Economic and Social Reports
A profile of the video game industry in the Canadian provinces

Abstract

Despite the involvement of the Canadian government in the video game industry, there is relatively little publicly available information about the types of firms populating this industry. This article provides new statistics on the video game industry across the Canadian provinces from 2013 to 2022, focusing on three main areas of interest. First, it examines changes in firm counts, revenue and jobs across several dimensions: ownership (Canadian- or foreign-owned), activity (design or publishing), size and geographic region. Second, it presents statistics on the percentage of women employees and the percentage of employee compensation paid to women over time. Third, it compares entry and exit rates for video game firms with entry and exit rates for all private employer firms in Canada. The article illuminates several changes to the video game industry over time, including a rapid increase in the number of small Canadian-owned firms, a shift away from video game publishing towards video game design, and an increasing proportion of women employees and employee compensation paid to women.

Keywords: video games, firm dynamics, women employees

Authors

Rupert Allen is with the Strategic Policy, Planning and Research Directorate, Canadian Heritage. Jenny Watt is with the Economic and Social Analysis and Modelling Division, Statistics Canada.

Acknowledgments

This study was supported by Canadian Heritage. The views expressed in this paper are those of the authors and do not necessarily reflect the views of the Department of Canadian Heritage. The authors would like to thank Arthur Ehlinger and Robert Campbell for their helpful feedback.

Introduction

The global video game industry is the fastest-growing media industry, representing a significant and increasingly important part of the creation and dissemination of culture (Wesley & Barczak, 2016). In the Canadian context, video games have been treated like other cultural industries, such as film and television, in two ways. First, Canadian governments at various levels have sought to attract and aid video game developers through tax advantages and other measures of public support (Paul, 2005; Wolf, 2015). Second, through the Investment Canada Act, the Canadian government reviews foreign acquisitions of Canadian video game companies with the goal of protecting the creation and retention of Canadian intellectual property (Black & Backus, 2024).

Despite the involvement of the Canadian government in the video game industry, there is relatively little publicly available information about the types of firms populating the industry. The major source of information is a biennial report published by the Entertainment Software Association of Canada (ESAC, 2019; ESAC, 2021). This article fills information gaps by providing new statistics on the video game industry across the Canadian provinces from 2013 to 2022, focusing on a few main areas of interest.

The article begins by examining counts, revenues and jobs in the industry to investigate which types of video game firms are contributing to industry growth. Of particular interest are foreign-owned firms, given the governmental reviews of foreign acquisitions. An important disclaimer is that, while there is clearly an interest in supporting Canadian ideas and stories (Black & Backus, 2024), some authors view multinational firms as a positive for local industries, because global interaction allows the development of common infrastructure that can be used to enhance quality (Cohendet et al., 2018).

Another dimension of interest is the size of firms (in terms of the number of employees), as there are a few reasons why video game production may increasingly occur on a smaller scale. First, given that video game development requires relatively little capital, employees of established Canadian firms have often left to form their own studios (Wolf, 2015). Second, smaller studios may have a larger role in the industry as the presence of mobile and downloadable games increases (Goh et al., 2023). Third, barriers to entry have been lowered because of the availability of publicly available game engines, asset packs and drag-and-drop technology, allowing developers with less technical expertise to enter the market (Young, 2018). While these small (“indie”) developers may not generate technical innovations, they play an important part in the industry by innovating in terms of art style, stories and themes, and gameplay (Goh et al., 2023).

After examining industry growth by firm type, the article continues by providing statistics on the percentage of women employees and the percentage of employee compensation (i.e., salaries and wages) paid to women over time. This line of analysis is motivated by the fact that the global video game industry has been observed to be dominated by men (Bulut, 2020).

