Amidst mass layoffs, a still-tough job market, and rapidly rising hardware costs, the video game industry is feeling the squeeze. The process of making video games gets pricier and more laborious as consumer demands and market expectations continue to grow. The competition is stiff: more games have come out this year on Steam than ever before, and the numbers keep on climbing year over year.
It’s not all doom and gloom. Canada’s $5.1 billion video games industry is especially well-positioned to continue growing. Our provinces and territories are home to hundreds of small to micro studios that make up the largest portion of the bustling Canadian video game scene. One need only take a look at many video game events across Canada to see the enthusiasm and the boundless creativity of indie studios and teams working tirelessly on their next hit. It may be hard to reconcile with the reality of high-profile layoffs and the hardship faced by game development teams, but it’s also hard to shake the optimism when witnessing Canada’s sweeping presence at high-profile showcases and trade floors.
Some of the most memorable games made in Canada hail from fully independent or publisher-backed independent studios. In the face of Xbox, Sony, and Ubisoft studio closures and budget cuts, putting all our eggs into one indie basket is an attractive proposition, but hardly the only answer. The Canadian market certainly benefits greatly from the behemoths of the industry, like Behaviour Interactive, which paved the way for recognition and investment for local projects. Video game development thrives when game makers have options, and options when it comes to funding are central to video game innovation and growth.
Amid fewer funding options, government-backed programs give game makers an edge
In 2026, the market is mature, and the investors are cautious. Funding avenues available to developers are shrinking, at least in traditional ways. The allocation of capital follows more stringent criteria and more due diligence than ever before (on all sides). “We’re moving out of AA budget lands,” notes Corey Caplan from TinyBuild Games, a publisher specializing in indie games. “Publishers are gunning for games they can fund for one million or less.” Innovation and “fresh, interesting takes on genres” are what can get publishers’ attention, according to Caplan.
Canadian developer talent has that in troves. Not only that, but Canadian studios also enjoy an important home soil advantage—that of numerous government programs that exist to support game development. The most notable of them is the Canadian Media Fund.
A long-standing pillar of supporting excellence in Canadian film and television, the CMF has been making strides in increasing funding for interactive experiences—an umbrella that includes video games. The recently announced CMF funding increase, which would amount to $57M in the 2026/2027 fiscal year, was welcome news to an industry hungry for support. The CMF currently runs programs for ideation and creation of interactive digital media, which also include innovative pilot projects that mark a departure from traditional publishing deals.
XP Game Summit panel on game funding, featuring from left to right: Ryan Sno-Wood, Corey Caplan, Shelley Coultish, Eileen Mary Holowka.
One such CMF program is the Commercial Projects Program, which funds projects with a greater probability of commercial success. While its Main Stream is a selective process that involves in-depth project evaluation and a business fitness test—a process akin to securing publishers’ or investors’ financial participation—the program is also piloting the Third-Party Investment Stream, which would be of particular note to studios with some funding already secured.
This initiative is a first-come, first-served opportunity granting up to $1.5M CAD in funding for projects with “a viable locked financing plan” that includes at least 25% of third-party investment already procured by developers. “If you can come up with 25% of funding that’s not you, we’ll give you the money, no questions asked,” says Shelley Coultish, Deputy Director at Telefilm Canada (CMF Program Administrator).
While Coultish is certainly being tongue-in-cheek about the “no questions asked” part, as the pilot program guidelines are well-defined and stringent, they bypass many more traditional guardrails on the program’s Main Stream. A third party’s commitment to a project acts as a litmus test of market fitness. Studios with enough capability and potential that earned the trust of a publisher or independent investor are deemed more likely to succeed and thus worthy of more cash injection.
Programs like CMF help publishers support more projects
Given that studios need third-party funding to qualify for the pilot, it raises the question of how studios can solve the issue of attracting initial investment in the first place. “The first investor is always you, the developer,” says Jason Della Roca, game business funding advisor, investor, and consultant. Bootstrapping in the very early stages of game development is the new reality for indie developers. Early validation and gathering market evidence of success are key to securing funding to finish the game. From the start, “Studios are in a fan-building business.”
Both Caplan and Coultish echo Della Rocca’s sentiment, stressing the importance of making your studio “fundable.” This includes preparedness, knowing one’s audience, and good marketing and promotion strategies. Eileen Mary Holowka, Co-Executive Director at Baby Ghosts Studio Development Fund, adds smart and intentional business and operations practices to the list: “We need a good budget, and we need a good game, but we also need good values and good studio governance, too.”
Programs such as the CMF pilot benefit not only studios but their publishing partners. As the latter offload some of the investment risk and spread their investment capital wider, they can partner with and support more projects. It remains to be seen how this pilot of the CMF commercial program shakes out, but it’s clearly a step in the right direction during the times when more support from the government for the gaming industry is desperately needed.
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