Velan Studios is growing its footprint by adding an office in Montreal this year.
Guha Bala, president of the Troy-based video game studio, said the goal is to develop a talent pipeline and establish a foothold in the city, which has a high concentration of game companies.
As gaming companies scale, many will outsource labor to keep costs low — which sacrifices some creative control — or establish offices in a place with lowers costs, he said. Velan Studios decided to expand into Montreal to keep growing at half the cost of labor due to exchange rates and the province's video game tax credit program.
"Having a lower cost center, in addition to access to talent, that could bring down our overall cost of innovation in the United States," Bala said. "It's a good idea for us in the long run."
The province of Quebec offers a tax credit of up to 37.5% of qualifying labor expenditures. There are also additional programs, grants and interest-free loans.
Economic development organization Montréal International in 2023 estimated that the local industry had grown to more than 300 game studios and 13,500 workers since government support started in 1996.
New York has implemented its own $25 million video game development tax credit program, which awards up to $5 million per year for five years. It's a good first step, Bala said, but Montreal's program is different because it's easy to use, widely used, uncapped and permanent.
Canada also implemented a skills-based immigration policy, which would give Velan an easier way to recruit international talent.
"That means that it's not only the talent in Quebec, but it's talent around the world. And we can, in a pretty straightforward manner, apply for work permits and get them to work there," Bala said. "It's much more challenging to get that done in the United States now, and it's become more challenging over the years."
Over the course of the year, Velan plans to hire five to 10 employees in Montreal. The group will be focused on product development. Bala said the additional employees won't detract from the workforce in the Capital Region. In total, the company currently has 123 employees.
Bala said Velan is trying to grow slowly in Montreal.
"I think you could get lost in the numbers in terms of building a company. You could say, 'It's half the cost, so let me double the number of people,'" Bala said. "It's more important to be able to develop and establish a small footprint that works really well, understand the local market, establish the local leaders, and set the foundation to build really good organic growth there over time."
