According to the ESA’s reports, the five states that are serving as game development hubs in the US are California, Washington, Texas, New York, and Massachusetts. This shouldn’t come as a surprise to anyone; cities like Seattle, San Diego, Austin, and their peripheral towns are often mentioned in gaming press. This is fine –€” certain hubs are expected to rise up in any industry, and game development, at $22 billion domestically per year, absolutely qualifies as industry. However, it is becoming increasingly apparent that there is a need to start expanding into new locations if studios expect to continue to grow profitably. It comes down to cost: the cost of living, and cost of business.

The cities and regions that game developers are based in right now tend to be expensive: the amount of money it takes to maintain the same quality of life is higher than in other cities. As an example, comparing Portland, Oregon, and Seattle, Washington, two cities that offer similar climates, similar cultural opportunities, overall a similar quality of life. In Seattle, an examination of average office lease rates are running between $25 and $40 per square foot depending on where in Seattle you are (and where most of these companies are located, you’re looking at the high end of that range). A similar examination of Portland puts the lease rates between $12 and $25 per square foot. (To put those prices in perspective, Bungie recently announced their move into downtown Bellevue, leasing 85,000 square feet. Assuming they got a killer deal and only paid $30 per square foot, that’s still $2,550,000.) An equivalent space in Portland, assuming, say, $20 per square foot, is $1,700,000. That’s an $850,000 price difference, and that’€™s only one part of the overall cost of doing business.

Looking at the cost of living for the employees themselves, median apartment rental prices drop nearly in half between Seattle and Portland. While other price comparisons are less dramatic (the cost of heating a home doesn’€™t vary much, which is unsurprising considering they share a similar climate), it still works out to a net savings for the employee to be in Portland. What this means for the employee is that they can live at the same quality of life, for less money. What this means for employers is that they can price their salaries accordingly (as they already do), and again, save money to either a) bring down development costs, or b) hire more developers.

Of course, so far we’ve only discussed basic numbers, on the assumption that one would have to pay for everything involved. For a number of developers, this is already not the case: both Ontario and Quebec (and respective cities Toronto and Montreal) offer significant subsidies to game companies to build studios there. It was reported a few years ago that the city of Montreal and the province of Quebec combined subsidized over half the salaries for Ubisoft and EA, two major developers and game publishers. Ubisoft is expanding again, opening a new studio in Toronto, who have committed to investing $226 million into Ubisoft over the next ten years. Here in the U.S, 8 states have already passed initiatives to encourage game development, including significant tax breaks and other incentives to draw the industry in. The city of Savannah has gone so far as to offer a full year of office space free to any company willing to commit to offices there.

Now, I realize it is pretty rare that a company is in a position to be able to perform an en masse relocation (there have been a few examples, such as when Square moved from Washington to California, or when Bungie moved from Illinois to Washington), but that isn’t really what anyone is trying for: as development teams grow, new facilities are needed, and new development teams are created. These new studios and teams are in a prime position to make use of the lower development costs of setting up in a less expensive city. It would be foolish for a large game developer to not at least consider this when building out their next team.

The cities I expect to be great additions:

1. Portland, Oregon: the city has so much going for it in, and is already starting to undergo a bit of a cultural explosion thanks to its fantastic music and art scene, green policies, and laid back atmosphere.
2. Minneapolis/St. Paul, Minnesota: it’s been largely off the radar for a lot of people, yet sports a remarkable diversity within the area, low costs, and is something of a jewel of the central states.
3. Boulder, Colorado: it is already becoming a pretty significant tech hotspot, housing a number of startups and offering a range of support for the software industry.