INVEST IN CANADA’S COST AND TAX ADVANTAGES – DIGITAL MEDIA Canada’s digital games industry is the third largest in the world in both size and quality, according to the Canada Digital Media Fund. Its new technologies and platforms continue to offer opportunities to investors. The consulting frm Nordicity tallied 472 frms with over 20,000 staff (up 24% from 2013) which make up this sector in Canada. In its 2016 study of global business locations, Competitive Alternatives 1 , KPMG found that Canada offers the lowest business cost structure and the lowest business tax burden among the G7 countries for video game production studios. Details of these fndings are presented below, refecting business costs and taxes for a model mid-sized game development studio. VIDEO GAME PRODUCTION COST INDEX, G7 RESULTS (U.S. = 100.0) CANADA ITALY UNITED KINGDOM FRANCE JAPAN GERMANY UNITED STATES 0 69.4 81.6 82.8 84.2 87.4 89.1 BASELINE 20 40 60 80 100 CANADA’S COST HIGHLIGHTS Video game studios based in Canada beneft from total labour costs that are 31.3 percent lower than equivalent costs in the U.S. Competitive salary levels and lower healthcare costs in Canada contribute to these savings. Leasing costs for suburban offce space in Canada’s major cities are low relative to most G7 countries, with savings of 30 percent compared to the G7 average for this facility. Power-hungry servers beneft from affordable electricity in Canada, with power costs that are 25 percent below the G7 average for this video game studio. Taxes and incentives represent the fnal component of Canada’s cost advantage, as detailed on the next page. Combining all cost factors, Canada has the lowest business cost environment among all G7 countries, with total business costs 30.6 percent below the U.S. IMPACT OF EXCHANGE RATES The 2016 edition of Competitive Alternatives was released in March 2016. The results from that study, including the results reported here, refect exchange rates that were in effect in the fourth quarter of 2015. These results are sensitive to exchange rate changes. During 2016, the Canadian dollar has appreciated modestly in value relative to the U.S. dollar. For the model video game studio, Canada’s cost advantage relative to the United States decreases marginally, from 30.6 percent to 29.7 percent at September 2016 exchange rates. The continued strength of the U.S. dollar provides Canada with a clear cost advantage for international video game studios.