A few weeks ago I pondered if cuts in Quebec subsidies would trigger a migration for games and VFX studios in Montreal. IGN reports that Ubisoft’s CEO is seriously analyzing the cuts and :
Quebec is cutting back on $500 million in subsidiary bonuses, La Press reported, which will cost Ubisoft Montreal and Ubisoft Quebec large quantities of government-funded production dollars. Ubisoft Montreal CEO Yannis Mallat told IGN, “I think we need to analyze with this means for us. Then once the analysis is done, we’ll be able to decide what the next stage is for us.”
I laughed out loud at the term “subsidiary bonuses”. Let’s be clear, these are government subsidies where the taxpayers are paying 37.5% to 60% of people’s salaries who work in the games and film industry. In the long run this is completely unsustainable and Mr. Mallat’s stunning admission is a great example of that:
“I think what Quebec has become over the years in terms of video game development, it’s not a hotbed,” Mallat said. “So obviously this tax program was here to help build that environment. So we see this program as an important reason for the growth of the sector in Quebec.”
Since 1997, Ubisoft was one of the first companies that benefited from massive taxpayer subsidies for the games industry and has gone on to make huge profits on immensely popular video games. The fact that a mere 20% reduction in these subsidies is enough to place doubt in the studios future shows that there probably never will be a sustainable games industry. Now combine that with VFX studios that make much smaller margins in a province that offers much larger subsidies to US studios and you can see why I’m very curious to know how places like Framestore, MPC, and Cinesite will react.
Of course as I’ve learned in the industry, any statement from a CEO has to be taken with a grain of salt. This is the same company that complained it would double the work to add more female characters to games. Ubisoft can still survive and make great profits in Quebec without taxpayer support but the hope by many is to intimidate the Quebec government into blinking and rolling back the subsidy cuts. The film and television industry along with the local unions are already beating that drum. Subsidies are a problem, not a solution.