YouTuber we have on the platform. He has 44 million subscribers to his channel. Basically he does gaming related content.

Of the top 200 channels that we have on the platform, over 40% of them, are all gaming related channels. We have I think, 144 billion minutes of game related content are watched every month on the platform. It is a huge category for us which is why we actually have a dedicated team that specializes in gaming, that actually works together very closely with the publishers and other game developers and so forth, and It’s actually why we deployed the YouTube gaming app which is a specific gaming related experience which we released in Canada in March. And it’s absolutely huge.

Again, YouTube gamers will basically do things which we call “Let’s play videos” where they are actually playing with the video and they leave commentary as they’re going through. They have these massive audiences of people who constantly come back and actually want them to play through the game. That helps them interact directly with their fan bases because they build a personal one on one relationship with their fans. Which is why the fans keep coming back. The fans kinda relate to the content, they relate to the personality – it’s very personality driven. Similarly, when these YouTube creators will then interact with folks from the companies and when they actually replay through games that they actually like and then provide commentary and so forth. It interacts very closely and very well with the gaming industry because it provides them basically a brand for them.

Essentially for us, we have a very much synergistic relationship. Where actually again, there’s an emotional thing that happens as well as a community building relationship that happens. YouTube fans that are watching a sort of gamer that get attracted to a game then migrates if you’re not already a fan to the company.

Alex: Something that I find is also interesting is even when we are creating the game, we are becoming better and better at having those hooks that people want to talk about outside of the game. There’s typical things like online features where you can get your friends to come and play with you. Even we call it, systemic games. Games that have systems like physics or crazy things are happening, when you play something and it feels like what you are experiencing is unique and no one else is seeing it, then you want to engage and put it out there and show this is what happened to me and that’s crazy. You want to see other people experience things you haven’t seen in the game. It makes you want to go back to the game. Having that anchored in our experiences I feel has made the games very popular on social channels. Because you want to talk about it.

Nathan: It all actually kind of comes back to how do you make your game stand out in arguably the most crowded market you’ve ever seen? Right now, there are more people making more better games than ever. I think it was last year, if you’re familiar with Steam. Steam is the largest platform for downloadable distribution on PC. There’s a hundred and thirty million active users. They count active user as someone who’s purchased and played in the last two months or month. It’s ridiculous. It’s a very, very rapid fan base. You see so many people putting things out on the platform that had more games last year than their entire history combined.

This year will be 40% more games than last year. If you take the last two years combined, there’s 10 times more content than the entire history of Steam which is 12 years old. As a result you have, you’re battling consistently with a game a day, three games a day, four games a day. It used to be that a lot of the smaller publishers and smaller developers. They were the first ones to arrive on Steam. Support for PC would come later from a lot of the larger publishers. That’s gone now. All of the larger publishers and developers are making games for Steam immediately because the market is so massive and so rapid. As a result, you have a massive influx of competition for that one or two single top spots. The good thing about Steam is there is value in being in the top 100 or top 300. Whereas, it’s much different on the app store.

Back to what Alex was saying, those kind of moments, those special kind of singular, I did this and no one has done this so I want to show off. I want to promote it. Those pieces are becoming critical to stand out. The way you stand out is by sharing those moments whether it’s streaming it or putting it up on YouTube. There are startups like Forge that just capture those moments of kind of cowboyism in video games. People are building games around those moments to make sure their games are more sharable and more discoverable. It’s almost flipping over where discoverability was a thing you tried to do after you launched. You tried to promote or market or sell. Now it’s the other way around. You try to make sure that your project from the ground up has hooks that people will use to share.

Jason: I just think there’s a couple of other things too in terms of earlier discoverability. You tend to think of community sometimes as kind of a marketing tool maybe in a more modern sense. But on top from that it also helps shape products themselves in terms of I know we’re out there and we have forums and feedback. For Xbox fans to propose new features, what feedback or bugs did they see. The community can vote on that and it goes to the top and engineers can address it. There’s other things that we’ve launched like the game preview program where independent developers can choose to release on our platform to consumers. It’s essentially an unfinished version of the game. The people will decide they know they want this game immediately and are willing to take unfinished product and help test it and give feedback. It’s an opportunity for them to get in on the ground level and actually shape what the finished product is going to look like by the time it will be launched which is pretty unique and is for the gaming community and their desire to get in on the ground floor and pursue what could be a game experience that interests them.

Jeff: Similarly, it’s why it’s certainly important to us as well as important to the consoles, the integration of basically business streaming into the consoles in the current generation was huge. As you can imagine, we got a massive lift out of that. Especially because you know which is pretty dominant in the space as well with live streaming. Basically the ability to really start doing this with the touch of a button. It also gets the community very engaged and also allows them to parse down their content into shareable clips that they can share with their friends. All the major platforms all integrated that and made it a fully functional at app launch. Actually that is in my view, very much improved over the intervening years with the various software updates. The ability to share the content to build that community has been huge.

Carl: Let’s go back to content because it’s really important. Back in the days, we had cartridges, I remember we used to blow in the cartridge to make it work. Then after that we had CDs and DVDs and now it’s all digital. With a platform like Steam. You were talking about Steam or Xbox live or PSN, what’s the strategy now for you guys to release games? I know you touched a little bit about that but what’s your strategy in general when you want to release a game?

