Canada has a games industry far bigger than its reputation, and a tax policy built it

A deliberate tax policy in Canada helped to create a gaming industry that continues to fly under the radar

ASSASSIN’S CREED, FAR Cry, Rainbow Six Siege, Mass Effect, Dragon Age, Dead by Daylight, Warframe, Company of Heroes, Deus Ex: Human Revolution, Don’t Starve.

All Canadian. Most people could not name three Canadian studios, and the list above understates it considerably once you include the co-development work that never carries a visible credit.

The reason this happened is not mysterious and it is not primarily about talent. It was a tax policy, and the story of how deliberate it was deserves more attention than it gets.

Quebec Made a Decision and Everyone Else Followed

In the mid-1990s Quebec introduced refundable tax credits on labour costs for multimedia production, aimed squarely at attracting an industry that barely existed there.

Refundable is the important word. The credit pays out regardless of whether the company is profitable, which for a studio spending years on a project before earning anything is a completely different proposition from a credit against tax owed.

Ubisoft opened in Montréal in 1997. What followed is the part policymakers everywhere have been trying to replicate since: the studio grew enormous, trained a generation of developers locally, and those developers founded or joined other studios that stayed in the city.

The credit attracted the first arrivals. The talent pool kept everyone afterwards, which is the only version of this policy that actually works. Plenty of jurisdictions have offered incentives and ended up with branch offices that left when the terms changed.

British Columbia and Ontario built their own programmes, and the clusters in Vancouver and Toronto followed similar paths on smaller scales.

The Provincial Pattern Repeats Everywhere

Which points at something structural about how Canada does almost everything, and it explains a lot beyond games.

Provinces hold jurisdiction over a striking range of economic and cultural policy. Each designs its own incentives, sets its own rules, and competes with the others. There is no national games strategy because there is no mechanism for one, and the same is true across most sectors that touch provincial authority.

Online casino gaming is the clearest current example, since gambling is provincial under the Criminal Code rather than federal. Ontario opened a competitive licensed casino market in April 2022, where private operators compete for players under provincial registration. The other nine provinces still run Crown corporation monopolies, offering a single state-operated casino site and nothing else.

Which means a Canadian player’s legal casino options are decided entirely by their postal code. An Ontarian chooses between dozens of licensed operators. A Manitoban has one. To see how each province handles online casino access, click here for a province-by-province breakdown.

Same constitutional logic that let Quebec build a games industry by itself. Provinces experiment independently, one of them finds something that works, and the others decide whether to follow. Ontario is four years into its casino experiment and Alberta is the province most likely to copy it, which is exactly the pattern the tax credits followed three decades earlier.

What the Industry Actually Looks Like

Three distinct things get called the Canadian games industry and they have little in common.

The large studios. Ubisoft Montréal is among the biggest development sites anywhere, running multiple concurrent AAA productions. Behaviour, Eidos-Montréal and Relic operate at substantial scale.

The support studios. This is the invisible layer. Beenox, Certain Affinity and numerous others do co-development and support work on games credited to other names. It is a genuine industry within the industry and it employs a great many people whose work you have played without knowing it.

The independents. Klei in Vancouver, Capybara in Toronto, Digital Extremes in London, Ontario. Smaller, self-directed, and responsible for some of the most distinctive output.

Digital Extremes deserves particular mention. Warframe was released into general indifference and rebuilt over a decade into one of the most durable live service games in existence, out of a city of 400,000 people.

The Risk Nobody Discusses

Worth being honest about the model’s exposure, because it cuts both ways.

An industry that located somewhere for a tax credit is an industry with a stated price. If the credit is reduced, the calculation changes, and the studios most likely to leave are the branch offices rather than the homegrown ones.

Quebec has adjusted its programme periodically and each adjustment produces public anxiety from the sector, which tells you the dependency is real rather than rhetorical.

The counter-argument is that thirty years is long enough for the cluster to have become self-sustaining. The talent pool exists, the supply chain exists, and the universities are producing graduates locally. That was always the objective, and the honest answer is that nobody knows for certain until it is tested.

Why It Stays Under-Recognised

Two reasons, and the second is the more interesting.

Most of the output carries somebody else’s brand. A game developed in Montréal for a French publisher and marketed globally does not read as Canadian to anybody, and the support work is invisible by design.

And Canadian studios rarely make identifiably Canadian games. There is no equivalent of the Nordic tonal register or the Japanese design tradition, which means the work does not accumulate into a recognisable national voice the way other countries’ output has.

That is arguably a strength commercially and a weakness reputationally. An industry this size with this output should be better known than it is, and the main reason it is not is that it has spent thirty years successfully making things that do not announce where they came from.