With the game industry booming, more entrepreneurs are evaluating where to base their new startup or open a new office for their existing company. The U.S. government’s block on H1-B and L-1 visas will encourage American game startups to add an office abroad much sooner than they otherwise would have. But where?
This spring, I surveyed a number of gaming-focused VCs about which cities are the best hubs for game studios targeting the Western games market. Several locales stood out as heavily recommended — which I’ve shared below — but the most interesting takeaway was the lack of consensus.
Game studios are far less geographically concentrated than other categories of VC-backed startups. While there are odes on Twitter and conference stages that “you can build a successful startup anywhere,” most investors will push founders to locate themselves in the SF Bay Area, or at least in LA, NYC or London. Meanwhile, the most common piece of advice from those I spoke to: You should probably not base a gaming startup in the San Francisco Bay Area.
Access to the right talent is the top priority, as is the ability to retain them. Proximity to investors matters, but a successful game quickly turns a profit, which reduces the need for outside funding beyond Series A (and U.S. and European VCs who focus on gaming tend to be very international in scope). Quality of life, ease of obtaining visas and access to strategic partners all play into the decision as well and will weigh these recommendations differently depending on who you are and the games you’re developing.
Three notes:
- I focused on qualitative research, gauging the assessments of top investors who track new startups in the sector about where the action is right now.
- The scope of this survey is limited to studios targeting the Western gaming market, so leading hubs in Asia weren’t included.
- I group cities by metropolitan area so, for example, San Francisco includes Redwood City and Seattle includes Bellevue.
North America
In North America, Los Angeles is the clear favorite with Montreal, Seattle, San Francisco, Toronto and Vancouver all receiving many endorsements as the other top hubs. Regarding cities with the most interesting gaming startups recently, Ryann Lai of Makers Fund said, “It is hard to name a single best location, but Toronto, Culver City (in Los Angeles), Orange County (next to Los Angeles) have gotten increasingly popular among gaming founders lately.”
The LA metropolitan area is home to Activision Blizzard, Riot Games, Scopely, Jam City, Zwift, and has important offices for companies like EA, Sony Interactive (PlayStation), Xbox, Tencent, NetMarble, Nexon, Playtika and Sega.
It offers a deep talent pool of developers and artists from across the gaming, tech startup and Hollywood VFX ecosystems — which makes competition and salaries high. It’s easy to recruit talent to move to the warmth and glamor of America’s second-largest city (setting aside the visa challenges).
LA is home to film/TV companies that many teams license IP from and it’s one of the primary hubs for esports companies. Its gaming talent pool leans more to console and mobile than PC, according to one investor. Notably, all my respondents who had a recommendation for AR/VR development named Los Angeles as the epicenter.
LA is also a one-hour flight away from San Francisco to the extent that key partners or investors are based there, and it has direct flights to most major cities.
The most agreed-upon sentiment in my survey and interviews has been that San Francisco is overly expensive without offering a worthwhile advantage, as Silicon Valley is less dominant as a hub for gaming startups than for many other categories of startups. With intense competition from every other type of tech company, the Bay Area is the most expensive place to hire developers and they don’t stick around for very long.
“Keeping tech talent in games startups is incredibly difficult today, so [you] need to find a location where the fight for talent is not as bad as SV,” wrote NFX partner and serial gaming entrepreneur Gigi Levy-Weiss.
That said, San Francisco certainly has a large pool of top talent working at anchor companies like industry giant EA ($5.5 billion in revenue last year) and subsidiary Maxis (creators of The Sims), kids-centric sandbox MMO Roblox, and mobile gaming leaders Zynga (Farmville, Words with Friends), Niantic (Pokémon Go), Glu Mobile (Design Home, Kim Kardashian: Hollywood), MZ (Mobile Strike, Game of War), Pocket Gems (Episode, War Dragons) and Storm8 (Property Brothers Home Design) plus satellite offices of Ubisoft, Sony Interactive, Tencent and one of the main offices of game engine Unity.
From a funding standpoint, the San Francisco Bay Area is the global center of venture capital, but the VCs who invest in gaming companies generally make the majority of those investments outside the Bay Area, and just as many are based in Europe as in key U.S. tech hubs.
David Gardner, partner at gaming-focused seed fund London Venture Partners, highlighted the strategy of growing your team in two locations: “San Francisco is incredibly expensive where your startup runway is eaten at 3x the speed of other locations. We’re seeing a hybrid approach where the founding team might start there and then expand in Toronto, Montreal or other high-quality but lower-cost locations to make their runway/productivity ratio better.”
