State of Play: Canada's games industry looks towards its next chapter

• Government incentives have helped grow Canada's publishing industry, but support may need to evolve to meet modern publishing needs.
• Industry leaders see greater Canadian ownership of studios and IP as key to future growth.
• Mobile remains an underrepresented opportunity despite Canada's established development expertise.

This article is part of our Canada Region Report, published in association with Xsolla, coming soon. Learn more about the country's games industry at PGC Summit Montréal on November 10th.

Canada has established itself as one of the world’s leading game development hubs, supported by international investment, experienced developers and a strong network of studios.

However, the industry is also facing a period of adjustment. Layoffs, rising costs and greater competition have put pressure on businesses worldwide, including those in Canada. So questions remain about how the country can turn its development expertise into more internationally successful companies of its own. 

For Ludia CEO Jimmy Gendron, the country's games industry is “resilient, but at an inflection point".

"Foreign-owned companies employ a majority of the workforce," he says. "Canada is a world-class place to make games, but still too rarely a place where the companies that own the games are headquartered."

Hyper Hippo Entertainment chief business officer Jennifer Kilback similarly believes the country has the foundations for future growth, despite the challenges facing developers. 

"There's still a lot to be optimistic about, with a strong talent pool and government programs that help support innovation and investment," she says.

"I see this as a period of evolution, with significant opportunities for studios that combine creativity and innovation with strong business foundations."

Navigating a changing industry

Canada’s games sector has not escaped the international difficulties affecting developers. 

In an economic impact study which was commissioned by the Entertainment Software Association of Canada and conducted by Noridcity, it found that the number of active games companies fell by 9% between 2001 and 2024, while employment declined by 3.5%.

More recently, layoffs have impacted companies like Bethesda Game Studios Montréal. Ubisoft closed its Halifax studio in January 2026, which impacted 71 positions. It also shut its Winnipeg operations in June, affecting another 65 employees.

These developments reflect the pressures facing an industry in which established companies and independent developers alike are having to reassess costs and operations.

Kilback identifies financial sustainability as one of the sector’s biggest concerns. 

"Rising development costs, economic uncertainty and tighter access to capital have contributed to layoffs and studio closures across the industry," she says.

"Competition is also intense. With so many games competing for players' attention, discoverability and the cost of acquiring and retaining players continue to be significant challenges."

For studios launching new titles, the commercial challenge extends beyond development. Reaching audiences and maintaining that engagement requires investment at a time when securing capital has become more difficult. 

Technological change is also influencing how studios operate, particularly as artificial intelligence becomes more prominent in development workflows.

Kilback sees opportunities for greater efficiency but cautions that adoption brings wider considerations.

"There's tremendous potential to improve how we work and innovate, but also important questions around intellectual property, creative integrity and the impact on our people. Finding the right balance will be important as the industry evolves."

Despite industry pressures, some have still gone on to attract international investment. Wizards of the Coast opened a new Montréal studio in October of 2026 and has plans to expand to around 200 employees by 2028.

Such developments show the continued appeal of Canada’s talent base, even as the industry adjusts to changing market conditions.

The mobile opportunity

Canada’s development ecosystem has historically been shaped by console and PC production, particularly by well-established international companies such as Ubisoft and Electronic Arts. However, Gendron believes mobile remains an underrepresented opportunity. 

"It strikes me how few of the teams and studios in Canada are focused on mobile, given where the market is," he says.

"Canadians themselves are mobile-first players. Yet our mobile ecosystem is small relative to our console and PC footprint, largely for historical reasons: the industry here scaled on the back of Ubisoft's early investment in Montréal and EA's in Vancouver, so our talent, our schools and our incentives all grew up around big-budget console and PC production.

"That is a strength, but it also means the mobile opportunity is underrepresented. The talent we have built in Canada is more than capable of creating global hits in mobile and there is real room to do it."

Canada already has several established mobile businesses. Ludia operates licensed titles including Jurassic World: The Game and Jurassic World Alive, while Big Blue Bubble is known for My Singing Monsters.

Other companies in the sector include East Side Games Group, Kabam, Hyper Hippo, Gameloft Montréal and Budge Studios. 

While mobile is a popular way to play in Canada, it is still a tough market with its own challenges.

East Side Games Group reported revenue of $77.6 million in 2025, down from $83 million in 2024, with the company pointing to factors including competition and rising user acquisition costs. 

Meanwhile, Ubisoft’s decision to shut down Rainbow Six Mobile in January 2027, less than a year after its global launch, shows that such difficulties impact even some of the most established studios when it comes to adapting to mobile. 

Gendron believes the competitive landscape has also changed, with publishers increasingly relying on sophisticated monetisation strategies, live operations and direct-to-consumer channels.

"It is not new players; it is deeper monetisation of existing ones, direct-to-consumer channels, and, in mobile especially, publishers from Asia, and China in particular, who now lead entire genres through live ops and user acquisition spend," he says.

"That is the competitive set."

For Canadian developers, competing in these environments requires a host of skills beyond just technical expertise. Studios must understand publishing, marketing and other operational aspects needed to sustain games internationally.

Who owns Canada’s games?

While mobile presents an opportunity, both Gendron and Kilback identify a broader issue facing Canada’s games industry, which is ownership. 

International publishers have played a significant role in building the country’s development infrastructure, but much of the intellectual property created by Canadian teams belongs to companies headquartered elsewhere. 

Kilback believes increasing Canadian ownership could help the country retain more of the economic value generated by its developers.

"One of the biggest opportunities is developing and growing Canadian-owned IP," she says.

