Video-game maker Behaviour Interactive’s CEO sees reason for optimism amid spectre of recession

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The booming video-game industry has seen a flurry of acquisitions in recent years, but the founder and CEO of Canada’s largest independent game maker isn’t looking to give up his company any time soon.

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“There’s (been) opportunities, but why sell? That’s the question,” Behaviour Interactive Inc.’s Rémi Racine said on Sept. 14 from the company’s recently opened Toronto office. “Ted Rogers never sold Rogers (Communications Inc.) but I’m sure he had the opportunity to sell many times. So it’s the same…. He wanted to build something. I’ve decided I want to build something instead of selling.”

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That mindset is part of what led the Montreal-headquartered firm, famous for the game Dead by Daylight, to expand its base to Ontario’s largest city, opening an office in the downtown core in April. The Toronto base currently has about 70 employees, but with the video-game sector sizzling at home and globally, Racine wants to fill the office with 300 more designers, programmers and marketers to add to its 1,000-deep roster in Quebec.

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Racine, who founded Behaviour in 1992, and his chief technology officer, Stephen Mulrooney, seem upbeat about the future, a bit of a jarring juxtaposition to the pall cast over numerous Canadian sectors, especially technology, by high inflation, increasing interest rates and the spectre of recession.

“The game industry is probably one of the best values for a discretionary dollar right now,” Mulrooney said, seated across from Racine. “Compared to other things like going to the movies or going to a restaurant … the amount of entertainment you get for your dollar (with video games) is higher than most other forms.”

The long gestation period for games — a video game can take up to four years to produce from ideation to getting it to market — is another reason to avoid any knee-jerk reactions.

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“Let’s say the downturn lasts 18 to 30 months,” Racine said, “we’re going to release those games when the economic cycle will be different.”

The latest data from Entertainment Software Association of Canada (ESAC), a trade lobby, supports Racine and Mulrooney’s optimism. The number of active companies increased by 35 per cent from 2019, according to ESAC’s industry report that comes out every two years. Further, revenues from the sector grew 20 per cent over the two-year period to an estimated $4.3 billion.

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Behaviour itself brought in record revenues of $260 million this year, the executives said, and the momentum helped it acquire its first studio, Seattle-based Midwinter Entertainment in May.

Racine said he won’t go on a buying spree to pick up smaller studios because the Behaviour team is selective when it comes to “vision,” and want to be strategic. But he acknowledged making acquisitions could be easier now that the Heritage Ministry, which has jurisdiction over entertainment sectors, is more closely scrutinizing foreign purchases of Canadian studios. The ESAC report showed that between 2019 and 2021, the number of Canadian-owned studios declined from 84 per cent to 75 per cent.

“It’s a good thing for us,” Racine said of the elevated scrutiny from Heritage. “It’s an opportunity because those studios might become available and instead of a foreigner buying it, it might be easier for us.”

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