Montreal has a particular strength in PC games, according to Levy-Weiss, and is filled with established gaming studios. It is home to Behaviour and Eidos Montreal (which both make PC and console games using Hollywood IP); kids mobile game studio Budge; EA’s Motive (which works on Star Wars: Battlefront II); Xbox-owned Compulsion Games (creators of Contrast and We Happy Few); Ubisoft Montreal; GameLoft Montreal; Warner Bros. Games; Google Stadia’s first studio; Unity’s Vivox team that builds in-game voice and text infrastructure); and a 2K office focused on the BioShock franchise. America’s strict, time-consuming and unpredictable visa process makes Montreal and other Canadian cities easier office locations for hiring international talent than U.S. cities.
The crowdsourced tracking site GameDevMap lists 165 game studio offices in Seattle, 99 in Toronto, 81 in Vancouver and 100 in Austin. Seattle has long been a major hub for PC and console gaming studios as well, with the headquarters of Valve and Microsoft (XBox) plus offices for Nintendo and EA. Toronto has large offices for Ubisoft, Rockstar and Zynga plus local studios like Big Viking Games and Uken Games. Vancouver is home to SkyBox Labs, Sega-owned Relic and EA Sports. Austin’s specialty is PC/console gaming with the headquarters of companies like Certain Affinity, KingsIsle and Aspyr in addition to offices for EA Sports, BioWare, Bethesda, Unity, Blizzard, Zynga and Amazon Game Studios.
Peter Levin, managing partner of Griffin Gaming Partners in Los Angeles, said that “due to the weighted influence of key players in distribution, intellectual property, 5G/cloud gaming and competitive gaming (esports), [LA, SF and Seattle] punch way above their weight and have become hot beds for startups and talent.” He also added that “Canada, in particular, Toronto and Vancouver, continues to be a great environment for talent recruiting. Quality of life balanced with cost of living is the calculus here.” The Canadian ecosystem’s strength tends to be in PC and console games more than mobile, it’s worth noting.
Europe
Helsinki stands out for being, in the words of LA-based Upfront Ventures partner Kevin Zhang, the “undisputed champ for mobile.” A hub for indie game development since the 1980s, the Finnish capital is now home to world-famous studios like Rovio, Supercell, Seriously, Next Games, Ubisoft’s Redlynx, Small Giant Games (acquired by Zynga) and Remedy (on the console side) plus offices for EA. Dozens of smaller studios like Grand Cru, Armada, RedHill, Mainframe and Dazzle Rocks are growing here and the top local universities feature masters and doctoral degrees specific to gaming.
Generalist VC firms in the Nordics tend to be open to gaming investments given the region’s strength in the industry and top gaming VCs based elsewhere are frequent visitors to Helsinki. Levin says he can count at least 50 trips to Helsinki as part of his investing and corporate development roles and argues that “the level of competition and quality in [the Nordics] has created both a fraternal community of gaming companies as well as a Darwinian effect with respect to quality and companies that achieve ‘escape velocity.’”
Two VCs described Helsinki as a tough environment for incoming foreign talent. That said, the country’s gaming industry association Neogames reports 27% of game developers are foreigners, with a 75% increase in foreign talent in the last two years, showing there are a lot of game developers immigrating. The surge in foreign talent also hints at a downside of basing your studio here though: A small overall talent pool (roughly 3,200 game developers) is a recruiting challenge, especially for senior-level positions as your company grows, so luring talent from abroad will become a normal part of your recruiting process.
As one of the globe’s key business hubs across industries, including all things media and entertainment and technology, London has one of the largest talent pools in the world and lots of startups creating games or gaming infrastructure. The city includes offices of Square Enix Europe, Sega’s European HQ, Bossa Studios (I Am Fish), EA-acquired PlayFish, King (Candy Crush), Rockstar North (Grand Theft Auto) and gaming infrastructure unicorn Improbable. The gaming industry is less centralized in London though, particularly when it comes to PC and console, with large studios spread out in clusters across England (and Scotland). London is expensive, though still less so than San Francisco. It also offers the largest concentration of venture capital in Europe including firms like London Venture Partners, Index, Initial Capital, Hummingbird and Makers Fund (who are among the most active early-stage investors in gaming startups). The ease of building an international team in the U.K. remains unclear post-Brexit, creating uncertainty around visas.
