Canada’s game production industry is booming, with new plans for expansion recently announced by major studios in Quebec and British Columbia. Montreal in particular has become the biggest hub of the gaming industry in Canada, due in no small part to the provincial government’s generous subsidies.

On October 4 Warner Brothers Games announced a $63 million planned expansion of its Montreal studios and expects to add 100 new employees to its payroll over the next five years.

This announcement comes just days after the French-owned Ubisoft announced a $373 million planned expansion to its Montreal studios, expected to result in 500 new jobs as part of a 1,000 position local expansion by 2020. Meanwhile, Microsoft is expanding its studio presence in Victoria and Vancouver.

Canada’s game development industry is the third largest in the world, well behind the United States and Japan, but the largest on a per capita basis. Our 349 studios employ 16,500 employees, and indirectly support another 10,000 jobs in related creative industries. The net worth of Canada’s gaming industry is $2.3 billion, up five percent since 2011. Canadian studios are responsible for some of the world’s most popular games, from Assassin’s Creed to Batman: Arkham Asylum to FIFA Soccer to Scrabble for iOS.

As with the film industry, provincial governments have been aggressively courting new industry investment through grants and more favourable tax policies. The Quebec government will be issuing grants worth $1.5 million to WB Games and $9.6 million to Ubisoft for their recently announced expansions. Quebec also just further revised its tax code to maximize the amount of deductions game studios can claim against their tax liability.

These tax incentives are controversial, as they in effect subsidize an industry that is both on the whole very profitable and not of intrinsic social value. Provinces and their counterparts in other countries are caught in a race-to-the-bottom bidding war to provide the most lucrative incentives, with numerous firms having recently closed studios in B.C. – which offers generous tax incentives to all creative industries – only to open new studios in Montreal, to take advantage of Quebec’s new sweeter deal.

With the average game developer earning over $72,000 annually, at an average age of just over 30, these creative industry jobs are of tremendous net benefit to any city that can lure them, and are central to the so-called ‘new economy’ or ‘knowledge economy’ touted by politicians as a replacement for the manufacturing jobs outsourced as a result of free trade agreements.

In an industry that can be as hit or miss as Hollywood, these subsidies also lessen the risk incurred by studios from potential failures.

With the increasing popularity of mobile ‘casual’ gaming on smartphones and tablets, start up production costs have been significantly reduced, allowing more small ‘indie’ studios to start up targeting the mobile market. The average console game production has a budget of $8.7 million and takes a team of 65 developers around 583 days to produce, whereas the average mobile game has a budget of only $300,000 and can be produced by a team of seven in just over five months.

Console gaming is still tremendously popular in Canada, with 61 percent of Canadian households owning one or more gaming console. However, with 80 percent of Canadians owning a mobile device of some sort, mobile gaming has dramatically expanded the market of potential gamers. Because of this, 84 percent of Canadian studios are now working to produce mobile games, while only 48 percent continue to produce games for console.

With new generations of the popular Xbox and PlayStation console franchises due to be released shortly, and the imminent entry of PC-gaming juggernaut Valve into the console market, it’s still premature to worry about the so-called ‘demise of console gaming’ – and in any case, most Canadian studios have already made the transition to the mobile frontier. Game development will continue to be a growing industry in Canada for the foreseeable future.