As mid-sized video game studios die out, Vancouver needs to get more indie: Nowak

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In parts one and two of my week-long look at indie games in Canada, I profiled Blot Interactive and Drinkbox Studios, two small Toronto developers both on their way up. In part three, I spoke with Untold Entertainment, another Toronto operation still trying to find its big break.

Today, we journey out west to Vancouver, where Klei Entertainment is making a name for itself with games such as Mark of the Ninja and the recently released Don’t Starve. The scene is considerably different in British Columbia than in Toronto—while Ontario’s biggest city developed a vibrant indie scene because of a lack of major studios, the opposite is now happening in Vancouver, with closures and layoffs gutting the big operations that have called it home for years.

Klei was started in 2005 by Jamie Cheng, who earned his chops as a programmer at Vancouver’s Relic Entertainment. That company was bought in 2004 by publishing giant THQ, only to end up owned by Sega after THQ’s bankruptcy earlier this year. Cheng got out while the getting was good and sold his THQ shares to fund his new company. His departure wasn’t financially driven, though—it was all about the creative challenge.

“I wanted to see if I could make a dent in the industry,” he says.

The early going was rough, with the company getting Telefilm funding to help publish Eets and Shank, two downloadable games for PC, Mac and Xbox Live Arcade. Klei’s big break came last year with Mark of the Ninja, an action-fighting game that came in as the eighth-highest-rated game of 2012 on aggregation site Metacritic—an astonishing achievement for an indie game.

Don’t Starve, released in April, wasn’t as big a runaway hit with critics, but it still garnered a positive reception. Here’s the trailer:

Both games have done much to cement Klei as a rising star in the third wave of Canadian indie studios, which includes other notable upstarts such as Toronto’s Drinkbox, Capybara Games and Queasy Games. The first wave was led in the 1980s by Distinctive Software, a company started by Don Mattrick, who has since risen to lofty heights as the head of Microsoft’s Xbox division. Distinctive eventually became Electronic Arts Canada, which served as the bedrock of B.C.’s game industry.

The second wave followed in the 1990s, with Edmonton’s BioWare and Vancouver’s Relic and Radical Entertainment. All three achieved success and were snapped up by EA, THQ and Activision respectively, doing much to establish Western Canada as a gaming powerhouse.

But it wouldn’t last, with first Quebec and then Ontario rising to challenge the West with their own lucrative labour tax credits. Both provinces drew the big companies eastward, with B.C. so far refusing to raise the ante. The result has been a host of big studio closings and layoffs over the past few years, from Ubisoft and Disney to Activision and EA.

Most of those studios were mid-sized, Cheng says, which are finding it the most difficult to survive in the new economy of console games. You’re either ultra-high-end with thousands of employees and huge budgets, or you’re tiny like Klei, with its 30 employees.

“You don’t want to be in the middle. That’s where a lot of the studios were in town when they shut down,” he says. “You might see the odd one but that’s not going to be the normal case.”

The third wave is going to be different from its predecessors, he says, because studios are going to purposely stay small, to avoid the sort of bloat that makes a company incapable of being flexible and dealing with industry change quickly. A new sort of mid-sized studio will eventually emerge, but nobody knows what that’s going to look like yet.

British Columbia’s game industry is in real danger, meanwhile, because the ecosystem can’t operate without both big and small companies to feed it. While some of the province’s indie companies can soak up some of the people laid off, they simply can’t cope with large numbers.

“If a studio with 300 people shuts down, I hire maybe two of them,” he says.

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