Stockholm also received strong endorsements across the board for quality of talent (across mobile, console and PC) and quality of life. It is home to Mojang (creators of Minecraft), the Stillfront and Embracer conglomerates of studios, Avalanche (Mad Max, Rage 2), EA-owned DICE (Battlefield, Star Wars: Battlefront), Paradox Interactive (Cities: Skylines; Europa Universalis), developer/publisher Starbreeze, Fatshark (Warhammer), King (Candy Crush), and offices of Ubisoft, Unity and Epic Games. Stockholm is more expensive than Helsinki but still more affordable than San Francisco, LA and London and — as a larger, more cosmopolitan, more international city — easier than Helsinki to recruit international talent to, according to one active gaming-focused VC who asked that his survey responses remain anonymous. English is the language most startup teams use internally. Pioneering gaming studios to watch include co-op MMO studio Embark Studios (founded by former EA Chief Creative Office Patrick Söderlund and acquired by Nexon) and VR games maker Resolution Games.
Paris and Berlin follow as gaming hubs in large part due to sheer size as major world cities that are home to creative and technology businesses of all types and the talent pool of developers and artists that surrounds them. In the Parisian suburb of Montreuil is the headquarters of longtime game publishing behemoth Ubisoft, which earned over €2 billion in 2019 revenue. Notable startups include mobile studios Oh BiBi and Pretty Simple and cloud gaming startup Shadow plus large offices for Nintendo and Blizzard. The language barrier can be frustrating for non-French speakers in Paris, whereas English is the standard language used in most Berlin startups given the more international talent pool. Berlin is the home of narrative games maker Wooga, casino games outfit Huuuge Games and startups like sandbox MMO maker Klang Games. The German capital’s counterculture makes it a quite different tech ecosystem from more formal Paris.
Among my survey respondents, Barcelona was the favorite hub in Europe for a low-cost office. A beautiful city with creative and technical talent that comes at a much lower price than in London or Paris or the Nordics, Barcelona helps startup studios stretch their funding farther. TakeTwo-owned Social Point, two Ubisoft offices (one focused on mobile, the other on console) and large offices for Scopely and King are anchors in the ecosystem. Scopely co-CEO Walter Driver wrote that his team has continued “to expand and lean into the Barcelona market due the quality of talent in and around the city — both from top universities and other tech companies.”
Most of the gaming VCs I spoke with said they are paying increased attention to startups in Eastern Europe, particularly Warsaw and Kyiv. Mobile casino games giants Playtika and Huuuge have large offices in both cities, as does Israeli mobile MMO developer Plarium. These metro areas remain quite cheap to operate in compared to the rest of Europe and North America. They are filled with developers who have been doing outsourced work for Western European and American startups for years and are now eager to contribute to ambitious local success stories like CD Projekt, the Warsaw-based firm behind the The Witcher franchise and the Good Old Games distribution service that earned €121 million in revenue last year.
Where to set up shop
Large gaming companies rise up in cities all over the world. This survey highlighted the consensus of where those focused on investing in pioneering new companies have been seeing the most talent and startup activity, but it is hardly an exhaustive list of where the next wave of big game studios will come from.
Other cities outside the US that received endorsements from the investors I surveyed included: Tel Aviv in Israel, which is historically strong in social casino games (and home to Playtika, Plarium and Crazy Labs among others); Istanbul in Turkey, which Play Ventures’ Harri Manninen described as “affordable and good talent especially for (hyper)casual and puzzle” games; Medellin, Colombia, which Geneva-based Bertrand Vernizeau of Game Seer Venture Partners endorsed as “low cost of living, [you can] easily relocate highly talented foreigners, excellent quality of life”; and São Paulo and Bogota per Ryann Lai of Makers Fund.
Lai advises analyzing cities based on the specific context of your product development priorities: “It is better to focus on the specialized talent necessary for the specific game idea — i.e. some cities (Montreal, Bellevue, etc) are home to certain game companies and vocational institutions that promote distinct talent pools. Depending on the design and strategy, founders should also consider staying closer to strategics, investors and/or influencers (e.g., movie IPs in LA, platform players in SF).”
Levy-Weiss emphasized the distinction between a hub for gaming talent and a hub for more general tech talent: “Using nongames talent is likely to be much slower than those with games experience … talent is not easily transferable between platforms (PC to mobile for example), business models (premium to IAP) or even genres … so have an experienced core that has relevant knowledge in your specific field.”
Existing, larger companies with relevant expertise can be anchors for you to recruit from as their staff start looking for new jobs. Having an office nearby to plug into the same social circles and provide an easy transition can help win some of them over.
Ultimately it’s more important to build a successful game than to minimize costs, though keeping costs down buys time to accomplish the former. Reducing costs doesn’t have to mean an office in another region; sometimes an effective option is selecting a lower cost urban neighborhood or suburb within a major metro area where key clusters of relevant talent are located.