COVER STORY: Digital Media Takes The Prize

By Jenny Vickers
From the March/April 2012 issue

The digital media sector is developing rapidly, creating thousands of jobs as millions of pixels are aligned in the unbelievable images its artists generate for the latest feature films and video games produced by the multi-billion-dollar entertainment industry. While most of the workforce still is centered in traditional locations like California, Massachusetts and New York, several states have aggressively introduced incentives that are geared to jump-starting new digital media clusters. Among the emerging leaders in this thriving new industry are Utah, Louisiana, Rhode Island and Oregon.

Utah Aims for Digital Peak

In Utah, the digital media industry, which consists of businesses in animation, graphics, film and digital gaming, currently accounts for 1,500 jobs and $415 million in revenue for the state. But now, the goal is to double that by 2016.

In November 2011, the Utah Cluster Acceleration Partnership (UCAP) announced its strategy to double the number of digital media jobs and turn the industry into an $800 million contributor to Utah’s economy by focusing on the state’s unique creative and technology strengths. UCAP is an innovative effort in which Utah’s institutions of higher education become regional hubs of economic activity and the respective presidents become “regional economic stewards.”

Many of the state’s colleges and universities are rapidly adding or expanding programs to meet the demand for educated workers in the industry. In Utah County, Brigham Young University has established a world-class digital media program that is sponsored by digital media giant Pixar. Through the program, BYU students have garnered numerous “Student Emmys” from the Academy of Television Arts and Sciences, as well as several “Student Academy Awards” from the Academy of Motion Picture Arts and Sciences.

Meanwhile, the University of Utah’s Entertainment Arts and Engineering video game development program, ranked second nationwide, represents one part of Utah’s flourishing video game industry that employs 600 people and generates about $242 million in revenue annually.

“The University of Utah’s game development program has been great for us,” said Ben Bell, Executive Producer at Electronic Arts (EA) Salt Lake City. “They have passionate faculty and we work closely with them on curriculum. We’ve had great luck working with them. It’s a really great asset that the state has with respect to the momentum of digital media.”

EA is one of the top producers of digital games in the world. Bell credits the state’s successful workforce as one of the reasons why the company chose to locate in Utah.

Utah’s success in digital gaming is showing. In addition to EA Games, the state is rife with blockbuster studios including The Walt Disney Co.’s Disney Interactive Studios, Epic Games Inc.’s ChAIR Entertainment Group, Silverlode Interactive and Smart Bomb Interactive.

In 2010, EA expanded to a larger, state-of-the-art, custom-designed studio in downtown Salt Lake City where it has produced several top-selling games, including The Sims brand, one of the most successful video game series of all time, and Hasbro’s Monopoly, Littlest Pet Shop and Nerf.

One of EA’s latest successes is its release of RISK: Factions Game for Facebook. The EA adaptation of Hasbro’s popular RISK game represents a brand new dimension in social gaming and the first major Facebook game to be developed in Salt Lake City.

“Social gaming is an important part of growth that’s happened in our industry,” said Bell. “With social games you need a blend of talent that includes creative, business and analytic skills. The great success story for us and I think for the state is that we were able to build a team that could deliver a competitive Facebook game and we did it in a market where we had never done it before.”

Another example of Utah’s success is Avalanche Software, which is known for creating the recent video game for Pixar’s “Cars 2” movie.

Avalanche was founded by four lead programmers from Sculptured Software in 1995. The company has developed for every console platform since the Sega Mega Drive/Genesis and SNES days and has grown to a staff of over 100 since its inception. The company is headed up by Vice President and General Manager John Blackburn.

“I started in the industry in 1992 as a programmer working on Super Nintendo games,” said Blackburn. “After a few years of programming, I co-founded Avalanche with a few friends. We mainly did conversions of coin-operated arcade games to the home systems initially, and then started to make our own original games after 2000.”

Since 2001, the company, which works primarily on kids and family titles, became a well-known developer of games such as Tak and the Power of Juju games for THQ (Toy Head Quarters) and Nickelodeon and Chicken Little for Disney. In 2005, Disney Interactive Studios, the interactive entertainment affiliate of The Walt Disney Company, announced its plans to expand its focus into the video gaming industry. The Walt Disney Company acquired Avalanche and created the Fall Line Studio in Salt Lake City.