Alex: If we’re erasing all the channels, digital is huge for sure. I mean, it’s interesting because someone can look at a video of someone playing something cool and in the next five minutes, they’ll have purchased your game. The consoles have made it easy and Steam has made it easy. You can close that loop right away. It’s been probably the most freeing and powerful thing. Part of it too, I think with digital distribution that is a massive game changer I find, is that it’s not really the game anymore. Like Nathan was saying, we’re trying to have our players not just for the game and leave. Now we can support the game over a really long period of time by adding content, tweaking it, looking at what players are doing in our games and adapting the game for that, balancing it and stuff like that.

Games have become more like a platform that lives on through the year, a couple of years until the next one in the brand comes out. Your community is centered around the brand and your game is like an event. There’s multiple events during the year where you can provide more content and you can keep the community engaged. That’s because digital distribution in a way. I think we’re going to see massive transformation related to that in the coming years.

Nathan: Same.

Jason: For us, as a platform owner, I think ultimately it’s about offering consumers choice. There’s definitely a growing number of consumers who are seeing the benefits of digital whether it’s just being able to purchase a demo, something immediately be ready to play with their friends when the game launches. I think there’s also a group of gamers who also love discs. They want something physical in their hands whether it be because of the trade in value, the collectible nature of the SKU perhaps. There’s tons of limited SKUs that comes with sweet statues that people like to collect.

There’s definitely a transformation taking place that digital is growing. From an Xbox perspective, it’s always being able to offer consumers choice of whether or not they want something digitally or if they want the retailer disc.

Jeff: Just to jump in, obviously because at Google we’re all about the digital and Google play games which is our distribution platform for Android. It’s a complete digital. From a platform perspective switching from the console, I can also see some compelling reasons why you want to maximize that choice. A) you want to make sure you are serving your customer. Secondly, those of us who live in urban areas tend to forget not everyone has access to high speed broadband. In this day and age, I pulled down a day one visual of a AAA console game and it’s a 44 gig file. That is half of my cap. And that’s the other compelling reason, especially when you’re thinking outside of urban areas, especially when you’re thinking of other markets outside let’s say North America, where access to broadband is not that great. You want to make sure you’re serving those markets as well.

Nathan: And also you want to make sure you are feeding people, giving them the ability to become super fans from the highest of the high players. From the mobile side, we call them whales and I think it’s very different when it comes to PC console. We’re not looking for those type of players. We’re looking for players who are actually going to spend time in the game. Sometimes the physical stuff is the stuff that allows them to express their fandom better than digital stuff because it is communicated. It’s very difficult to put your phone in front of a friends and say see this awesome costume that I got for buying this. It’s way easier to show them the statue that you got on your shelf when they’re over having a drink or to show them the t shirt that you got.

The digital component enables developers to like I said, close the loop to sell things easier. It makes it far cheaper to produce games because you don’t have to worry about manufacturing as much. But also, you have to think about that side. The disc is not going anywhere even though a substantial portion of those company’s revenues are shifting to digital. I think there’s always going to be a piece there for the collectors. Whether they love going to Game Stop and trading in games. People love that process of I give you one and I get. The barter system is still very enjoyable for some people. For us, we think about physical as exclusively a way for super fans to show their super fandom. We don’t have to produce … We’ve had one disc game or one retail game in 10 years. It’s not important to us from a studio standpoint, but we always make sure there’s statues or some kind of thing for people to express their fandom with.

Carl: Talking about that, the music and television industry obviously switched to the subscription model. We have the Netflix of the world, we have Google play music where you can pay an amount every month or every year to have access to that content. It seems that video game is going down that route also. We see a lot of VLC’s. We see season pass. Do you guys think it’s the way to go for the industry and what’s I guess, your strategy to send that content to VLC and the season pass.

Alex: Those services like Netflix are an additional distribution model. When you look at a movie, say it’s going through multiple cycles. It’s in theaters, then you can rent it, then it usually ends up on Netflix. It’s the long tail say, of movies and TV shows. I think you’re starting to see that with video games as well. There’s so many great games that have been produced 5 years ago or 6 years ago and those games usually did not necessarily happen big. We’re selling a game and then 3 months later, people start to forget it and then we sell another game. I think what we are seeing now with the industry maturing is that there is multiple new ways to access the content. One way for sure that we’re 100% embracing is the dominant model right now, is to create a buzz around a game, launch and then try to support it over a long time while telling the community what we’re talking about.

There’s more and more additional distribution models that are also becoming successful, the platforms have done that. Subscription services. Publishers are embracing that as well. I guess we are starting to expand that now with what kind of games are successful in those platforms and what kind of shape it is going to take in the future. I feel like there’s a place for it, but I don’t see it as becoming the dominant distribution model in games personally.

Nathan: We’ve seen people try to do the kind of streaming games thing numerous times whether it was online or guy just got bought by Sony and turned into PlayStation Now. They are there. For us, I’ve been a huge fan of backwards compatibility on Xbox one. That’s been a massive. You buy games on your old Xbox 360, when you bought an Xbox one, you used to know it. If you bought a PS3 and then ended up upgrading to a PS4, all the content that you had digitally was not playable on your new version. So all of the stuff that you bought downloadable was lost to that box. Now on Xbox one, they’re slowly but consistently allowing you to play those backwards compatible games. We have people coming in and because it got announced that one of our games is backwards compatible, all of a sudden we have an influx of players that were like, oh, I own this game and I loved it and I haven’t touched it in 4 years and I came back to it because I saw I could play it on my TV and I didn’t have to hook up another box.