Finally, the article examines entry and exit rates of firms in the Canadian video game industry relative to all private Canadian employer firms. While it is known that the global video game industry was turbulent in the 1980s and 1990s, with layoffs and closures being commonplace (Zackariasson, 2012), video game firms cannot be identified in firm-level data until the 2010s. However, this article is still able to contribute to information gaps concerning the Canadian video game industry by examining entry and exit rates from 2013 to 2022. By doing so, it can determine whether the video game industry has been volatile in more recent years. The article achieves these aims by using the National Accounts Longitudinal Microdata File within the Canadian Employer–Employee Dynamics Database, a linked dataset based on Canada’s Business Register and the tax filings of firms (Statistics Canada, 2022). For firms to be included in the analysis, they must do at least one of the following: file a T2 Corporation Income Tax Return, issue T4 Statement of Renumeration Paid slips, or remit sales taxes or payroll deductions and contributions. This means that the data include mostly incorporated firms but may include some self-employed individuals who either have employees or have large enough revenue to be required to remit sales taxes. Video game firms are those with North American Industry Classification System (NAICS) codes of either 513212 (video game publishers) or 541515 (video game design and development services) (Statistics Canada, 2024b).^Note  Both codes were introduced in 2012. Before that year, video game firms would have had to file under another code (such as one related to software), and thus video game firms cannot reliably be located in the data before that point. Instead, the article uses a 10-year study period from 2013 to 2022. The article does not include data from the territories because of their small sample sizes.

The main difference between the reports published by ESAC and the current report is that the ESAC reports use surveys and secondary research (ESAC, 2019; ESAC, 2021), while the current report uses administrative data to capture a greater number of firms. There are also several differences in the variables used and the way that the results are broken down. Notably, the current report provides results by whether the firm is primarily engaged in video game design or whether it is involved in publishing. It also provides new statistics on entry and exit rates and on compensation paid to women employees. Another difference is that the ESAC data are collected every two years, while the administrative data can be used to present statistics for each year.

The number of video game firms in Canada more than doubled over a 10-year period because of an increase in small Canadian-owned firms

From 2013 to 2022, the number of video game firms in the Canadian provinces increased from 775 to 1,628, for a compound annual growth rate (CAGR) of 7.7% (Table 1).^Note  This increase was driven by Canadian-owned firms, firms primarily engaged in video game design (as opposed to video game publishing) and small firms with fewer than five employees. In percentage terms, firms primarily engaged in video game design were the fastest-growing type of firm, with a CAGR of 8.9%.

The growth rate of firms dropped in the first two years of the COVID-19 pandemic,^Note  2020 and 2021, but the number of firms did not fall until 2022. Generally, the decrease in the number of firms was spread evenly across regions and firm types. Firms with 20 or more employees were the only exception, with the number of firms increasing from 2021 to 2022.

When compared with the numbers published by ESAC, the numbers from administrative data are much larger. In 2021, for example, ESAC identified 957 firms, whereas the administrative data identified 1,620 (ESAC, 2021). This difference is explained mostly by the number of firms with fewer than five employees. Since ESAC’s numbers are based on surveys and secondary research, these small firms may have less of a presence online and on traditional video game platforms and may be more difficult to identify and reach compared with larger studios. Despite this difference, the patterns are similar between the two data sources, with both sources identifying that most firms are small and Canadian-owned and that British Columbia hosts a disproportionate number of firms relative to its population (ESAC, 2019; ESAC, 2021).

The revenue of video game firms grew disproportionately to the number of firms—more than tripling from 2013 to 2022—with a CAGR of 13.6% (Table 2). Despite their greater numbers, Canadian-owned firms generated less than foreign-owned firms in most years. However, Canadian-owned firms had a higher CAGR in terms of revenue than foreign-owned firms (15.1% versus 12.7%, respectively). The revenue generated by video game firms in design increased by more than eight times, with a CAGR of 22.7%, while the revenue generated by video game firms in publishing fell (CAGR of -4.5%). Other high-growth groups in terms of revenue were firms with fewer than five employees (20.3%) and firms in Ontario (18.3%).^Note  Revenue increased for most groups during the years coinciding with the COVID-19 pandemic (2020 to 2022). Video game firms primarily engaged in publishing did not fare well, however, with revenue decreasing sharply in 2021 and remaining low in 2022.

