Wednesday, November 10, 2010

Video Gaming Industry And Talent Connectivity

Los Angeles and Pittsburgh have some interesting and important economic linkages. You are probably familiar with all the filming going on in Southwestern Pennsylvania. Less known is the burgeoning industry of entertainment technologies, symbolized by the presence of Disney on the campus of Carnegie Mellon University. Thus, I've endeavored to track video game design talent migration:

When London is referred to as one of the world's capitals for creative industries, mention should be made of electronic publishing and Eidos, the local firm that created Lara Croft and the Tomb Raider series. Since April last year, Eidos has been part of Square Enix of Japan.

Its boss in Europe, Phil Rogers, was kept on by the new owners. His is a highly competitive business, serving a demanding, fickle audience. Last week, in Tokyo, Square Enix issued a disappointing earnings statement. Part of the reason was technical issues with a new release, leading to poor reviews, while the company also suffered a foreign exchange loss and losses on property in Japan. Total sales for the six months were 68.05 billion yen (£522 million).

Rogers is upbeat, concentrating on new titles and formats, notably online and for Facebook. “We've got lots of game play coming up — there are some pillar releases in the pipeline. We're looking at new ways of engaging with the consumer — for instance, introducing bite-size games.

“Worldwide, the whole market is worth $50 billion. It's all up for grabs,” says Rogers. Demand appears to be insatiable. When Square Enix launched Final Fantasy XIII this year — the game is now in its 20th year, having sold over 97 million copies, and Lara Croft first appeared in 1996 — it had to close the Champs Elysées in Paris because of the crowds. In London, hoards of eager customers turned up at HMV in Oxford Street, dressed as warriors and wizards from the role-playing game. ...

... In London, says Rogers, “there is an amazing amount of creative talent. From here, we can dev-elop games and manage teams worldwide”. But he has to be careful: “There's evidence of a migration of that talent to other locations,” he says, citing Montreal where “they've structured their universities to study and teach gaming development — their education system is geared towards helping the industry — and for the companies involved they've introduced tax incentives”.

Montreal is a talent hotspot that has turned up on my radar more than a few times. In Canada, Vancouver and Montreal are the poles of gaming innovation. In the United States, it is Los Angeles and Pittsburgh. For the two West Coast cities, the legacy of entertainment enterprise attracts talent. For Montreal and Pittsburgh, the legacy of talent production attracts enterprise (e.g. Disney).

Phil Rogers is indicating that Montreal is starting to attract talent thanks to a growing international reputation as a place promoting video gaming innovation. Keep in mind that Rogers is trying to needle government in the UK to make a similar investment. If the evidence Rogers is referencing is credible, that bodes well for Pittsburgh.

Like Pittsburgh, Montreal is deeply parochial and off the map for most outsiders. Winters are long and cold. There is constant concern about brain drain. The outmigration of Anglophones is notoriously robust. Montreal stealing talent from London would be quite a coup.

Back in Pittsburgh, talent no longer needs to move to Los Angeles after graduating from CMU. I would also hazard to guess that it is cheaper to produce video games in Pittsburgh as opposed to Los Angeles. The growth of entertainment technology companies in Pittsburgh is a good example of the benefits of exporting talent. Doing so created strong links with a world class city. Pittsburgh is now cashing in on its brain drain and the migration flow has reversed.

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