That in terms of enabling the community has been really interesting for us because we have a few games on Xbox 360. In terms of the season pass stuff, I think that’s one of the more predominant ones these days. I think people are really trying to think about getting a player to invest early in all of the additional content. So they know how much of the content can be budgeted for. I think it’s a really interesting model and I think it’s a great way for super fans to buy in very early and feel like they are part of something. I think it is ever-evolving. I think people are going to come up with new different models. We have a bundle which is service on PC for PC Mac and living space where you pay whatever price you want and you get this group of games. If you pay over a certain price, you might get a couple extra games.

You can pay $1 and get 7 games. Those games are traditionally, I did the numbers and they are traditionally 14 months old or older. They are well into their long tail. They are probably generating 10 to 15% of their entire lifetime revenue over the last year or two years that they’re going to be in that long tail. They’re done. In a lot of ways, they’re making pennies. And then, up a bundle provides that 2 week bump where you’re older titles can come back and make an impact that can generate meaningful revenue all off of type in a number and that’s what you pay as you get paid.

For us, we’ve done that a couple of times with our games usually when they are 16 months old or so. It’s been an awesome model for us to take old good stuff that people would still kind of want but never tipped over the edge because it was never cheap enough for them, but they were still interested. Like Alex said, it’s this kind of chain of you have a launch, then you have your post launch content that sometimes is paid or sometimes is free. Then you have the next step which might be a massive sale on a platform. Then you have another step, then you have [inaudible 00:27:59]. The more of those steps there are, the better chances we have of finding fans and generating revenue as well.

Jason: Yes. I think the comparison to a Netflix type service is easy because games movies are big entertainment. I think the fundamental difference is once a movie hits a theater, that’s kind of a finished product that is never going to change whereas gaming sort of evolves into these living, breathing things that change over time. How the creators choose to change that over time varies. For some shooters, they might release map apps for free. Other companies might decide to charge for them. They might release free updates that augment the game over time. That’s why you’re seeing these different business models emerge through things like season passes, some free updates, some paid DLC. That’s why publishers are experimenting with different models to see what works to essentially both give gamers what they want and the content for the games that they love but also maximize the business.

Jeff: I would agree with everything that’s been said. I think the dynamics of each individual content industry for lack of a term. Music vs. TV vs. gaming. What is very different and what kind of works for each is very different. I think the gaming industry in particular has been well ahead of the curve with respect to experimenting with different business models, for lots of different reasons. They were always a digital industry. They were always externally focused on global market places that kind of were willing to try out stuff and do stuff that works outside of the conventional retailing and buying and that’s it. I think they evolved much more rapidly, and because the nature of the content is interactive. It means there’s things that you can do with respect to DLC, with respect to in app purchases, with respect to all this kind of thing that you definitely can’t do with other industries.

As a consequence, there’s been a lot of experimentation with that. With that, I think there will be experimentation as Nathan said. There was and has been some attempts on sort of an all you can eat subscription model. My sense is there are two to this success. The fact that I’m alive and still around is an indication of that. I expect also that there will be more experimentation on an ongoing basis.

Again, we have to think back at how Netflix came about. Netflix was all long tail content at one time. Basically it was all old stuff that really wasn’t actually moving in iTunes and so on and so forth so it kind of made sense. I see that that’s what PlayStation did with PlayStation Now. I think that actually kind of made sense. I think Xbox can very competitive with their folks having backwards compatible with the library that you already have which I think is very appealing to their base because it means that you don’t have to subscribe to a service to get access to games you already bought. I think there’s going to be this competitive dynamic as we all give it a try.

Carl: What about the free content that the players can get when they subscribe to PlayStation Now or Xbox live. They have every month, or in the Xbox store, they have every month a free game. Does that help? Is that something that you see… ?

Alex: I think it depends on the kind of game that you’re … Again we were talking about Rocket League. Basically when you’re launching something, a new game, you’re trying to build a community. You want people talking about your game. You want people engaged. If you have the right type of game and you piggy back those distribution channels, you can have massive success. I personally think Rocket League became majorly successful because it was featured, then people got on board started playing and talking to their friends about it. It was easy to get the game. Now it’s a massive success. I don’t think that it applies to every type of game but for some games when you’re trying to build an audience quickly, I think it’s really great. It can be really powerful.

Nathan: We’ve done a lot of them. A bunch of it. We did … Our last game, Super Time Force, was free with Games of Gold about 5 months after it launched. When we launched it on PS4 and PlayStation beta was free with PS Plus. It launches in Japan today with PS plus if anybody is watching in Japan. We’ve played around a bunch with it. I think there’s a real, to me, it’s the biggest dichotomy in the video game business right now because it adds tremendous value for games that don’t … Or even the type of games that are perfect for us which is traditionally multi-player games where the scale of community matters the most. Your goal is to get as many people in as possible. You can over a life time, earn revenue back by selling DLC which Rocket League has done exceptionally.

The flip side is, games that are more niche or smaller market. Predominantly the games with gold and PS Plus services are smaller 5 hour experiences downloadable only. For us, it’s a balance of how well do we think the game is going to do or continue to do versus how much value comes from getting in front of players. The upside of it is that time with players, is that kind of spreading the audiences, is the growing the brand. The downside is that if you are trading players, that type of games are worthless or have no value because you’re not equating payment with receipt of content. You pay once a year, your fee and then every month you get something. There is no correlation between the act of purchasing and creating value.

