The same factors that led Toronto to being dubbed Hollywood North (it’s the third largest screen-based production center after Los Angeles and New York) are poised to have the same influence on the tech and startup scene there.
You can credit it all to a combination of hefty government tax credits, top engineering and animation talent, lower costs — and now, a favorable exchange rate that looks like it’s not moving any time soon.
“We get tax credits [up to] 40 percent on every dollar,” says CEO Albert Lai of Big Viking Games. His company is in London, Ontario, a college town two hours from Toronto with just under 400,000 people. “We have a tremendous talent pool that is way less expensive than the Valley — there’s an extremely high caliber of people coming out of the stream of top-notch universities around us. Plus, we’re also pulling people from all over the world. And the cost of living is lower.
“So when you add it up, it looks like this: 40 percent or more in tax credits plus 25 percent savings with the exchange rate plus 25 percent savings in the cost of living.”
Lai has launched six companies in both the U.S. and Canada — and he’s a guest speaker at VB’s Toronto Roadshow on mobile acquisition and monetization coming April 1.
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After beginning with only four people in 2011, Big Viking’s staff has grown to 70, and Lai says they plan to hire up to 40 more this year. “Honestly, there’s no way I could have built this company in the Bay Area,” Lai said.
Alongside its federal partner, the Ontario government is aggressively subsidizing startups in order to achieve significant growth in tech. “Hands-down, there’s no other place in the world more supportive,” Lai said, and he goes on to describe how numerous American contacts and friends in the industry regularly come to him for advice on how to set up shop north of the border. He also refers to the “largest invisible minority” in the Valley: Canadians in the tech scene who live in the Bay Area but often return — and have established the biggest ‘invisible bridge’ that benefits both countries.
Big Viking’s growth right now is coming from two, somewhat opposite, directions. Lai sees a pendulum swing back to games on Facebook. The opportunity has been created by developers’ mass exodus to mobile games, leaving a hole on Facebook that Big Viking is more than glad to capitalize on, as it did when it bought YoVille from Zynga and renamed it YoWorld. Games like YoWorld and FishWorld have huge online communities, and Lai sees significant lucrative growth in Facebook, especially for smaller companies.
On the other bleeding-edge side, Big Viking is making fast-and-furious gains in HTML5 technologies for gaming. The advantage to HTML5 is the capability to deliver content in ways that’s not been possible before. Lai refers to embedding a game inside of a mobile browser, or as a minigame inside of an ad unit or inside a video player. And this is where it gets interesting, because suddenly, the possibilities for user acquisiton open up significantly.
Lai points to messaging platforms like Kik that have enabled their platforms to deliver HTML5 games. “This opens up an entirely new opportunity in how you think about engaging a player outside of the traditional application interface — or the app store,” he said. “Essentially, you have a huge try-before-you-download approach, and in a channel like a messaging platform that is highly social, that opens up sharing and viral activity big-time.”
As to monetization, Lai is frank about his questioning of ad-based revenue models. “There’s such a huge number of ad networks for mobile now, and it’s very difficult to differentiate between them,” he said, before going on to explain that Big Viking’s focus has been on in-app purchases.
Lai also acknowledges that the tools for optimization are getting far more sophisticated. His challenge going forward is finding the balance between monetization efforts and alienating engaged users — through either in-app purchases or advertising. For him, the answer is predictive analytics in order to determine players’ behavior, and in turn, the ideal frequency of ad delivery or in-app offers.
He’ll continue to tweak and experiment as his company expands — from the supportive cushion of the Toronto market. “The weather can be a huge issue for people who can’t stand the cold,” he said, “but for a 50 percent cost savings, I’m willing to deal with it!”
VB’s Mobile Developer Roadshow is coming to Toronto on April 1, where we’ll be sharing the latest research on mobile app acquisition and monetization strategies. Find out here if you qualify.
The Roadshow’s four stops include: Seattle (March 24), Vancouver (March 25), Toronto (April 1), and Montreal (April 2). Get all the info here.