Our CEO/Co-Founder, Albert Lai talks about tax credits, & why he chose Ontario as the home for Big Viking Games

By April 29, 2015Games, Tech

Our CEO, Albert Lai had the opportunity to sit down with Patrick O’Rourke of the Financial Post for an in-depth interview of why he chose Ontario as the home for Big Viking Games.

Tax credits a big part of why Big Viking Games chose Ontario over San Francisco, even if they aren’t perfect:
*Article originally appeared on Financial Post – written by Patrick O’Rourke | April 28, 2015

Over the last few years southern Ontario has quickly become a hotbed for video game development thanks to generous provincial tax credits and other government subsidies, often provided by the Ontario Media Development Corporation (OMDC), and a top tier educational pipeline, allowing studios to hire world class talent locally.

However, there has been wide industry speculation the tax credits and other programs the OMDC offers video game studios could suffer from significant cuts and restructuring in the near future – a rumour the OMDC adamantly denies.

A prototypical example of Ontario’s burgeoning video-game industry is Albert Lai’s London-based Big Viking Games, a studio that has grown significantly since being founded in 2011 as a developer that continues to capitalize on the rise in popularity of free-to-play mobile titles.

“We’ve been really focused on making sure that we’re not just creating a great place to work, but that we’re also creating a place to work where people grow their careers, and when you build a reputation around that, it’s kind of cool because you’re able to attract really amazing people from around the world,” said Lai, cofounder and CEO of Big Viking Games.

Since starting with a staff of just four in 2011, Big Viking Games has expanded into two offices, opening up a new Toronto studio, consisting of approximately 70 employees, adding to the 60 already working out of the company’s London, Ontario office. Lai explained both of Big Viking Game’s studios collaborate on projects, but the company is ultimately moving towards what he calls a “headless” organizational structure, allowing staff to work on any project from either of the studios’ two offices. Big Viking Games was also named one of the best companies to work for in Canada, placing seventh out of 50 companies in the 2014 list.

“My choices were between San Franciso, where there are mass amounts of venture capital, or there’s Toronto or Canada, where I’d be coming back home.”

A significant aspect of what has allowed development studios like Lai’s, as well as other notable Ontario-based game creators such as Capybara Games (Super Time Force),Metanet Software (N++), Drinkbox Studios (Guacamelee), and even larger developers like Ubisoft Toronto, establish themselves in the region, is the OMDC, an Ontario Government-run organization that provides tax credits and financial aid to video game developers and a variety of other creative companies.

“I think it’s important policy makers and the broader community recognize the value of these funds. What they’ve enabled in Ontario (there are also different versions of the tax credits across the country in other provinces, particularity Quebec and B.C.) is the growth of this industry,” said Lai.

Lai explained the Quebec government recently proposed cutting tax credits for the gaming industry, but quickly back-pedalled on the decision, realizing cuts would mean a loss of jobs, the creation of industry turmoil, and that the region would also lose the strong foothold it currently holds in the game industry, thanks to studios such asUbisoft Montreal, Ubisoft Quebec, Square Enix Montreal and a slew of other smaller, independent Montreal-based developers.

Big Viking Games

“They quickly reinstated them [the tax credits]. We’re going into a review cycle [of the funds that were provided to us by the OMDC], and the important thing to recognize about the gaming industry is that it’s kind of like the film industry 20, 30, 40 or even 100 years ago. We’re at the tip of the iceberg of what we know as being a cultural contributor, meaning, if you think about how much time people spend in front of their screen and how many of those hours and dollars are spent in front of a game or mobile device, it’s amazing,” said Lai.

The OMDC funding is staying just the same, says the OMDC itself, though there are a more companies and people accessing the fund.

“At this point and time we’re operating under a business as usual assumption. Our plans at the moment are we’re going out with the funds the same way we have in previous years. So for the next fiscal year we will be running the program in the same way we have in previous years,” said Kim Gibson program consultant at the OMDC. “What we’re finding year after year is the pool of companies is actually growing significantly, the number of companies that are accessing the fund is increasing and we’re seeing different companies come in every year. From one year to the next about 40 per cent of the applications we receive are from new companies.”

However, even if the rumoured cuts don’t end up happening, Lai says the system the OMDC filters tax credits through still have a number of issues. He feels the scope of which companies qualify for the tax credits needs to be narrowed significantly, emphasizing part of the problem is there are a lot of organizations not qualified for the benefits the OMDC provides that are “jamming the pipeline for the review process,” and that in many situations, qualified studios are forced to wait up to two years to receive any funding from the OMDC. According to Lai, this is a significant issue for smaller developers relying on OMDC tax credits to grow and function, as well as the thriving Ontario gaming industry in general.

Big Viking Games

Big Viking GamesAlbert Lai, Big Viking Games’ co-founder and CEO.

The support of the OMDC provides qualifying Ontario-based gaming companies between 35 and 40 per cent of all money the studio invests in developers, artists and marketing costs. Additionally the OMDC also supports new games through the Interactive Digital Media (IDM) fund, a grant covering $150,000 up to 50 percent of a project’s budget. Last year alone the OMDC released information stating 23 gaming companies in Ontario received this $150,000 grant to create new titles.

Lai said he made the decision to establish his studio in southern Ontario, specifically London, because his co-founder lived in the area and also due to the city’s close proximity to Sheridan and the University of Waterloo, arguably two of the top schools in the world for computer science and animation, giving Lai a strong and largely untapped talent pipeline – OMDC tax credits were also a significant factor.

“My choices were between San Franciso, where there are mass amounts of venture capital or there’s Toronto or Canada, where I’d be coming back home. I’d have amazing talent and a great tax credit system. The third option was to go to the far east and whether it be in Shanghai, Bejing or Hong Kong (which is where I’m from). Singapore is also super aggressively investing in startups, but ultimately I settled on London, Ontario.”

Almost amusingly, Big Viking Games is also one of the only companies to actually acquire a title from Zynga Inc., a studio/publisher known for purchasing successful free-to-play games from other developers at the height of their popularity, and then subsequently running them into the ground. Lai’s studio recently purchased Yovillefrom Zynga, a game set to be shut down by the company because it no longer saw the title as profitable.

Big Viking Games

“It has a very, very passionate community, so much so that at one time it had over 60 million registered users and the ones that are left today were still extremely passionate about the community and the game. So when Zynga was about to shut it down, there was a real uproar. So we were able to reach out to Zynga and acquire it back from them (one of our co-founders was actually the creator of the original game),” said Lai.

Lai also explained Zynga acquired YovVille (now called YoWorld) before releasingFarmville in 2009, the title that arguably sparked the free-to-play mobile title concept, and that the game was used as a basis for what eventually became Farmville.

In the future, Lai says his team is concentrated on supporting and creating new content for the studios’ already-released titles, treating its games as platforms rather than just a single title. He also sees games based in Facebook as a growth opportunity for Big Viking Games because many other developers have abandoned the platform for traditional mobile games, as well as HTML5-based titles, an area Lai feels will grow increasingly more important for mobile gaming in the coming years.

“The majority of our existing talent is actually focused on our existing games. There are a few games that are in pre-production that we aren’t quite ready to talk about. Often times when you’re dealing with triple A games you’re working towards the next sequel, or the next Assassin’s Creed or Halo – it’s a complete overhaul of the engine and the story. Whereas with us, it’s about evolving the game gradually and basically over the last year within Dark Heroes there were four to six different revamps of major features,” said Lai.