Compared with the ESAC reports, revenue estimates from the administrative data are higher because they capture more firms. The 2021 ESAC report estimated total revenue at $4.3 billion in 2021 (ESAC, 2021), whereas the administrative data estimated it at $6.7 billion.

The number of jobs is calculated as the total of individual labour units (ILUs), which are calculated as follows: each person issued a T4 slip within a year is assigned an ILU of 1.0. If the person is issued a single T4 slip within the year, the entire ILU of 1.0 is attributed to the firm that issued the T4 slip. If the employee is issued multiple T4 slips, then the ILU is divided between the firms issuing the T4 slips, regardless of the firms being in the video game industry (Statistics Canada, 2024a).^Note  The number of jobs in the video game industry grew less over time than revenue, with a CAGR of 8.0% (Table 3). Like with revenue, high-growth groups were video game firms primarily engaged in design (15.9%), firms in Ontario (11.9%) and firms with fewer than five employees (14.6%).^Note  The total number of jobs continued to grow in 2020 and 2021, despite the COVID‑19 pandemic, but fell from 2021 to 2022. This decrease from 2021 to 2022 occurred for all subgroups, excluding firms headquartered in the Prairies (Alberta, Manitoba and Saskatchewan).

The ESAC reports do not provide the number of jobs in terms of ILUs, but rather use full-time equivalents (ESAC, 2019; ESAC, 2021). Nevertheless, both reports find that Quebec has the largest number of jobs. In addition, both reports show an increase in employment from 2019 to 2021, despite the COVID‑19 pandemic. Since the surveys used for the ESAC reports are collected every two years, there are no 2022 ESAC estimates for comparison.

Over the study period, video game designers created an increasing proportion of jobs, relative to video game publishers

In terms of the proportion of jobs attributed to different types of video game firms, patterns seem to have been affected by the COVID-19 pandemic. Canadian-owned firms contributed more jobs than foreign-owned firms from 2014 to 2019, but fewer jobs than foreign-owned firms from 2020 to 2022. Over the total period, video game firms primarily engaged in design represented an increasing proportion of jobs (relative to video game firms primarily engaged in publishing), but this redistribution appears to have accelerated during the pandemic (2020 to 2022).

The proportion of jobs attributed to firms with 20 or more employees decreased temporarily in 2021, even though counts and revenues for this group did not decrease. This finding is consistent with a scenario in which larger firms remained open during the COVID-19 pandemic, but temporarily decreased the number of employees.

Since the ESAC report is biennial and does not produce employment figures in the size categories used in this paper, it is difficult to compare the results. However, the 2021 ESAC report states that firms with fewer than five employees account for 1% of jobs (ESAC, 2021), compared with 9% of jobs in the administrative data. This result is consistent with the fact that the administrative data used in the report capture a greater number of very small firms than the ESAC surveys.

Data table for Chart 1

Data table for chart 1 Table summary
The information is grouped by Employment (appearing as row headers), 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2020, 2021 and 2022, calculated using percent units of measure (appearing as column headers).

Employment	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022
	percent
Note: Employment is in individual labour units. Source: Statistics Canada, authors' calculations.
Ownership
Canadian owned	45	50	61	61	65	62	56	48	45	45
Foreign owned	55	50	39	39	35	38	44	52	55	55
Primary activity
Design	39	45	44	50	60	58	58	60	77	80
Publishing	61	55	56	50	40	42	42	40	23	20
Size
Fewer than 5 employees	4	5	5	6	9	10	7	6	9	7
5 to 19 employees	8	8	22	7	6	6	7	8	10	9
20 or more employees	88	87	73	87	85	83	86	86	81	85
Region
Atlantic provinces	3	3	2	1	1	1	1	1	1	1
Quebec	53	51	44	43	43	39	40	42	40	43
Ontario	15	17	31	32	33	31	29	22	26	22
Prairie provinces	4	3	2	3	2	3	3	2	2	3
British Columbia	24	26	21	21	21	26	28	32	30	32