Utah-based Avalanche Software created the video game for Pixar's "Cars 2" movie. (Photo: Avalanche Software.)
Utah-based Avalanche Software created the video game for Pixar’s “Cars 2” movie. (Photo: Avalanche Software.)

“The working relationship with Disney was good and they wanted to acquire developers to lock down talent in the industry, so it was a good match,” said Blackburn. “Working for Disney has been a great learning experience because we have been exposed to working with some of the most talented entertainment creators of our generation. Sometimes it is truly surreal.”

In addition to a healthy talent base, Blackburn says that Utah’s quality of life and location are attractive to digital media companies. “We are close to the west coast and most of the major publishers, but the cost of living is cheaper and quality of life is higher in many ways,” said Blackburn. “We have really good universities with excellent programs in computer science and computer arts that allow us to grow local talent.”

Although Utah’s digital media industry has a long way to go to reach the “critical mass” of entertainment capitals like California and New York, the state is certainly well on its way.

“Utah is now focusing quite a bit on workforce,” said GOED’s Gary Harter. “Through the UCAP initiative, we are making sure we are going toward where an industry needs to be. We want to meet their demands today but be forward-looking and meet their demands for the future.”

Louisiana Digital is Red Hot

Louisiana’s rich culture in creativity, film, music and television has been a natural fit for the development of an emerging digital media and technology industry. The state first began cultivating video game development in 2005 when it passed the digital media tax credit program, attracting major game developer EA Games to the state.

In 2009, Gov. Bobby Jindal and the Louisiana Economic Development (LED) office decided to shift its focus to the whole space of digital media, expanding the program’s definition of “digital interactive media” and making the program more effective for all digital companies. The program, which is now available to any type of software development for commercial sale, including national security and IT applications, offers a bottom-line savings in the form of a 25 percent tax credit for expenditures and a 35 percent tax credit for Louisiana labor.

The LED also has implemented strong incentives for technology and film growth through its Technology Commercialization Tax Credit and the Louisiana Motion Picture Investor Tax Credit, as well as best-in-nation workforce and job training incentives through its FastStart and Quality Jobs Programs.

These incentives have helped to create thousands of new jobs in the state and catapult the region to the forefront of a rapidly growing digital media industry. Between 2001 and 2007, employment at Louisiana digital media firms—which include Smartphone App and video game designers, software developers and more—grew 9 percent, according to a 2009 report by the firm Economics Research Associates.

“Digital media and software development is at the top of our targeted growth industries,” said Stephen Moret, Secretary of LED. “We’ve been working hard to cultivate it, it’s a great fit for Louisiana and we are experiencing a lot of success right now.

Louisiana’s digital media industry is one of the fastest growing in the nation, growing at a rate of more than 100 percent, according to Moret. The state has almost 19,000 skilled software developers and more than 100,000 professionals with a skill set conducive to digital media or software development. In addition, its information sector, including software publishing and telecommunications, has experienced the second fastest growth rate in the country since June 2009.

“What’s really exciting is that it’s happening all over the state,” said Moret.” Essentially we’ve got significant digital media and software development and telecommunications activity in roughly five cities: Baton Rouge, New Orleans, Shreveport, Monroe and Lafayette.”

Baton Rouge—Creative Capital of the South

Known as the “Creative Capital of the South,” Baton Rouge has attracted development studios such as Electronic Arts, Firebrand Games, Crawfish Games, Nerjyzed Entertainment, BitRaider MMO. Now, the city will soon be home to a new international Academy Award-winning visual effects studio, Pixomondo.

In February 2012, Pixomondo announced it is investing $1.2 million to open shop in Baton Rouge’s Celtic Media Centre, a state-of-the-art movie studio.

Pixomondo won an Oscar for Best Visual Effects (VFX) at the 84th Academy Awards for Martin Scorsese’s 3D epic-adventure, Hugo. The film, which is based on Brian Selznick’s novel The Invention of Hugo Cabret, is about a boy who lives alone in a Paris railway station and the enigmatic owner of a toy shop there. The company completed more than 800 shots as the primary visual effects vendor on the film.

