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\n\t\t\t\t\t\t\t\t\tUbisoft offices are shown in Montreal, Thursday, May 16, 2013. THE CANADIAN PRESS\/Graham Hughes<\/p>\n
The Canadian Press is not naming the source because they were not authorized to speak publicly and feared it would harm their future job prospects. Xbox and Bethesda did not respond to questions on the layoffs.<\/p>\n
The dozen employees were part of a much larger cull by Microsoft-owned Xbox, which announced on Monday that about 3,200 employees would be laid off in the coming year amid a \u201creset\u201d at the video game business as it faces heightened competition.<\/p>\n
The move marks the latest hit to an industry that has struggled to adapt to tougher market conditions after a surge in demand and investment during the COVID-19 pandemic. The subsequent retrenchment means that, in Quebec, the video game industry finds itself in a state of limbo as studios let go of workers, tax credits recede and consumers turn their attention elsewhere \u2014 even while some outfits find ways to thrive.<\/p>\n
\u201cWe\u2019re still in a bit of a restructuring period,\u201d said Jean-Jacques Hermans, who heads Quebec\u2019s video game industry association.<\/p>\n
\u201cWe see game projects being abandoned or put on pause \u2026 We\u2019re seeing employees being laid off in between projects, which wasn\u2019t the case earlier.\u201d<\/p>\n
The stakes in the province are high. Quebec is home to more than 300 studios and 45 per cent of the country\u2019s roughly 34,000 game developers, according to the association and consulting firm Nordicity. The sector generates more than $1.4 billion in economic output in Quebec each year. And Montreal plays host to big offices for major foreign companies like Epic Games \u2014 behind the massively popular \u201cFortnite\u201d \u2014 and Ubisoft, whose nearly 4,000 employees in Montreal work on the \u201cAssassin\u2019s Creed\u201d franchise and comprise the biggest studio in the world.<\/p>\n
But both companies have taken hits. Epic cut more than 1,000 workers or 20 per cent of its staff earlier this year, some of them in Montreal. Ubisoft laid off nearly 140 employees after shuttering studios in Halifax and Winnipeg.<\/p>\n
Eidos, Electronic Arts, Behaviour Interactive and other developers have all announced layoffs in Montreal over the last four months.<\/p>\n
The cuts hint at a broader industry crisis that continues to unfold amid restructuring by major companies and the spread of rival forms of interactive entertainment as well as artificial intelligence.<\/p>\n
\u201cIt feels like it\u2019s a perfect storm,\u201d said Philippe Morin, co-founder of indie studio Red Barrels in Montreal. \u201cIt\u2019s definitely not a fun time in the industry.\u201d<\/p>\n
One problem is that overspending by big companies during the pandemic is now coming home to roost.<\/p>\n
\u201cEverybody was at home looking for stuff to do. That created a big peak of activity and salary increases and investments,\u201d said Morin.<\/p>\n
\u201cIf the revenues don\u2019t follow, then the only solution is to decrease the expenses.\u201d<\/p>\n
Meanwhile, the proportion of people who play video games worldwide has been shrinking since 2021.<\/p>\n
That decline coincides with the rise of new forms of digital entertainment. TikTok exploded across the world over the past half-decade, notching user numbers in the billions. Sports betting, prediction markets, cryptocurrency investing and consumer AI apps have all gobbled up a greater chunk of the attention economy.<\/p>\n
\u201cCompetition isn\u2019t just coming from other games,\u201d said Paul Fogolin, CEO of the Entertainment Software Association of Canada. \u201cPeople only have so much time in their days.\u201d<\/p>\n
And only so much money. Higher living costs have weighed on consumers\u2019 willingness to spend, he said. The AI data centre boom has sharply raised the cost of random access memory and other components used in game consoles.<\/p>\n
\u201cTypically in a console release cycle, the console comes out and then, a couple years after, the prices decrease. We\u2019re seeing the opposite,\u201d Fogolin said.<\/p>\n
Falling financial support from some governments makes things tougher still. For decades, Quebec paid companies up to 37.5 per cent of employees\u2019 salaries through a tax credit. But two years ago, then-premier Fran\u00e7ois Legault\u2019s government revised the formula, reducing the credit by a third and omitting a slice of each worker\u2019s wages from the calculation in a bid to cut costs.<\/p>\n
\u201cThe impact was radical,\u201d said Hermans. First to go were lower-level jobs such as quality assurance testers, who look for bugs in a game, or localizers, who adapt it for a specific region.<\/p>\n
\u201cThey can move those positions from Quebec to Ontario quickly, or to Asia or to Mexico,\u201d he said.<\/p>\n
Generative AI throws more uncertainty into the mix, though how many job losses it accounts for remains unclear.<\/p>\n
Fogolin described it as a tool for designers rather than a replacement, saving them time on more routine illustration tasks.<\/p>\n
\u201cThink about something like \u2018EA Sports FC,\u2019 where you have these massive stadiums. AI can help render realistic backgrounds and even the way that things like hair are rendered,\u201d he said.<\/p>\n
Signs of hope persist.<\/p>\n
At Red Barrels, which made the indie horror game series \u201cOutlast,\u201d the company doubled its head count to 90 over the past nine years. Despite tough times across much of the industry, big hits still breed lucrative business \u2014 and lots of optimism.<\/p>\n
\u201cIt\u2019s our best year so far,\u201d said Morin, referring to revenue. Sales for the PC-based version of the firm\u2019s 2024 release \u201cOutlast Trials\u201d neared $40 million in its latest fiscal year.<\/p>\n
Images of the game\u2019s hollowed-out streetscapes and sewer-green lairs that hang framed on the studio walls belie the laid-back office atmosphere. Foosball and shuffleboard tables furnish the converted loft space in Montreal\u2019s Old Port neighbourhood, and stuffed animal versions of game characters render the ghoulish adorable.<\/p>\n
The team has found success in building slowly \u2014 \u201cwe would never add 20 to 30 people in just a few weeks\u201d \u2014 and being \u201cvery cautious\u201d with risk, Morin said. And the success of Red Barrels\u2019 latest release has given it breathing room in a sputtering market.<\/p>\n
\n\t\tWinnipeg Free Press | Newsletter\n\t<\/p>\n
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The small size of studios that make up the bulk of Quebec gaming companies lends them greater agility, he added.<\/p>\n
\u201cYou can feel where the wind is blowing and then adjust.\u201d<\/p>\n
However, it also leaves them vulnerable to changes in the sector, said Carmel Smyth, president of CWA Canada, which represents some game developers.<\/p>\n
\u201cThere\u2019s a lot of anxiety in the industry,\u201d she said.<\/p>\n
This report by The Canadian Press was first published July 12, 2026.<\/p>\n","protected":false},"excerpt":{"rendered":"MONTREAL \u2013 At 10:30 a.m. last Monday, about a dozen employees at Bethesda Game Studios in Montreal learned…\n","protected":false},"author":2,"featured_media":797075,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[194296],"tags":[49,48,22073],"class_list":["post-797074","post","type-post","status-publish","format-standard","has-post-thumbnail","category-winnipeg","tag-ca","tag-canada","tag-winnipeg"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/797074","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=797074"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/797074\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/797075"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=797074"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=797074"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=797074"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}