"While many of our largest studios are foreign-owned and contribute significantly to the industry, much of the long-term value created here ultimately flows elsewhere. When we own our IP, we keep more of the decisions, the revenue and the long-term upside in Canada."

Ludia’s ownership change provides one example of a Canadian business seeking greater independence. 

In August 2025, local shareholders and senior management acquired the Montréal-based studio, returning it to Canadian ownership after its time under US-based Jam City. The company said it employed more than 120 people and planned to create another 50 jobs over the next year.

Gendron sees the move as part of a broader ambition to establish a Canadian-headquartered mobile publisher capable of competing internationally. 

"It is one of the reasons we saw an opportunity to bring Ludia back into Canadian hands last year and to scale it from here as a platform for mobile," he says.

However, building more Canadian-owned businesses also depends on encouraging new companies to emerge. He points to Türkiye as an example of how successful exits can help create a new generation of games businesses.

"Compare that to what is happening in a country like Türkiye, where one big exit, Peak Games, produced a generation of founders who have since started dozens of new studios and scaled several of them into global leaders," he says.

"That density of entrepreneurs building and scaling companies is what Canada is missing."

He also highlights the Nordic games industry, where companies including King, Rovio and Supercell emerged from relatively small teams before going on to become internationally successful businesses. 

Canada has shown it can create successful independent games, with studios such as Behaviour Interactive and Red Barrels building intentionally long-lived audiences, while Balatro has shown that even smaller Canadian developers can achieve global recognition. 

The challenge is creating the right conditions for more businesses to follow. 

Investment and international ambitions

Access to capital is a major concern for studios seeking growth, especially as some investors have become more selective about what they back.

Gendron argues that this is a global challenge, not one unique to Canada. 

"Investment in games is at a low and investors want proof of traction before they commit," he says. "That said, I would put the responsibility on us as an industry as much as on investors."

He believes studios with distinctive products and clear commercial strategies can still attract investment, pointing to the growth of mobile developers in Türkiye as an example.

For Kilback, building sustainable businesses also means expanding internationally.

"There's also a big opportunity to reach new audiences internationally, particularly in growing markets like India and established gaming markets like China, Japan and South Korea," she says.

"Canada has a strong reputation as a trusted, collaborative partner and that opens doors."

For Canadian studios, looking outward toward expansion in markets such as Türkiye, India and Japan could create new opportunities to build audiences beyond their original territories. 

However, doing so would also require teams to ensure they have resources and expertise to establish a presence in those markets.

Kilback's comments also highlight this opportunity for Canada's games industry, that rather than relying on its reputation as a development hub, more studios could take control of their own international growth.

Government support

One factor that has famously significantly impacted the growth of the Canadian games market is government incentives. Over the years, these tax credits and programmes supporting innovation and employment in the region have helped build the market we see today.

However, some in the industry believe that those methods need to evolve alongside the businesses they support.

Quebec’s changes to its multimedia production tax credit, announced in the province’s 2024 to 25 budget, introduce a phased shift toward a greater non-refundable component, affecting how some studios can benefit from the incentive. 

Gendron believes the priority should be improving the effectiveness and consistency of government support rather than simply increasing funding.

"Not necessarily more, but smarter and more stable," he says when asked what additional government support is needed.

"Stability in fiscal support is the foundation; studios make multi-year decisions and need to know the rules will hold. Modernising the credits matters just as much. Ontario, Manitoba and Nova Scotia already cover marketing and publishing roles, and for a mobile games business, those functions are half the company."

He argues that incentives should better reflect the commercial requirements of modern mobile publishing, including marketing and user acquisition.

Kilback highlights the practical impact government programmes have already had on Hyper Hippo’s operations.

"Government support has made a real difference for us. Programs like the Interactive Digital Media Tax Credit (IDMTC) and SR&ED provide valuable non-dilutive capital that allows studios to reinvest in development, innovation and growth," she says.

"Funding from PacifiCan helped us grow overseas and support from CanExport is now helping us build in markets like Japan, South Korea and India."

She believes continued support should help studios progress from early development to sustainable commercial operations, while investing in the next generation of talent. 

Kilback also points to the importance of industry organisations including DigiBC, Interactive Ontario, Creative BC, Ontario Creates and the Canada Media Fund.

These groups provide connections to funding, expertise and talent, as well as helping developers navigate the different stages of building a business. 

"I think the real value comes when these organisations work together to help studios grow, from developing their first game to building sustainable businesses and competing on a global stage," she says.

Looking to the coming years

Despite the challenges facing Canada’s games industry, both executives remain optimistic about its long-term prospects. 

The country has an established workforce, international connections and decades of experience in producing games for global audiences.

For Gendron, the opportunity lies in using those advantages to create more Canadian-headquartered publishers. 

"We have one of the deepest pools of games development talent anywhere, built over 25 years. We have a generation of senior people who have shipped and operated games at global scale," he says.

"Five years from now, I hope Canada is known not just for the games it builds for others but for the companies it owns, with a handful of Canadian-headquartered publishers of real scale, including in mobile."

Kilback shares that ambition, but also emphasises the importance of profitability, employment and retaining value within the country.

"I hope we'll see more Canadian-owned games reaching players around the world, supported by independent, profitable studios," she says.

"I'd also love to see continued investment in our talent, creating opportunities for people to build meaningful careers in games across the country."

The future of Canada’s games industry will depend not only on its ability to attract intentional investment and maintain its development workforce, but also on its ability to create more businesses that can compete and grow independently. 

As Kilback puts it: "Ultimately, success would mean a thriving Canadian games industry that's not only creating great games, but building lasting businesses and keeping more of that value here in Canada."

Learn more about the country's games industry at PGC Summit Montréal on November 10th.