Opening in May, the Pixomondo Baton Rouge studio will be the German company’s 12th international location. Annual salaries will average more than $65,000, plus benefits, and Pixomondo will hire 50 people in its first year, expanding to 75 by the end of its second year. The project will result in the creation of 49 indirect jobs, the LED estimates, for a total of more than 120 jobs.

“Pixomondo already operates a dozen VFX studios worldwide and they could have chosen anywhere to create a new studio,” Gov. Jindal said in a press release. “Their decision speaks volumes about how far Louisiana has come when it comes to improving our business climate and providing competitive incentives.”

Founded by CEO Thilo Kuther in 2001, Pixomondo offers 24/7 visual effects production and supervision, CG character creation, 3-D animation and pre-visualization for the feature film, television and commercial industries. The company has created visual effects for more than 30 feature films, including Journey 2: The Mysterious Island, Red Tails, Sucker Punch, Super 8, Fast Five, Percy Jackson, The Olympians: The Lightning Thief, 2012 and Hugo. The company is currently in production on VFX for Snow White and the Huntsman, The Amazing Spiderman and TV series that include Game of Thrones, Terra Nova, Hawaii Five-O and Grimm.

The state began working with Pixomondo six months ago to gauge the company’s interest in establishing a visual effects studio that could partner with major movie and TV productions in Baton Rouge and Louisiana. The company was drawn to Louisiana due to its rapidly growing film industry, as well as generous LED incentives including digital media and film production tax credits, FastStart and the Quality Jobs Program.

“Opening an office in Baton Rouge fits perfectly with our overall company vision,” said CEO Kuther. “Louisiana offers a very generous production tax credit that we can pass on to our clients to bolster our project load as well as growing teams in Los Angeles, London and Germany—not to mention China and Canada. Baton Rouge is a beautiful city with a wealth of resources. We’ve already connected with the Louisiana State University computer science department to help set up remote render farms and virtualization with our other studios.”

Digital Marches into NOLA

New Orleans is undergoing an economic renaissance—and digital media is playing an integral role.

Companies drawn to New Orleans include Firebrand Games, a critically acclaimed video game development company currently working on titles for the Nintendo DS and Wii, and Fortune 500 company CenturyLink, the third-largest telecommunications company in the U.S.

At the same time, the city has attracted GE Capital’s new technology office, adding hundreds of jobs to the local workforce. After examining hundreds of locations for its new project, the company announced it is choosing New Orleans.

“When selecting a location for a center of this importance, we considered many attractive options across the country,” said Brackett Denniston, GE Senior vice president and general counsel. “Louisiana rose to the top of our list because of the advantages it offers in terms of talent, infrastructure, location and environment. Gov. Jindal and the Louisiana delegation presented a compelling case for locating in Louisiana.”

Denniston said cooperation between the state and the company helped make the project a reality. “We are thrilled to be part of what is rightly called the renaissance of New Orleans” said Denniston. “This is one of America’s signature cities, and we wanted to be a part of that.”

The state began cultivating IT-related economic development opportunities with GE in late 2010, and those efforts intensified in collaboration with local partners Greater New Orleans (GNO) Inc., the New Orleans Business Alliance and the New Orleans Mayor’s Office in 2011 as GE Capital was conducting a nationwide search for its new IT Center of Excellence. The center, which is expected to open by mid-year, will focus on developing software, processes and technology for the GE Capital financial services arm of the company.

New Orleans also attracted Paris-based Gameloft, one of the world’s largest publishers of digital and social games, to establish a major new game development studio in New Orleans, creating 146 new high-paying jobs over the next decade.

Gameloft credits the LED’s FastStart as one of the major reasons it decided to locate in New Orleans.

“Over the last 10 years, we’ve sold over 200 million titles, said David Hague, Studio Manager of Gameloft, on LED’s website. “We’ve calculated that we sell three games every second. What FastStart does is make sure we have the people that will help us create a great game. FastStart comes in and says I understand how you recruit and the type of person that you are looking for, your corporate culture, and tailors that perfectly.”

According to Hague, New Orleans emerged as the front-runner among many other sites not only because of the state’s strong digital media and workforce incentives, but also because it offers a quality of life and lower cost of living and doing business, which is important in a globally competitive market.

