Podcast Transcript: Putting your game face on
With a recession looming, sectors across the board are starting to feel it. But one sector is still seeing growth. It’s the gaming sector. And despite the global economic downturn, video game sales in Canada are so far remaining strong. And U.S. video game sales topped $21 billion in 2008, a 19% increase over the previous year.
It’s no surprise then that the Canadian Trade Commissioner Service has made electronic gaming one of its priority sectors. Listen in to hear how two trade commissioners, one from our Montreal Regional Office and one who served as a trade commissioner in Tokyo, can help Canadian companies in this sector.
I’m Michael Mancini, Editor-in-Chief of CanadExport, the e-magazine of the Canadian Trade Commissioner Service. Visit CanadExport website to subscribe. It’s free and easy.
Also, tell us what you think of our podcasts and how we can improve. If you have story ideas, or business questions you want answered by our worldwide network of trade commissioners, let me know. Just send an email (email@example.com) to CanadExport. Now back to the show.
I recently spoke with Neil Swain, a trade commissioner at the Montreal Regional Office of the Canadian Trade Commissioner Service. This is what he had to say about how Regional Offices in Canada help Canadian companies in this sector.
Neil Swain: I think one of my key roles in the gaming sector with these companies is working in particular with small and medium sized companies to make sure they're prepared for doing business abroad. So before they even go abroad we kind of help coach them through the process.
Very often the owners and managers in these gaming companies, they have very strong technical abilities, they have incredible creative abilities which is why they're coming out with these great products. But their experience and training in the area of business development and business development abroad in particular, it can be limited.
So we like to work with them to make sure that their ducks are in a row and their business plan and in the part of their business plan for international business do they have a good, solid plan. For example we like to make sure they have met all their domestic contacts beforehand.
I like to ensure they've spoken with their provincial association which across Canada in the gaming sector, the associations are very strong. Have they met with their provincial government counterparts? Do they need to speak with Economic Development Canada? Do they need to speak to Telefilm Canada for example about their programs? Or even the Business Development Bank of Canada; are there opportunities there that they may not be aware of?
I like to also make sure also that they're aware of our activities abroad as the Trade Commissioners in the Embassies and High Commissions and Consulates around the world. So companies would come and see us and if we see that the business plan is up to speed and we've helped them target some key markets, say three or four key markets - then I'll introduce them usually by e mail to my colleague who's in the office abroad, be it a Consulate, the High Commission, an Embassy somewhere in the world.
So there's a handoff and what the company has every step of the way, they know that we are there in their back pocket. That they can call on us if they ever need help, if they ever have questions. So I would just work with them here and pass them on to whoever is their industry representative for the Trade Commissioner Service at the other end of the network.
Michael Mancini: So what do you see as some of the big challenges for Canadian gaming firms as they look to the big markets like Japan, the US and Europe?
Neil Swain: When they have a very strong technical ability, they often forget that in their presentation to these companies abroad, often they're publishing companies or mobile game companies, that they want them to buy their product. They have to add, if they're going into a partnership with them or agreement with them, they should be explaining their finances as well.
They should explain how their company is stable, who they've had in the past as past clients and just to show them that they're not a fly-by-night company. This gives a lot of confidence to the foreign companies who may want to buy their product. I think that's very important. Something that's often missed is can you show them that you have financial stability to keep going and to continue with the relationship.
Another thing is the SME's in particular in the gaming industry have the challenge of targeting the right people in the US, but more importantly in Europe and Asia, especially in Japan and the incredibly fast growing market of China, where they may not have the resources to fly down to Shanghai, cold call some of these companies, find a translator and go around to all these companies and see if there's interest in their product.
We often find out that these companies first go abroad and then come to us when they realize that they couldn't get any doors open there. You know a company with five employees and a world class suite of games may not have the resources to fly there. So this is something that we keep reminding them to do, is talk to us first to see where we can help.
Michael Mancini: Is gaming technology just for gaming firms or can this kind of technology apply to other sectors as well?
