Imagine standing on an expansive, untouched plain, a blank canvas brimming with endless potential. This is the starting point game developers confront. It parallels the Canary Islands’ own evolution in the digital entertainment realm, as they take on the task to build industries from the ground up. In the case of its video game sector it has really lifted off in the last three years. Several factors are in play.
Robust Financial Incentives
On Jan. 1, the Canary Islands announced new incentives for film and TV shoots on the archipelago, of 45%-54% deductions rates for shoots capped at €36 million ($39.2 million) for a film and an extraordinary €18 million ($19.4 million) per single TV episode, some of the biggest incentives anywhere in the world.
Unlike the remainder of Spain, comparable rates exist for the Islands’ video game sector, an impressive 45% tax rebate or subsidy with cash back tailored specifically for investments made in the realm of video game development. Companies setting up shop in the Canary Islands can also benefit from their 4% corporate income tax, a rate considerably lower than the broader Spanish framework. Galvanized by incentives, the Canary Islands has built an animation industry which is a success story.
Gaming Sector’s Potential Growth
Growth potential for the video games sector is little short of staggering. Global revenues are forecast to total $522 billion in 2027 with users set to rise to 3.1 billion users, according to Statista. In Spain, the sector has already grown, from 490 active studios in 2017 to 755 in 2021, according to its latest White Book. Spain’s gaming industry now looks set to grow all the more, reaching $2 billion in 2027, up from $1.4 billion in 2022, according to Omdia. One geographic driver looks like the Canary Islands.
A key part of attracting attention to the Islands lies in proving marquee consumer gaming titles can be produced there. Enter No Brakes Games, a studio with a global hit. Its game, “Human: Fall Flat,” soared in popularity when released in 2016, becoming something of a sensation. Described as a ‘light-hearted, hilarious physics-platformer set in a world of floating dreamscapes, “Human: Fall Flat”’ has sold over 40 million copies. This breakout success, for founder Tomas Sakalauskas, enabled setting up a base on Canary island Tenerife in 2019.
”We try and prototype things super super fast. Get them in front of people, to do a lot of play-testing and just see what feels fun and what doesn’t. We’re quite experimental in that regard,” said Sitara Shefta, studio head and co-director of the recently announced sequel to “Human: Fall Flat,” describing No Brakes Games’ approach to game development: “We just want to make cool, fun, innovative experiences for people that want to play our games,” she continued. The studio’s presence underscores not only the caliber of games emerging but is proof of the Canary Islands’ potential to attract the best in their field.
There is a slew of intriguing titles in the pipeline for many of the studios. Previews of “Arico: Tale of the Abyss,” from Foxter Studio, Broken Bird Games “Luto,” and the aforementioned “Human: Fall Flat 2,” highlight the breadth of creative vision.
Spain’s Investment Challenge and the Role of Incentives
One crux for Spain’s independent sector is to attract investment, vital to sustain game development on more ambitious projects whose cost may not be covered by initial publishers’ deals. Here, the incentives can play an important part, creating a far more attractive business model and aiding companies to resist being bought up by big international conglomerates: 5% of gaming companies with offices in Spain already generate around 50% of the sector’s revenues.
“With the tax rebates, we believe it’s very possible to launch projects and to raise the financing,” Manuel Esteban Carrasco, UX/UI lead of Quantum Box, which set up in the Canaries in 2022, made up of industry veterans, many from Galicia’s Gato Studio.
The Canaries are, moreover, inspiring. At Gato, Carrasco and colleagues produced the RPG game “The Waylanders,” drawing its story from Galicia’s rich Celtic history. “There’s a lot of fantastic stories in Canarian culture and its long history. I think there’s a lot of things that a gaming studio could develop,” he enthused.
Canary-based video games are also broader based. One of the first gaming companies to set up shop there, in Gran Canaria in 2016, was Rising Pixel, founded by Italian Luca Contato. Producing what Contato terms serious games “designed not only for entertainment, but while they are certainly fun, they are made to educate, to inform, to advertise, to train, and so on,” one such project is “Inquisitors Heart,” a game focused on accessibility, in this case for the visually impaired in an audio video game in which the goal is to find a safe route out of dungeons by relying on your hearing and orientation skills alone.
Rising Pixels’ advergames, which score more engagement than standard video ads, have proven successful and it has worked with brands such as Twitter. Gamescom in Cologne will see the launch, not of a game but their platform named ÜConsole. “The idea is to transform any place, a hall, a workplace, anywhere with a shared screen into a virtual living room where everyone can join and play in a shared experience,” Contato explains. “You only need a phone and your phone becomes the controller,” he adds.
Education, Education, Education
In its drive to emerge as a nexus of innovation in the video game industry, the Canary Islands sector is taking one central issue by the horns: Training. Pablo Hernández, president of ZEC, and his team learnt from their experiences growing the Canaries’ animation industry. “One of the first things we did when we started our strategy to attract and develop more video game companies, two years ago, was go to the universities and the professional schools here to talk to them about the fact we’re going to put our effort into growing the industry of video games. We’re trying to build it [education] from the very first instance with local talent to support those who come from elsewhere.” Education programs created are already over subscribed.
The Heart of the Islands: Its People
The Islands to date have artfully employed their mix of financial incentives, geographic benefits and enchanting climate to attract talent and investment.
By building upon Spain’s appealing audiovisual tax benefits and enhancing them through the Canary Islands Special Zone (ZEC), they have significantly expanded their film and animation sectors over the past few years.
But behind these political levers lay human beings. The growth of the creative sector as a whole will give opportunity to the ambitious local talent who may in the past have thought they need to leave to make it to now stay. And for others who associated the opportunities on the island to be heavily skewed toward tourism and agriculture to have a stimulating alternative set of industries.
Alejandro Cañeque Martínez, director of investment attraction and services to ZEC entities, has worked on the development of industries on the islands for 20 years. “Laws and taxes? Those are important, but can be dull and boring for most people and if there is no business they do not work. In the end, what lays the foundation is people, talent and passion for starting projects.” he told Variety. “It is really really contagious.”
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