As the world stays at home to help flatten the curve of COVID-19 cases, consumer interest in picking up a PlayStation, Xbox, Nintendo Switch, or upgrading their PC has surged with a sharp increase in video game sales. It may surprise you to learn that Canada is home to some larger-than-life video game studios, such as the Edmonton-based Bioware studio, which has created games such as the Mass Effect franchise, Star Wars: Knights of the Old Republic, and Dragon Age, just to name a few.
In 2019 the video game industry contributed $4.5 billion towards Canada’s GDP, with those numbers expected to be dwarfed as 2020 hits record sales numbers.
With next generation consoles such as the PlayStation 5 and Xbox Series X set to release later this year, and the Nintendo Switch fully embracing games made by smaller independent game studios (indie games for short), it’s a great time to be in the video games industry.
With that being said, the coronavirus has taken its toll on this industry, resulting in many video games getting delayed. Cyberpunk 2077 and Halo Infinite are two largely anticipated video games that have both cited the ongoing pandemic and the challenges of working from home as the reason for their delayed launches.
In this article, Mentor Works is taking a look at what funding programs the federal and provincial governments have to support studios with the creation, launch, and promotion of a Canadian-made video game. If you believe your business is eligible for any of these programs, contact a member of the Mentor Works team to discuss next steps.
Canadian Federal Funding Programs for Video Game Development
Funding Through Each Stage of Video Game Development – Canada Media Fund: Experimental Stream
The Canada Media Fund: Experimental Stream helps to support Canadian-made software through its conceptualization, prototyping, production, and marketing phases by funding projects at these various stages of development.
Amount: This program funds up to 50-75% of project costs to a maximum of $15K-$1.5M. Each phase of a project has a different maximum amount of funding associated with it: (1) Conceptualization (75%/$15K), (2) Prototyping (75%/$250K), (3) Innovation (75%/$1.5M)
The overall maximum amount a single project can access across all funding streams is $1.5 million. Learn more about this program.
Funding for Innovative Video Games and Game Engines – NRC IRAP
The National Research Council Industrial Research Assistance Program (IRAP) is a funding program from the Canadian federal government designed to expedite the research and development process of innovative made-in-Canada technologies. This program would be relevant to those developing an innovative new game or software that is seeking to have its R&D accelerated.
Amount: Grants of up to 60-80% of internal labour costs and subcontractor expenses.
Ontario Government Funding for Video Game Development
Funding to Accelerate Video Game Development – Interactive Digital Media Fund (IDMF)
The Interactive Digital Media (IDM) Fund is a provincial government grant program from Ontario that supports digital media developers in expanding their growth and getting their products to market faster.
Amount: Provides up to $50K for concept definition projects, or $250K for digital media projects in the production phase.
Tax Credits for Ontario Video Game Developers – Ontario Interactive Digital Media Tax Credit
The Ontario Interactive Digital Media Tax Credit (OIDMTC) is a refundable tax credit that can be put towards eligible labour, marketing, and distribution expenses. This program is open to established Ontario-based corporations that develop interactive digital media. The OIDMTC is administered by Ontario Creates and the Canada Revenue Agency (CRA).
Amount: Up to 40% of eligible labour, marketing, and distribution expenses towards internal activities, with up to 35% for fee-for-service arrangements.
There is no overall funding cap for this program, however funding towards marketing and distribution expenses are capped at $10K per product.
Youth Video Game Development Grants – OCE SmartStart
The Ontario Centres of Excellence (OCE) SmartStart Seed Funding supports entrepreneurial youths aged 19-29 and can provide seed funding and support to help start-up companies become investment- and customer-ready.
Amount: Entrepreneurs can receive up to $30K in early-stage funding or 50% of eligible expenses, decided by whichever is less.
There is also up to $7,500 in financing available towards business skills training and support services as part of the seed funding amount.
Canadian Federal Funding Programs for Published Video Games
Retroactive Funding for Completed Video Games – SR&ED
The Scientific Research & Experimental Development (SR&ED) tax incentive program provides a retroactive tax credit 4-12 months after a project’s approval. This program is similar to the NRC IRAP program mentioned above, with the main differences being that this tax credit only applies to completed projects and covers a lower percent of the project’s costs, but more costs can be eligible.
Amount: Tax credit of up to 35-45% of wages, overhead, materials, and various other expenses.
Promoting Your Game in Foreign Markets – CanExport
The CanExport program can help your video game studio conduct marketing activities in foreign markets outside of Canada by accessing CanExport grants for related projects.
Amount: Up to 75% of project expenses to a maximum of $75K in grants.
Apply for Government Funding Grants, Loans, and Tax Credits
Whether your video game development studio is starting a new game, developing a game, or currently has a game launched, there’s Canadian government grants, loans, wage subsidies, and tax credits open to you. If you believe your business may be eligible, contact a member of the Mentor Works team to find out which of the 75+ government funding programs you qualify for. Businesses seeking funding as a result of the ongoing pandemic can also visit our COVID-19 government funding support page.
Video game studios looking into virtual reality development can download our free white paper on virtual reality trends to learn about new trends and funding programs to capitalize on this innovative new technology.