Neil Swain: I think there's traditional gaming, which most people know about and that's for fun. That's an incredibly huge market. But I'm also seeing explosive growth in the e learning sector across Canada. New media companies and these gaming companies, they're crossing over to the education sector. The result has been this burgeoning e learning sector that has a mix of the new media technologies with pedagogy and learning styles and learning applications that are becoming more and more popular.
Canada is fast becoming known for its modeling and simulation capacities at all levels. We have CAE which creates multi million dollar simulations for pilot training. We have a company in Newfoundland called Virtual Marine Technology that has a world-class life boat simulator. Then we have smaller companies like Formation Virtuelle in Quebec. They develop blended learning solutions for various training needs like safety instructions for putting on gas masks.
Montreal by the way will be hosting the country's first modeling and simulation conference called Modsim Canada this June. I think that's a testament to the growing sub sector of e learning and what's also known as serious gaming. Another thing is many companies I work with in gaming, they also have the capacity to work in digital special effects. This of course starts going into the movie industry and they're starting to do business with companies in Hollywood for movies, for television, for advertising. So they're seeing the application. Anywhere there's an application of computer special effects is really growing.
Michael Mancini: What advice would you give Canadian companies looking for gaming opportunities internationally or otherwise in fact in this sector?
Neil Swain: I would say come and see us first. Even if you're not ready to go abroad, one of our roles is to kind of bring you up to speed. My role is to make sure that I have a good network in my province. So if I=m working with a lot of companies I can make sure, have you spoken to your provincial representative? Have you spoken to your associations? So I would say, come and see us first. Let's sit down and we'll start a dialogue. We'll start working out where your needs are, where your strengths are and how we can help you.
I would say that we're kind of like the on-ramp for an expressway. A company really wants to get going and we're just kind of a checkpoint before they get on the highway. We go around the car, we make sure, yup, everything looks like you're up to speed. Then they can just kind of accelerate on. So it's always a good place to start with us in the regional office.
Michael Mancini: Well that's great. Thanks very much Neil for your time.
Neil Swain: It's my pleasure.
And with that driving metaphor, and for the foreign perspective, we go to Stéphane Beaulieu, a trade commissioner who was posted in Tokyo and who was responsible for the electronic gaming sector in Japan.
Michael Mancini: So why is the gaming sector a priority sector for the Canadian Trade Commissioner's service?
Stéphane Beaulieu: First of all for the economy in general it's a knowledge based industry so it doesn't rely on the price of commodities and so on. So it's an industry that's very stable. Governments from provinces are also very active in promoting the sector which means that there's a lot of place for partnerships. So we weren't alone in this so it's easy for the Trade Commissioner Service, it's a sector that's easy to promote because we have a lot of partners.
There are over 450 companies in Canada in the gaming sector alone and if you broaden a little bit to the multimedia sector then you go, it's over 3,000 companies and it employs over 50,000 people. So it's a very important sector for the economy.
Canada has made a lot of progress in that sector in the last few years. I think we're now third in the world as far as game development goes after the US and Japan. So we're very, we're up there with the leaders. The gaming industry is actually bigger than the movie industry for the last two or three years so I mean it's a huge industry. It's bound to grow even more.
Michael Mancini: So where are the big opportunities then around the world that this huge industry in Canada should be taking advantage of?
Stéphane Beaulieu: Canada right now is very active in the US. There's also a lot of companies that are active in Europe - the UK, France, Germany are very well known markets for games. Now there's a lot of opportunities in Asia that are appearing and in Asia Japan of course comes to mind because it's the mecca of gaming. China is growing and India is also a very good market for gaming.
Now as far as in what area of gaming do we actually have opportunities, I would say Canada is really strong in middleware, in developing contracts, subcontracting contracts to Canadian companies. We have development teams that are really, really good.
Michael Mancini: You said middleware. What exactly is middleware?