I do worry a lot about training players to expect certain types of content. It just so happens to be the content that my studio makes as something that you should just wait and get for free. It has the challenge. Fortunately, both of the platforms have been very good at ensuring that the promotion and the way that it’s marketed and given to players is not in a oh, here’s your free game, congratulations, you got free shit. They are events. That are massive. They are big. They are promoted well. There is marketing dollars put behind it. They are treated extremely respectfully and they are made into something that makes players feel like they are part of an inner club because they subscribe to Gold or because they subscribe to PSN. I like that part. I think that’s the balance between devaluing and ensuring each still has value.

Jason: What this is, is so, we have a service called Xbox Live and Xbox Live Gold. Traditionally it’s a subscription so you can pay by month or you can get a full year for $60 and that gives you access to do things like multi player on the service, get discounts on content via the store. Part of the add value in that is that every month, we’ll give Xbox Live Gold subscribers 2 free Xbox One games and 2 Xbox 360 games that now will also be backward compatible. It is a reward and a value add for Xbox Live Gold subscribers that are on our platform. Those are available for a limited time that you as a reward as a thank you can get them for free, download them now. Then the next month we’ll have a new set of old games.

Nathan: The other part of it, if he’s willing to answer that, great. I’m not. Zippity zip.

Jason: Oh yes. For sure we definitely work closely with the publishers. Yes. Definitely. I can’t talk about the specific arrangements but we are definitely working with the publishers to figure out what are the best games based off of the month that we want to include and what’s in the best interest of the publishers and what do they want to put on the service for free.

Jeff: Something that’s also worth noting. Maybe I’m going to comment on this too. Most games go through a particular sort of sales cycle. Especially those on a console. There’s a very spiky beginning and then it kind of tails off. I think part of the value I’ve always seen from Xbox Live and the goal, the gaming goal, is also actually getting games that otherwise have kind of petered off a bit back into the marketplace and spike up again. Certainly there’s actually been times where either because I missed a promotion or so forth it’s sent me to my games myself.

Carl: Cool. I want to talk now about linear broadcasting content and video games. Now with the Xbox One you can plug your TV in your Xbox, you can watch TV. You have your PVR, but you also have content now that is created. You know, TV shows and video game. The best example is Quantum Break who was launched recently. Do you think there are going to be more and more content created like that. TV shows or audiovisual traditional content and video games mixed together?

Jason: I think I can speak to at least from a Quantum Break perspective I think that was a very particular vision from Sam Lake at Remedy who, a lot of his career has been bringing cinematics and that style to video games and finding the perfect formula for how they come together to make a really cool experience for gamers. I think it was incredible what he did with Quantum Break in terms of the quality of the production and the TV component as well as the video game. What he did with video game actually impacted the TV content that he would see after completing each load. I think it’s up to each creator based off of what is the vision they want to create for the experience.

Nathan: One of the things we’ve seen a lot … I’m trying to pace here. A lot of the content that is created based off of games has shown up on YouTube as YouTube specific content. I know a lot of Red vs. Blue is the original spawn of Halo. It’s still going 10 years later or something. I think there’s a lot of ability to bring in that style and a lot of it comes from fans rather than coming from the companies themselves. We did a project with a studio in Vancouver. The game is called, Don’t Start. It has millions and millions of players. It’s one of the most actively played games on Steam. It is the most actively played game on PS4 and on Xbox and on Wii and on Mac. It’s kind of everywhere. There are people who are creating their own linear content based off of the game.

The studios or the game companies are not actually creating it themselves. They are enabling and almost incentivizing the fans to generate their own linear content based on the brands that they’ve made. It’s basically every popular game if you go on YouTube and search for that brand. There will be a bunch of promotional videos made by the companies. There’ll be a whole ton of Let’s Plays. Then there’ll be a whole ton of fan created, whether it’s like, comedies or shorts. Some people are making series based off of small games. Games that are 100, 200, 500 thousand units. For us, while Quantum Break isn’t the highest end, which is actually building linear content for games in games,

I think there are a whole bunch of different tiers and the tier that we are the most interested in is enabling and almost making sure that fans have all the tools they possibly can to create their own content. Traditional linear content, and then seeing where that can go. I think going forward you’re going to see a whole lot of people taking games that they love and doing these kind of YouTube based content and then if these games are big enough, then that YouTube content will become partners with the studios to make more YouTube content that is outside of the just pure fandom.

Alex: The cool thing about that and I think, that makes me think of something. With games, we’ve allowed our fan base to use the content and distribute it on YouTube. The IP restrictions have been lifted and is something that I think is a real learning for traditional media. If you want fans to carry the conversation on social media, they need to have the ability to remix your content and grab it and distribute it and stuff. I think in the infancy of all that stuff, there were some publishers that were like, I’ve been doing that stuff. Now we recognize how powerful it is for discoverability and marketing your game and getting your community excited about your content.

That is, I think, for traditional media, that is something really powerful there. People like to see other people remix, experience, experiment, discover the content. There’s even, unboxing videos that are massively popular. Thinking about it that way, restricting your IP on social channels doesn’t seem to be a good way to make sure that the community really engages in it.

Nathan: I mean, to take it even a step further, let people make money off of your content. Let them monetize those videos. Let them think about it as a potential professional choice. We just have a page on our website that is here is a blanket permission to make as much money as you want by remixing and Let’s Play-ing and taking it out. Whatever you want to do, just create with our stuff. We don’t care because in the end, it’s just going to sell more copies of our game and it’s going to create more hardcore fans.