“Throughout the search process, we went through a lot of the gaming technology hubs of the U.S.,” said Hague on the LED’s website. “Last on our list was New Orleans. After being here for just under 24 hours I quickly realized that this was a city where we would be able to pull a workforce to have a great cost of living and a very fun lifestyle when people aren’t at work.”

“Gameloft was worried that they couldn’t attract the same number of applicants to their studios compared to New York and California,” said Moret. “Yes, we are smaller, but what we lack in size we make up for in exceptional targeted resources for recruitment and training. It turned out that they had the same quality and number of applicants for their New Orleans studio as they did in NYC—and NYC is a vastly bigger pool.”

According to Hague, the state‘s customized solutions got the company running in half the time.

“We’re really starting to create a hub that can really grow to become one of the meccas that you see in some of the other large cities in the U.S.,” said Hague. “These jobs are here and they’re here to stay.”

Rhode Island’s Winning Pitch

In 2004 and 2007, pitching ace Curt Schilling helped the Red Sox win the World Series. He is now taking aim at the video game industry and has picked Providence, Rhode Island as the home for his hot new video game studio, 38 Studios.

“The staff at 38 Studios is incredibly excited about our relocation to Providence and we expect to be the first of many relocating knowledge-economy companies that will take advantage of the opportunities Rhode Island provides,” said Jen MacLean, chief executive officer of 38 Studios, in a press release. “Providence has some of the best students in the nation, a vibrant arts community and a dynamic urban environment with easy access to public transportation.”

In February 2012, 38 Studios released its first game, Kingdoms of Amalur: Reckoning, which became the No. 4 best-selling video game and the only new franchise to crack the top ten, according to consumer market research group NPD.

The company is located in downtown Providence’s “Knowledge District”—an area with a strong creative and arts culture and in close proximity to internationally recognized schools such as the Rhode Island School of Design, The University of Rhode Island and the New England Institute of Technology. The gaming company also has a second studio in Maryland for its Big Huge Games subsidiary.

The state was able to lure 38 Studios to the state thanks to Rhode Island’s Job Creation Guaranty Program, which authorizes the RIEDC to use up to $125 million in loan guarantees to facilitate critical economic development projects.

38 Studios is receiving $75 million through the loan guarantee program and in turn will employ 450 people in the state by late 2013.

“The program is one piece of a state strategy to build Rhode Island into a leader of innovation, into a world-class incubator for 21st century growth industries,” said KeithStokes, executive director of the Rhode Island Economic Development Council (RIEDC). The addition of 38 Studios to Rhode Island’s growing knowledge economy is a critical step in further developing the state’s digital media sector, Stokes said.

“As an ‘anchor tenant’, 38 Studios will be a magnet for other related businesses that will set up shop here and generate thousands of additional jobs in our state,” he said.

Another anchor tenant to set up in downtown’s Knowledge District is Hasbro, a top-selling toymaker turned digital media conglomerate.

In July 2011, Hasbro announced it is expanding into a 136,000 square-foot facility in downtown Providence. The $24 million project will bring at least 284 full-time jobs within the first three years with annual wages averaging $80,290.

The RIEDC conferred “Project Status” on Hasbro, making the company eligible for a sales tax exemption on the purchase of construction materials and equipment and other items such as furniture and computers related to its expansion in Providence.

“As Hasbro continues to grow and evolve, we are excited about expanding our presence not only in Rhode Island but in the Capital City of Providence as well,” said Brian Goldner, CEO of Hasbro, in a press release. “Rhode Island has been our home since 1923 and we look forward to remaining an active and important part of this community.”

Hasbro’s expansion is part of the company’s continued emergence as a branded play company. No longer just a toy and game company, Hasbro is creating global experiences for its consumers with its brands like Transformers, Littlest Pet Shop, Nerf, Monopoly and G.I. Joe into a wide range of areas including film, digital gaming, licensing and television.

“Hasbro has transformed itself for the 21st century as a branded play and multi-platform entertainment company,” Stokes said in a press release. “So too will the larger Knowledge District area in Providence with the addition of another powerful anchor institution acting as a magnet for the strong digital media and IT cluster already in place.”