After dashed hopes, the Alberta government appears to have been fragged in its attempts to create a viable video game industry In its latest budget.
That’s because the UCP government has pulled the plug on plans to revive a tax credit for video game developers, opting instead to support the industry through strategic partnerships and investments.
According to Toronto business and technology news outlet The Logic, Alberta had been considering a new tax credit after Premier Danielle Smith floated the idea in November 2022. However, officials confirmed the proposal has now been shelved.
According to Toronto business and technology news outlet The Logic, Alberta had been considering a new tax credit after Premier Danielle Smith floated the idea in November 2022. However, officials confirmed the proposal has now been shelved.
“Instead of sector-specific tax credits, Alberta’s government has chosen to support the digital media gaming industry through strategic funding partnerships and investments,” said Jonathan Gauthier, press secretary for Alberta’s Innovation Minister, Nate Glubish.
The move comes amid rapid global growth in the video game industry. In 2025, it was valued at approximately USD$236.9 billion and is projected to expand at a compound annual growth rate of more than 12% through 2030, potentially approaching USD$1 trillion by 2032.
The sector is dominated by giants the likes of Sony, Apple, Microsoft, Nintendo and Electronic Arts.
But startups have been seeing an ever shrinking piece of the pie, falling from a peak of USD$8.95 billion in venture funding in 2022 to $2.4 billion in 2024 and about $144 million thus far in 2025 — barely a tenth from the same quarter in 2024 according to industry trade site Crunchbase.
The pattern of falling investment isn’t isolated to the gaming industry, as other sectors including e-commerce and consumer electronics have seen reduced funding in favor of massive new investments in AI.
In 2022, Smith’s mandate letter directed Glubish to develop a tax credit proposal to help Alberta compete with larger game development hubs in Quebec, Ontario and British Columbia. At the time, Ontario offered a 40% tax credit, Quebec 37.5%, and BC 17.5% — with BC planning to increase its rate to 25% by September 2025.
Alberta’s previous Interactive Digital Media Tax Credit — introduced by the NDP government in 2018 — covered 25% of qualifying labor expenditures, plus an additional 5% for underrepresented employees. However, the UCP government scrapped it in 2019, citing budget concerns.
For the short period the credit existed, the province saw a surge in game development activity. Major studios like New World Interactive (Calgary) and Improbable (Edmonton) opened offices, and Alberta’s game development workforce reached 1,310 full-time employees.
By 2024, that number had dropped to 810, according to reports by consulting firm Nordicity for the Entertainment Software Association of Canada.
Glubish had previously indicated that reinstating the tax credit was a “priority,” emphasizing the industry’s job creation potential. However, the government now believes “strategic partnerships” are a “more effective and sustainable” way to support the sector.
As part of the strategy, Alberta Innovates has partnered with B.C.-based Shred Capital, and the Alberta Enterprise Corporation has backed Seattle-based Flying Fish Ventures, both of which are investing in Alberta gaming startups.
Critics have welcomed the reconsideration of industry support but expressed concerns about long-term stability.
While Alberta shifts its focus to strategic investments, other provinces continue to enhance their incentives. B.C.’s upcoming tax credit expansion to 25% will bring it closer to Ontario and Quebec’s more generous programs, raising questions about whether Alberta’s new approach will be enough to retain and attract game developers — and ‘level up’ in the parlance of video gamers — in the years ahead.