There are so many tools out there that are enabling people to do that. We were talking about how easy it is to get game content onto YouTube. That is all the different pieces of that process are in place. There is the most publishers and studios letting go of ideas. Something that we keep and you don’t get to touch. There is the tools where we are capturing and sharing. It takes 10 minutes to make a video now. Less than 10 minutes to make a video now. That can be shared through all the social channels and can be shared on your actual console to your actual friends list. All of those things are there and it does wonders for how games are sold.

Jeff: I think a) thanks for doing my marketing for me. I appreciate it. I’d like to get into the point that was made, one of the things especially before again. Quantum Break was a massive project. Right. First it was the quality of the cast they had, that is well beyond the capabilities of most independent developers. I think actually engaging with your community aimed to get them involved in the process themselves, is also how you foster the relationship that you’re referring to. Not only are you basically outsourcing the work to the community but also, basically they integrate. It gets them that much more invested. Because, a) making video can be simple, but some of the amount of work that goes into Machinima in particular. Oh my god. It’s just incredible the investment that people are making of their time voluntarily. Some of them will actually eventually build that into a sustainable business for themselves.

Just because they love the content so much is why they are doing it. It’s why they are doing it. It’s because they love Assassins Creed. It’s because they love you name it. They are that invested. It makes sense that, and we learned this actually from YouTube. Essentially find the creators that are naturally wanting to do something and then you foster them rather than trying to execute a top down strategy. A top down strategy can work if you have the resources for it. We’ve found that in certain social spheres on YouTube, that was a much better approach. Which is actually why we partnered with YouTube creators. Organically, it becomes successful on the platform by themselves because they are doing it because they’re passionate about it and they happen to make a living it. That’s actually a very good approach.

Jason: If you look at a tale like Minecraft. Minecraft is a phenomenon that started with a studio of 30 something people. It’s grown to over 100 million users and is one of I think, the top 3 games of all time. If you go on YouTube and you search for MineCraft, it’s cats. You might get a little bit of cats on YouTube. You just see what those creators are doing. It’s nothing led by the developer or us or the publisher. It’s all fueled by the community and their passion for the environment and what people do in Minecraft. So many people just go watch Minecraft videos to see what you do, how you create certain things or just completely off the wall experiences as well. It really is powered by the fans and the community and just creates some great momentum in the game.

Jeff: When you engage your community, you take your content off in directions that you would never have anticipated. Understandably when you’re a brand, you could be a little uncomfortable with that. Again, the Minecraft example, things have been done with Minecraft that I could never possibly have imagined. Not the least of which there’s actually a UK creator called StampyLongHead who actually, he built a class room series that teaches kids using Minecraft. He found that that was how you engage them because all the kids were playing Minecraft so okay, why don’t we just do this live in Minecraft and actually use Minecraft to instruct. It’s the kind of thing I never would have anticipated but it’s amazing on the creativity.

Carl: That brings me to coverage … Back in the days when you guys wanted to promote your game it was through the traditional media. You know, TV shows. I remember the Electric Playground on the English side and M. Net on the French side. Those TV shows don’t exist anymore. You have website and now you have all those display videos and everything that you can see on YouTube or on Twitch. How do you guys leverage that? Do you or do you let it just go organic?

Alex: I think it’s a mix of both. We were talking about engaging with the community. I think right now, the person that talks about your game is not a journalist or someone who has a TV show, it’s everyone. It’s about embracing that to the fullest and leveraging the community. What you were talking about earlier, having those hooks in the game that make you want to talk about it. You want people to be talking about your game everywhere and anywhere and any which way possible. Some of it might be leveraging the share button on your controller to… your game is hard and there’s going to be websites for people to try to figure out how to go through the game. That’s community building right there.

I think some games like Dark Souls are massively successful by being obscure and hard. Then people just go on the web to talk about it and there’s this entire game outside the game. I think the way you’re successful with it is just embracing the decentralization of how the community plays your game and talks about it and shares it on all the different channels.

Nathan: We just look at it as all these boxes to check. Do you have websites covering your game? Yes. Are you engaging with YouTube content creators? Yes. Are you having people or doing your own live stream? Yes. Are you talking about it on social media. For us Tumblr is a lot bigger than people give it credit for. It has to be a gif or picture. You can’t just put text on Tumblr. We have 4 times more Tumblr followers than we do in all the rest of our social media combined. Going through it, just do all the stuff. It all actually matters and it matters in different ways. You are engaging in or creating this kind of deets in different ways. For us, getting an article in the Toronto Star still has a massive impact. That impact is markedly different than getting a YouTube content creator with a million subscribers.

The Toronto Star will sell less copies, but there is this validation where some players that are my age and they read the paper in the morning and see oh, there’s a game company from Toronto. Cool. I didn’t know that. It’s making sure that you are available in every format possible. We still put a lot of value in traditional media. We still put a lot of value in press. We still put a lot of value in social even though we know that Facebook is kind of the single best place to advertise your game. We still spend a ton of time on Twitter. We’re not on Friendster anymore. I think there’s all of those opportunities. When you’re talking about promoting a game or marketing a game, there’s no reason to not play every angle. It really does all boil down to really the community component is going to dwarf all that.

