Alberta increases film industry support but video game developers still waiting on tax credit

Alberta's latest budget offers more support to the province's growing film industry but leaves video game developers still waiting for long-awaited support.

The 2023-26 fiscal plan released earlier this month includes an additional $100 million over last year's estimates for the next three years in the province's Film and Television Tax Credit (FTTC). But it did not have an expected interactive digital media tax credit.

Scott Nye, chair of Digital Alberta and COO of Edmonton-based Inflexion Games, said the absence came as a surprise after so many signals from the government, including mentions in Innovation Minister Nate Glubish's mandate letter and the November throne speech.

"We firmly believed that the message that we've been delivering for the last several years had made an impact," Nye said in an interview Tuesday.

Although interactive digital media covers a swathe of related fields, video game development makes up a significant portion of the industry — and it's a booming business.

According to the Entertainment Software Association of Canada (ESAC), the video game industry spent an estimated $3.7 billion in 2021 across the country. 

Only four per cent of that was in Alberta. Most was in Quebec (43 per cent), Ontario (22 per cent), and British Columbia (27 per cent) — all provinces with some form of their own credit.

Nye said Alberta has many attractive qualities — low corporate tax rates, no PST, and a relatively low cost of living in major cities — but it is not competitive without a credit. He said video game companies based in Alberta are hiring employees in other provinces, stymieing job growth locally.

That includes Inflexion. Nye said the Edmonton-based company cancelled plans to expand its downtown workspace after the budget dropped.

Business case

Nye said the business case for the credit was proven in 2018, when the NDP introduced an interactive digital media tax credit. It covered 25 per cent of salaries and bonuses for staff, along with an additional five per cent for employees from diverse or under-represented backgrounds.

An influx of developers, including Inflexion's former owner Improbable, set up shop in Alberta — from 25 companies in 2017 to 66 in 2019, according to the ESAC. 

The UCP government yanked the credit after it was elected in 2019. The Alberta NDP promised last week to reimplement the credit if the party wins the May election. 

"I don't really concern myself with what party is coming forward with a proposal," Nye said. "If it's good policy, then we recognize that."

Melissa Crane, press secretary for Glubish, said Albertans are owed due diligence before introducing a new government program "to ensure the best decision is made in the interest of all Albertans.

"We have, and will continue to seek, the perspectives of leaders and experts in the industry."

Film boom

In 2019, the UCP government also axed a film and television grant introduced under the NDP but soon after created its own tax credit for the industry.

Alberta has seen some notable productions since — filming of Ghostbusters: Afterlife and HBO's television adaptation of the popular video game The Last of Us — while industry representatives speak of major growth in the sector.

Budget 2023 earmarks $125 million for the FTTC in 2023-24. Crane said $105M will be allocated to the credit for each of the following two years.

She said since the program was launched in 2020, 129 film and television projects have been brought to the province.

"These projects are expected to spend more than $964 million and support more than 9,000 jobs in Alberta," Crane said. 

"The additional funding in Budget 2023 is expected to support approximately $400 million spending in Alberta's economy."

Tom Viinikka, CEO of the Edmonton Screen Industries Office, said the additional funding for the tax credit will accommodate a growing industry.

"It is demonstrating both that they see growth coming and need to make room for it," he said.

The government is also promising a $4 million increase for 2023-24 to the Alberta Media Fund to support small-budget, Alberta-made productions.

Luke Azevedo, vice-president of creative industries and film commissioner with Calgary Economic Development, said funding like the Alberta Made Production Grant that fall under the media fund are also a part of the picture.

"Hopefully, we continue to ensure that the local producers are getting the same type of advantages as our as our service work, and that we can support both equally as we move forward."

Viniika and Azevedo were both supportive of an interactive digital media credit.  Azevedo said the industry falls within a wider creative economy that should be supported.

"Having our cities and our rural areas get behind us in the manner that they have with film and television, I think is going to be an incredibly beneficial thing for this entire province."