From 2013 to 2022, the percentage of women employees in the industry increased from 17.8% to 24.5%

Previous research in the United States has indicated that employees in the video game industry are overwhelmingly male (Bulut, 2020). Chart 2 shows the percentage of industry employees who are women and the percentage of industry employee compensation paid to women. From 2013 to 2021, the percentage of industry employees who are women increased from 17.8% to 24.5%, and the percentage of industry employee compensation paid to women increased from 14.4% to 20.0%. In other words, women’s employment share grew more rapidly than women’s compensation share. This is an expected result as employees new to an industry would generally occupy entry-level positions with lower salaries. It is therefore possible that women’s compensation share will rise as these new employees move into mid-level and senior-level positions. For this chart, it is important to note that compensation is based on T4 slips and thus captures only employees—not contractors. Additionally, compensation is based on T4 Statement of Renumeration Paid slips and includes salaries and wages, but not other forms of compensation such as stock options. The ESAC reports show a similar pattern for women employees, but the percentage in the administrative data is somewhat higher (24.5% versus 23.0% in 2021; ESAC, 2021). The ESAC reports do not contain statistics on compensation paid to women.

Data table for Chart 2

Data table for chart 2
Table summary
This table displays the results of Data table for chart 2 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2020 and 2021, calculated using percent units of measure (appearing as column headers).

	2013	2014	2015	2016	2017	2018	2019	2020	2021
	percent
Source: Statistics Canada, authors' calculations.
Percentage of women employees	17.8	18.0	18.9	19.5	20.2	21.0	22.0	23.3	24.5
Percentage of employee compensation paid to women	14.4	14.4	15.0	15.4	15.8	16.3	17.7	18.6	20.0

During the study period, Canadian video game firms exited the industry at lower rates, compared with all private Canadian employer firms

The global video game industry experienced a period of financial turmoil in the 1980s and 1990s, coinciding with the dot-com bubble bursting (Zackariasson, 2012). While this period led to many studio closures, it also resulted in new firms as employees of the failing firms left to form their own studios. In Canada specifically, the acquisition of a large Vancouver studio in 1991 led to several employees leaving and forming spinoffs (Wolf, 2015). Since video game firms can be identified in Canadian data only from 2012 onwards, it is not possible to calculate entry and exit rates for these earlier, reportedly volatile periods. However, the entry and exit rates presented in Table 4 can indicate whether the Canadian video game industry has been stable in recent years.

The entry rate represents the proportion of firms observed in each year that were not observed in the previous year, and the exit rate represents the proportion of firms not observed each year that were observed in the previous year.^Note  Entry rates for video game firms are higher than the entry rates for all private employer firms from 2014 to 2018 and lower from 2019 to 2021 (entry rates are not yet available for all private employer firms for 2022). Exit rates for video game firms are much lower than for all private employer firms from 2014 to 2021, indicating that studio closures in the Canadian video game industry are relatively rare.

In conclusion, the Canadian video game industry grew rapidly from 2013 to 2022 in terms of counts, revenue and jobs. Small, Canadian-owned firms working in video game design (as opposed to video game publishing) drove the growth in terms of the number of firms, but both Canadian-owned and foreign-owned firms were important for growth in industry revenue and jobs.

Overall, the industry fared well during the COVID-19 pandemic, excluding firms primarily engaged in video game publishing, which had reductions in counts, revenue and jobs. Employment attributed to firms with 20 or more employees temporarily decreased in 2021, indicating that some firms may have temporarily reduced their workforce. Even so, the video game industry was relatively stable, with much lower exit rates than all private employer firms, including from 2020 to 2022. The percentage of women employees and the percentage of compensation (i.e., salaries and wages) paid to women increased slightly each year, indicating a sustained and gradual change in the composition of the workforce in the video game industry.

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