Getting people involved and passionate about your game and talking about your game. If you can do that through an IGN or through Kotaku or through a smaller nicher site that has a tenth or a hundredth of the users, that’s awesome. But the goal is to bring them into the game. The goal is to get them to not just buy the damn thing, but to actually play it for a sustained period of time and to be one of those people online that is discussing how you beat it or why you are playing it or sharing your dumb clips or making fun of the bugs or breaking it on purpose, speed running it. All of these things are … That’s the end goal is to take all of those check boxes and drive people into the game and have them stay there.

Alex: The difference that people like IGN and Kotaku is that they are part of the community. They are a vocal, active members of the community. I think that’s the fundamental difference. It’s all one community with different people talking about your game from a different perspective. It’s the one community. When you have something that’s really interesting and compelling, people will talk about it on IGN, on Kotaku, on YouTube, on Twitch. It’s the same kind of content that activates the desire to speak about it.

Question: Great discussion. I have a number of questions, but I thought I’d just start with a general one. Video games have come a long way from the traditional games to the super hyper realistic games of today. We’re seeing Hollywood stars start to be cast in these games. Ashmore was in Quantum Break. Dinklage was in Destiny. We’re seeing Hollywood start to make real content. Feature films based on video games. Fassbender was just in Assassins Creed. A lot of the big budget games have major Hollywood sized budgets. They’re being promoted on television through commercials in the way that a major Hollywood blockbuster would be. Given this explosive growth… You know Canada has a massive video game industry. Given this massive explosion growth of video games both in mainstream culture and in interest in society, is there a public policy basis or rationale for perhaps investing more in the video game industry in the same way the government does with books, periodicals, movies, television, and radio? Have video games elevated themselves to a type of cultural expression that warrants further support?

Alex: I think we’re fortunate in Canada that it is a big part. It is really recognized as a cultural expression. We’ve seen a lot of support from the government, from provincial governments, federal government about the industry and stuff. We’re in an industry right now where we are seeing that. Can you need more? Can it be recognized more? Yes for sure. I think we have to fight for that all the time. There’s always censorship threats that are surfacing. That stuff hurts the industry for sure. I don’t think there’s still a month unfortunately where there’s still a weird news broadcast where they talk about a game in a way that’s kind of dated. The violence … I just remember the old examples of the sexual stuff in Mass Effect, for instance, that kind of stuff. So it feels like there’s still a feeling that games are for kids, that you can’t deal with mature topics and stuff.

We’re out of that mostly, but there’s still lingering effects from those old discussions that we have to be aware of and make sure we protect. I’m really excited about the fact that you’re seeing interest from people that are actively engaged in other industries. Using industry and the movie industry. You see an interest and you can see that. It’s all about brands. You can build a brand now with music and movies and games and we’re certainly embracing that as much as we can. We are going to see a lot more of that for sure.

Nathan: My company in many ways started with the help of government support. We were a bunch of people who had never made video games trying to get into the industry. There were no jobs here at that time … 12 years ago, 13 years ago. We just decided to start our own thing and applied for grants to cover half of the travel costs to video game conferences through the OMDC. That got us to our first game developers conference where we did the networking required to meet the people that would help us get contracts. We did contract work forever. Our very first original IP Ontario-owned content was part funded by the OMDC’s interactive media fund. We’ve received CMF. Our tax credits are actually pretty phenomenal. Always looking for tax credits.

Really, I think we are in the top 1 % of the world in terms of government support for the industry. I know for a fact on the smaller studio side, Toronto specifically is one of the centers for independent creation. Part of that is specifically the OMDC. They have gone out of their way. At the same time you have to recognize that there are also a bunch of institutions in the city, in Ontario in general that are fighting for that as well. They interact with Ontario with the business groups that are coming together to make sure that the government actually understands it all. There are specific people there that do understand but as a whole requires a lot more effort.

Just recently, we’ve seen a lot of positive changes kind of with the interactive digital media funds getting refunded. For independent studios or small creators, the IMDF is a pivotal piece. It’s the thing that helps you get out of working for someone else and start working for yourself and create those Canadian pieces of content that are actually ours, that are actually owned by us. Without that existing and somewhat growing support, I don’t think my studio would have had the chance to do anything other than make games for other people. Once we had that chance, we were able to prove ourselves. That’s the last 6 or 7 years of my company, has been making original content for us by us. Again, it all starts with that assistance. Specifically OMDC has been the most important to Toronto. But Canada-wide the CMF and what used to be Teleco, those pieces are fundamental to how we’ve managed to grow studios.

To start studios in Ontario or in Canada, a lot of the big … I would say all of the big companies are transplants in our industry. There aren’t any massive Canadian publishers. On the flip side, there is an amazingly strong small studio, 100 or less, specifically 25 people or less in the country. Specifically in Toronto, Montreal and Vancouver. BC doesn’t enjoy the same benefits that we do here in Ontario, but they still have fantastic support even there.

Jeff: Quickly to add onto what Nathan said, Canada specifically Quebec pretty much pioneered the tax credit model. It has been the envy of the world to which many other countries have basically strived to emulate it. It’s been supplemented in public policy decisions that were made to do things like the Interactive Digital Media Fund with the OMDC and that kind of equivalents in other provinces, which have been a massive boon. I am comfortable saying the industry in Canada would not be what it is, but for these decisions. It actually operates in a very different way than say what we see on the broadcasting side, insofar that it really is informed by an economic development mandate. Where we see this as an industry that we really want to develop and we see this as hugely explosive and will lead to good jobs, etc., etc. versus that cultural policy mandate which we see on the broadcasting side. Which is why it’s all been about public financing from the government versus a broadcasting regime which is a combination of public financing and mandatory contributions. The industry is operating very, very differently.

