Earlier today, Ubisoft announced its continuing Canadian expansion, with a new studio being established in the province of Ontario's capital city of Toronto. In a joint announcement with the Premier (his actual title) of Ontario, Ubi revealed the studio will have about 800 employees, while the government is committing $263 million in funding over the next decade. We spoke with Ubisoft Montreal CEO (and newly formed Ubisoft Toronto boss), Yannis Mallat, about his plans for the company why Toronto was "culturally" the right place for Ubisoft to expand its development reach.
Earlier this year, Ubisoft CEO Yves Guillimont revealed the company has seen a sales spike of 14 percent, yet Ubisoft experienced a 37 percent (or 31 million euro) decrease in net profit during Fiscal Year 2008.
Also, on a day where you announce a new studio, Merrill Lynch Canada chief economist Sheryl King revealed that she believes the Canadian economy will actually see a decline next year -- even though there has been a recent boost. Considering the troubled worldwide economy and declining profits, why has Ubisoft decided to expand?
You know, this is the kind of business decision that we take with the long term in mind. If there is one thing that's sure it's that, we don't fall into the trap of considering the the short-term economic context to impair with our long-term growth and strategy. As a matter of fact, Ubisoft is a healthy company in a still-growing industry and this is the kind of move that helps us to foster our long-term development.
I think that, a lot of people -- a lot of governments -- around the world do their best to attract investments and we could have ended up elsewhere in the world. But no, we chose Toronto because of several factors and I think that on the contrary, it is totally a positive move for us and for the province of Ontario and the video game industry here.
Why open a new studio in Toronto and not expand Montreal, which is already quite successful? Why not look elsewhere in North America? Some states like Massachusetts are close to Montreal and very eager to assist game developers.
"A lot of governments around the world do their best to attract investments and we could have ended up elsewhere in the world."
The opening and the development of the Toronto structure does not put a shadow on the growth of Ubisoft Montreal that is still going on. 3,000 employees? That's a huge studio. We need, as a company on the whole, to keep the growth. That's why we chose Toronto. Also, because of several important factors mentioned in the press conference.
First: Yes, there was the tax incentives. That part of it was a business decision, but there is also a lot of already existing players within the industry here in Toronto. Second, there are a lot of university and training programs and a lot of people in this sector that are gearing towards this new kind of economy. That's really important. And lastly, which is kind of the same that we've seen in Montreal as a success factor, we know that Toronto is a cultural and artistic city. It gathers all of the elements for creativity and innovation, which are our main values. So, you know, it's really those reasons and we're definitely applying a good strategy here.
Ontario has been trying to attract tech-based, creative industries as part of its plan to offset the loss of jobs in the manufacturing sector. In Europe, do you feel that development is lagging behind because of government decisions? Specifically, in France -- and soon the UK -- the government will require "cultural relevance" tests on companies when determining tax breaks.
I can't really comment on that. All I can say is that we are indeed talking to a lot of different governments and people, kind of as a day-to-day business discussion, to see what can happen over the years. What's important for us is to make sure that we create high quality jobs that support growth. Today it follows us to Toronto.
About tax incentives -- there is one thing that we all forget within the equation. It's that for one direct job there are a lot of other indirect jobs that are created and I think that's what Premier McGuinty and his team are looking towards and here we are, to achieve our business plan with him.
How did the partnership with Ontario government originate?
Again, all year round we're talking with different people from different layers of government. In the case of Ontario, we have found a real leadership in the Premier and his team. Again, it could have ended up anywhere else. But I think that the Ontario government is really into the next-generation of jobs and sustaining this new area of the economy. It's all part of the usual business discussions that we have.
Focusing on the studio itself -- When the studio does opens later this year will it be made up of completely new hires or will the studio move in team members from other Ubisoft development houses to get a strong framework in Toronto?