Stéphane Beaulieu: Middleware is basically a tool, software that allows game developers to build a game. For example, Canada is known for Softimage. It's a very well known Canadian company in that sector. It's software that allows you to manipulate images - to make them move, to create colours, make shiny effects on it. This is middleware. That's what a company will use - they don't create everything they do. They put orders into that software and the software does the trick for them, so that's what we call middleware.
Michael Mancini: I guess I'm wondering also how difficult it is for Canadian companies to sort of carve out a market for themselves internationally, especially given that this sector is dominated by a few large multinationals.
Stéphane Beaulieu: It's a great sector that way because even the smallest SME that has a really niche knowledge of a specific thing can actually get contracts from the big publishers. Because the big publishers more and more are giving contracts away because they realize that they cannot do everything in the company. They realize that putting together a team of 30 people to develop a specific tool to do a specific effect that they want to have in their game is not necessarily wise economically speaking.
They would much rather go to a company that has the knowledge, that has like 30 people that have been dedicating like years on that product and that know exactly how to adjust it to answer the needs of the big publisher. So all companies that develop tools that offer services that are related to gaming, for example sound production, testing, debugging, localization. Why would a company go hire 50 people to do 50 different voices when a company, a subcontractor, that specializes in sound production can do it for them, can localize a game for them in 50 different languages, you know.
But the important thing of course is to have the network. You can't just sneak in the door and say I have this, do you want it? You have to work at creating a network, maintaining your network. People are really well educated and they like their programming and math. That's somewhere where we're really strong. The business side - really go out and network and create a real database of people that you are in touch with, that you maintain, that you meet up with on a regular basis, is something that the Canadian companies really have to focus on.
Michael Mancini: You're of course a Trade Commissioner and you worked at the Canadian Embassy in Tokyo for years and one of the sectors you obviously got to know is the gaming sector. Now Japan as you said is arguably the mecca of gaming in the world so I know you were really busy helping companies succeed there. Tell our listeners about the kind of help that you provide, the kind of help that Trade Commissioners provide Canadian companies.
Stéphane Beaulieu: I'd like to state that it=s not a one shot thing. It's a long-term strategy. It starts with creating a network of people in the gaming industry in Japan.
So the fact that we spend so much time working on that network, having that network of people that trust us and that know that if we say I have something good to show you, they'll come because they trust us. I think we save a lot of time and money to Canadian companies that are interested in coming to Japan and developing a network. Because instead of coming and having to knock at each door one after the other, they come and they meet all our network that we have spent years working on basically. They get access to it on the first day that they're in Tokyo.
It's a long process and what we do is basically we allow to go through that long process without having to engage all the funds and the energy and the time that it would require otherwise.
Michael Mancini: What advice would you offer Canadian companies looking to develop opportunities not only in Japan but in markets all around the world?
Stéphane Beaulieu: You have to get out of your studio. I know it's fun programming and making games but you have to get out and also act on the business side. You have to develop that network. You have to show your skills to the world. You have to be proactive. You have something that very few companies have in the world. You have the know how. A foreign company that deals with a Canadian company knows that they're going to get a grade A quality product and they know that we're not going to not be able to deliver at the last minute. We're a stable source of technology, of knowledge and that is one item that Canadian companies should keep in mind when they go abroad. We're respected. People know that it's easy to do business in Canada.
So you have to get out, be confident. You have to know that you're going to succeed.
Michael Mancini: Stéphane, thanks very much for taking this time.
Well, that’s all for this podcast edition of CanadExport.
Check out the Canadian Trade Commissioner Service website where you can find some useful links to gaming sector websites.
You might also want to visit the Canadian Trade Commissioner Service website to see the video interview with Stéphane Beaulieu. And you can go to youtube.com using the searchwords Trade Commissioner, where you can find more videos on the Canadian Trade Commissioner Service.
I’m Michael Mancini, signing off for now.
To download our other episodes, just go to www.canadexport.gc.ca or go to iTunes and use the searchword “CanadExport.”
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