Carl: I think we have time for more questions.

Question: Hi. It’s really funny how guys you just did that lead in [inaudible 00:57:45] because I work for Telefilm Canada and I’m really happy to hear that you were financed through a sister agency, the CMF and how that is supporting independent companies and production.

My question, I work at consumer behavior and we finance independent film. Obviously Netflix was a game changer. I read about two weeks ago that Steam is getting into film and television in a subscription video on demand model. I don’t know if you guys can answer this. I would like you to kind of make a bit of prediction of how big of a game changer that’s going to be. I feel like we might see the shape of consumer behavior change like we saw with Netflix where people are basically using that on a daily basis to view films. If the independent Canadian cinema … how it should be respond to that.

Alex: That’s a simple question to answer. I feel like with Steam, I feel like gamers or the gaming community in general are comfortable with buying games online. Digital transactions. Having a bunch of digital licenses for a lot of games in their libraries. I feel like in a way, it’s a natural evolution for them because they have a community of people who are there and are constantly going back to the platform. They are kind of expanding and testing how much you can expand the platform for that type of DA content. I think that makes sense. I think like we were talking earlier, we’re still at the level of experimentation. Is it going to be the Xbox doing a lot of it? I think I watch most of my content on my gaming consoles now. Is it because I’m a gamer? Is it a trend? That’s harder for me to talk about.

Nathan: I think it’s interesting to note that there have been a lot of other companies make forays into or gaming companies making forays into creating content or supporting content. Microsoft for a while was making their own stuff and then stopped. The thing that I believe very strongly is that people who play video games, consider themselves as part of the gaming culture. That is very specific to games. Somehow YouTube merged into that. I don’t exactly know why. I think that it’s because it’s short and simple and easy to consume. I think television content has a really tough battle getting into … I think any content that isn’t games and/or extremely short form or created for YouTube content is going to have a really tough time breaking through. We’ve seen a ton of brands, specifically huge block buster films try to come into video games and fail miserably time after time after time.

The biggest films fail in gaming content. The Deadpools, X Mens, Spidermans and all of those games fail. Going the other way, we’ve seen some luck with gaming content and films. If I was an independent television or film producer, I would be very cautious about trying to break down that wall because I think it is a very sturdy one. Especially on PC, they are kind of the most intense and rapid and strong willed players. I think console players are much more … The people who play video games on PC care about playing video games on PC. People that play video games on console care about playing video games a lot. They’ll play on PC’s sometimes but PC users rarely play anywhere else.

Long story short, I think it’s a very challenging space to try to get into. I think it’s extremely challenging to try to bring your brands into video games. I think it’s extremely challenging to try to build content for gaming culture if you’re not already just a fan of gaming culture. To do it with a business purpose, I think is going to lead to a lot of challenging moments.

Jason: I mean for Xbox, definitely for us, gaming is the number one priority on our platform, but we know that gamers also want the Netflix, they want the YouTube, the Twitch streaming, even live TV, so you can put your live TV through our console. It’s a BluRay player. It gives you the option to consume whatever type of entertainment content you want to engage in through our platform whenever you want. I think it’s less of a question about what’s Steam doing and more of a question of what does a consumer want to do. Are they going to find value in that service over what they already have. I think that’s the ultimate challenge in trying to expand what could be ubiquitous entertainment offerings across other devices or forms of services. There has to be some value there for the consumer. Ours is that we have a really kick ass gaming machine in addition to all the live TV, BluRay entertainment apps that you typically use on your devices as well.

Jeff: Yes. Essentially I agree with a lot of what Nathan was saying. I think it can be done as long as it’s handled extremely carefully. There have been some examples of crossovers. I think it’s really difficult. I think sometimes things that seem a good idea at the time turn out to desperately not be. The reason the content I see as successful on the YouTube platform even stuff that is a little more equivalent to scripted for lack of a better term. I think it’s going to get a lot more likes Machinima and that kind of thing. Which is resonating with a pre-existing fan base. Generally, it’s playing off what they expect from the content. Often it’s very humorous and satirical and so forth. There are ways to potentially leverage that. I also see it’s the kind of thing that does very well by being consumed on the same platforms that people are also consuming in the gaming context.

To try to convert that type of feature is going to be a different experience. Again, that’s not to say it can’t work through digital distribution. Certainly, there have been cases where … there’s no such thing for YouTube as a fix or an optimal length of time in type of video or trends toward [inaudible 01:04:28] or short form content, but not necessarily. It really depends on the audience and whether they’ve been producing. There are certainly there are cases where it would work. It just would have to be handled very well.

Carl: Other questions?

Question: This is going to be kind of a difficult question. My main concern for a video game is, while I love the medium. It’s my favorite medium of all, I think the main discoverability problem is it’s such a niche market. It’s kind of fringe and it’s not mainstream. My question is how to make more people into gamers so that they are interested in consuming the great content we are producing in Canada?

Alex: It’s like a strange thing. It’s the most financially successful entertainment medium on the planet and I agree that it is still fringe. In the sense, we’re still shaking off the toys for boys mentality that has attached itself to games. I think we’re doing a really good job of getting rid of that. Honestly, I think a big part of it is spending the time and putting the effort in to make sure that all parts of our content is/are kind of open. Are for everyone. Even the Call of Duty’s which are the most popular, but also the most typical in a way. Violent, kind of male power fantasy, air quotes. They are even spending a huge amount of time and effort into making their games more diverse and more open to everybody who would want to be interested. My sister is a hard core Call of Duty player. Like, played way too much Call of Duty. But it’s only been recently that she’s gotten into it. It is slowly becoming a piece of the puzzle.

I think as we’re willing to tackle the things that the more mature kind of content as a way to treat violence, treat sex, treat personal relationships as serious. As real. Make things that aren’t just purely fantasies. I think that’s actually going to help a lot. I think people will start to notice that some of the more popular games now a days, even the ones that are more fantastical and take place on another planet between dragons and gnomes, they are actually starting to tackle the more serious life issues because it actually makes financial sense. It is actually making your games more interesting and playable and diverse actually equates to making them more consumable and sellable.

Jason: I think it takes time too. I think the video game industry as we know it, if you think back to the early 1980’s, in terms of video games as actual real blockbuster entertainment. I think of Halo 2 as one of the first titles that really got that kind of attention and blockbuster status, being compared to movies. That was 2004 or 2005. You’re talking about an industry that has been thrust into this position just over the past decade. It takes time to work through that. We’ve done things on Xbox like Kinnect and try to broaden for different types of game play experiences from that perspective. I think you’re bang on on everything you just said. I think there’s just the reality too in terms of it being a relatively young industry compared to other entertainment vehicles. That’s just going to take time to reach maturity and people to be okay with understanding that there are games for everyone and it’s not always Call of Duty or Halo all the time.

Alex: I know you were saying on the fringe but to offer a counter argument but I was in a high school speaking to students maybe 6 months ago and I asked the question, who’s played a game in the last week? Everyone raised their hand. Everyone is playing games now and maybe on their phones. Platforms are more accessible than they’ve ever been. Even though aspects of the game industry are more on the fringe and there’s work to do there, gaming in general is extremely pervasive. Everyone is a big franchise and I know if you extend me to Candy Crush, my dad plays games every day. It’s different than it was 10 years ago.

Question: I understand what you mean. I would say this is one of the smallest summit attendences I’ve seen of the weekend. That’s kind of why I ask, maybe the next generation, everyone is into games and maybe we’re the forerunner of this future, etc. in this culture industry segment, it’s still by the wide public, it’s not publicly known by the CBC. It’s barely covered by the main media. That’s kind of what, I know the younger generation is really into games, but how do we legitimize in the face of public behavior and big media?

Jeff: I take your point. I agree with what you said. I don’t think it’s as fringe as people may think. From certain perspectives, it is fringe. Actually to be honest, everything that you basically talked goes back to the fact that there’s the lack of coverage in the media in this country anyway, is actually more of a function of the disconnect between some of our established media entities and the ones we’re seeing in the online space. Of which gaming is the forefront of that. I see YouTube as the forefront of that. There is a cultural issue in the sense that I don’t think people have caught up to what you said. It’s generational. It will happen. It’s basically people, as the young people who grew up gaming age, and frankly they are still gaming. A lot of them. Whether or not they still game on console or maybe they migrate to mobile because mobile and tablets have radically expanded the market. It may be a different style of gaming but it’s still gaming. We’re talking more about the bigger budgets, different graphics in here. I do think it will change over time.

It’s the demographics change. A lot of the audiences that we’re talking about, tend to engage with the communities in online. To be honest, they might not be reading a CBC article. To Nathan’s point earlier, they get mainstream coverage but that’s to an audience that isn’t’ the same as this. I think we’re going to see catching up to this over time, we’re just not quite there.

Nathan: I am used to and I am totally comfortable with sitting on panels where literally no one in the audience has heard of my company or played any of our games. It’s normal. Probably the most people here have barely heard of Ubisoft. Probably they’re like, I like Microsoft, my kids have an Xbox. Those are the type of panels that we are consistently on. Especially when it comes to speaking, like if we go to the game developers conference, it’s affordable. Everyone already knows who you are because they are at a game developers conference. But going outside of video games, it’s a norm. Especially in Canada where there is I think, the kind of industry, the country in general has been so intensely focused on the new media, music, and specifically film in terms of how we expound Canadian culture and how we build the Canadian entertainment industry worldwide.

Like you mentioned, it’s just start of a process. Eventually the folks who are in charge of that, will not be in charge of that anymore. Considering how challenging that is, it’s something that we kind of just have to accept and understand. Considering how that is the case, I believe there is so often that we go into sessions and people who are not in the gaming industry don’t really know who any of us are. I think it’s really interesting that we have the most support of almost any country in the world. It’s a really strange imbalance that I don’t totally understand. Maybe it comes down to a few great people and a few great business organizations pushing for it. They get the right ears of the right people. Part of it is continually forcing video game sessions down people’s throats. It sounds like I’m joking but I’m actually serious.

If there is a conference on entertainment or on discoverability or on social there’s not a gaming component there, somebody has to talk.

Alex: For Canada, I find in terms of media export, video games reach out to millions and millions of people outside of Canada and those games are made by Canadians. In terms of just that, it makes me immensely proud of the work that has been done. Year on year, the best video games on all platforms that are made, the major concentrations are made by Canadians. I think it’s something that needs to be recognized for sure.

Carl: Thanks a lot guys. We are out of time. Thanks Jason, Jeff, Nathan, and Alex. We’ll see you next time.